Federal Judge Denies Microsoft Motion To Dismiss Antitrust Case

Microsoft had asked for a dismissal, saying the states could not show specific harm to their citizens and lacked the authority to seek national penalties.

"The court concludes that Microsoft's motion is without merit and must be denied," said U.S. District Judge Colleen Kollar-Kotelly.

She agreed with the states' argument that an appeals court already considered whether they have such authority, and did not question it.

"With little more than a passing reference, Microsoft implores this court to ignore the explicit findings of liability and presume that the Court of Appeals simply overlooked the fact that it was presented with two separate and distinct cases," Kollar-Kotelly wrote.

Before her ruling, the judge asked the Justice Department for its opinion. Department lawyers--as well as representatives of 25 other states that offered an opinion on the right to sue issue--agreed that the states should be able to bring their case.

The department, which made its own far more lenient settlement with Microsoft last year, maintained its opposition to the nine states' call for strict penalties. Kollar-Kotelly has yet to rule on whether to grant the states' request for those penalties.

Microsoft has two other important motions pending. One asks for the case to be thrown out because of a lack of evidence from the states.

The second would do away with the harshest proposal penalty against Microsoft: forcing the software company to create a version of the Windows operating system that would allow computer makers to swap out some features in favor of those made by Microsoft competitors.

State representatives said they were pleased by the judge's ruling.

"We certainly think it is the right decision and completely consistent with prior case law," said Tom Greene, California's assistant attorney general.

Microsoft spokesman Jim Desler said the company "had hoped for a different outcome on this particular issue. We look forward to the next step of this process and presenting our closing arguments."

Kollar-Kotelly presided over two months of hearings, starting in March, in which Microsoft Chairman Bill Gates and top technology company executives debated the states' proposals.

The states say the federal settlement will not go far enough to restore competition in the software industry. They say their ideas, which include making Microsoft give up most rights to its leading Internet Explorer Web browser, are more likely to increase consumer choice and promote innovation.

Kollar-Kotelly noted in her order that her ruling in the antitrust case could set an important precedent.

"This case has been unique from its inception and has continued to distinguish itself," the judge wrote.

Microsoft was found by a federal appeals court to have used illegal means to stamp out nascent competition in order to protect its Windows monopoly.

The original judge in the antitrust case, Thomas Penfield Jackson, ordered Microsoft broken into two companies. An appeals court upheld many of the violations but reversed the breakup order and appointed Kollar-Kotelly to determine a new punishment.

Both the states and Microsoft are scheduled to deliver closing arguments June 19. A ruling is expected in late summer.

States that rejected the government's settlement with Microsoft last fall and are pressing for tougher penalties are Iowa, Utah, Massachusetts, Connecticut, California, Kansas, Florida, Minnesota and West Virginia, along with the District of Columbia.