Microsoft Judge Opens Door To Broader Remedy

Microsoft Corp.

U.S. District Judge Colleen Kollar-Kotelly's request boosted the spirits of nine states seeking stronger antitrust sanctions against Microsoft, who have argued for remedies that protect markets that have arisen since the trial began.

The judge, who has expressed reservations about broadening the case, said she needed to learn more "to determine whether it falls beyond the outer reaches of a remedy."

"I've decided that I need more factual information, frankly," Kollar-Kotelly said during hearings on the remedies demanded by the states that have rejected a proposed settlement agreed to by the Justice Department in November.

Tom Greene, an attorney for the state of California, described himself as a "happy camper" to reporters outside court, saying the remarks signal Kollar-Kotelly may be willing to impose broader sanctions.

"Today she has made it clear we can bring in all of our evidence and she will at least consider it," Greene said. "That's just enormously important to us."

But Greene acknowledged that the states still have a "heavy burden" of proof in making the case for stricter sanctions.

The issue is important to the case because Kollar-Kotelly must decide whether the remedies should be designed to address only past misdeeds, or go further and try to restrain Microsoft's forays into new areas.

SANCTIONS LIMITED TO PAST WRONGDOINGS

Microsoft has argued the sanctions cannot go beyond specific wrongdoing upheld by a federal appeals court last year, mainly that Microsoft tried to crush Netscape's Internet browser in an illegal effort to preserve its Windows monopoly in personal computer operating systems.

The company has filed legal motions asking the judge to discard all evidence that is not directly related to the monopoly market at issue in the original case -- personal computer operating systems.

Microsoft spokesman Jim Desler said Kollar-Kotelly's comments were "hardly surprising," given the judge's cautious approach to the trial.

"We look forward through the process of continuing to press the point that the states are tying to bring in products and markets that have nothing to do with the case," Desler said.

During the next few days of the trial, the judge is scheduled to hear from executives from Palm Inc., a maker of handheld organizers; network software maker Novell Inc. and interactive television software maker Liberate Technologies Inc..

Kollar-Kotelly said Tuesday she has made no final decision about how broad the scope of the remedy should be. And the judge said she will consider Microsoft's objections.

Kollar-Kotelly had expressed some skepticism about the breadth of the states' argument, and she has been receptive to Microsoft's objections to allowing any new evidence into the case.

But during the last week Kollar-Kotelly has been permitting evidence about more recent developments in the computer industry. The judge said she will factor them into her decision about what sanctions would work best, but not as new allegations of wrongdoing against Microsoft.

GATEWAY EXECUTIVE'S TESTIMONY CHALLENGED

The judge is still considering whether the Justice Department settlement is in the public interest in a separate proceeding.

Earlier in the day a Microsoft attorney worked to discredit testimony by a Gateway Inc. executive, saying he was biased because AOL Time Warner Inc., holds a large chunk of the computer maker's stock.

Microsoft's lawyer, Richard Pepperman, spent the morning throwing a barrage of questions at Gateway Group Counsel Anthony Fama in an effort to portray Fama as biased and ill- informed.

Fama, the sixth witness called the dissenting states, said the proposed antitrust settlement with the Justice Department has allowed the software giant to impose onerous licensing terms.

During his cross-examination Tuesday, Pepperman challenged Fama's contention that the provisions in Microsoft's new, standard license were unreasonable. And he noted that Microsoft rival, online services and media giant AOL Time Warner, has bought $600 million worth of Gateway stock since 1999.

Fama said he did not know about AOL's investment.

After Fama, former Intel Corp. Vice President Steven McGeady took the witness stand in support of the states' remedy proposals.

McGeady said the proposed settlement would not have stopped Microsoft from restraining Intel, the leading maker of microprocessor chips for personal computers, from efforts to develop software during the 1990s.

MICROSOFT THREATS

He said Microsoft had reacted to Intel's NSP media playing software by threatening to withhold support for Intel's next generation of chips and pressuring computer makers not to install NSP.

McGeady said only the non-retaliation provisions proposed by the non-settling states contain specific prohibitions against threatened future retaliation and indirect threats via customers.

But another Microsoft attorney, Dan Webb, tried to discredit McGeady, saying he also was biased against the company.

Webb cited a book and magazine article in which the former Intel executive was quoted as calling Microsoft an "evil corporation."

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