Judge waits to rule on scope of Microsoft remedies

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Instead of deciding now the scope of the antitrust remedies that both Microsoft Corp. and nine states are arguing over in court, a district judge said on Tuesday evening she will wait until the end of the hearing before ruling on just what the remedies designed to curb Microsoft's anticompetitive behavior should strive to fix.

Judge Colleen Kollar-Kotelly told the courtroom she will hear all testimony from witnesses for both parties before reaching a decision, despite numerous motions from Microsoft to strike from the record any testimony from the states' witnesses that the company deemed outside the scope of the remedy hearing. "I thought I could do this earlier," Kollar-Kotelly said about reaching a decision, "but I decided I need more factual information."

This postponement could spell good news for the nine states and District of Columbia that chose not to reach an antitrust settlement with Microsoft. In preparing for the remedy hearing that began last Monday, the states told the court it planned to put on the witness stand a number of industry executives who would testify about Microsoft's business practices in markets other than the desktop operating system space -- emerging areas such as operating systems for handheld computers and television set top boxes, as well as Web services and server software.

In response, Microsoft filed motions asking the judge to disallow all such testimony, claiming that with these witnesses the states are trying to prove Microsoft's anticompetitive behavior extends beyond the PC operating system market.

The judge on Tuesday told the states that she would, in fact, consider such testimony, but only as it helps her decide which remedies should be placed on Microsoft.

The ongoing argument regarding the scope of the remedies stems from an appeals court decision last year, which found Microsoft violated antitrust law by trying to stifle competition in the PC OS market. That court had upheld some of a lower court's findings, but didn't agree with the proposed remedies and sent the case back to a district court for a new remedy hearing. Kollar-Kotelly, who took over the case last August, asked both Microsoft and the litigating states to come up with a set of proposed remedies that they would argue for during the hearing.

While attorneys for the states have argued that testimony from officials with companies in non-PC markets such as Palm Inc. and Novell Inc. will focus on supporting the states' remedies, Microsoft lawyers insisted that such testimony be barred. The states are attempting to show new liabilities with these witnesses, Microsoft has argued, instead of sticking to the parameters of the hearing set by the court of appeals -- namely Microsoft's behavior in the PC OS market.

Last week during the hearing, Kollar-Kotelly made comments that showed she may be leaning towards Microsoft's point of view. However, the judge said Tuesday that she must examine the four non-PC markets that the states' witnesses will testify about -- server operating systems, Web services, handheld devices, and television set-top boxes -- before deciding on the remedies.

Yet Kollar-Kotelly was careful to note that she will not consider any of the testimony regarding these non-PC markets in the context of new allegations of Microsoft anticompetitive behavior, but only to determine if the states' proposed remedies are appropriate.

Microsoft argued in court last week that if such testimony from states' witnesses is allowed, it will have to call witnesses to rebut what it considers new antitrust allegations. On Tuesday the judge said she wouldn't stop Microsoft from doing so.

Separately, Kollar-Kotelly on Monday invited the U.S. Department of Justice (DOJ) to comment on Microsoft's recent motion to dismiss the litigating states' case. Microsoft claims that the states lack the authority to seek nationwide remedies, and are attempting to "displace the (DOJ) in its role of establishing national competition policy," according to a court document. The DOJ and nine other states reached a settlement agreement with Microsoft last fall that is currently being reviewed by Kollar-Kotelly.

In her order Monday, the judge asked the DOJ to offer its position. "It seems most prudent to ask the (DOJ) to enlighten the court with its views on the issues raised in Microsoft's motion," the document read.

A spokeswoman with the DOJ on Tuesday said the department is reviewing the judge's order and will respond as appropriate.

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