Microsoft Files Motion for Summary Judgment

(August 11, 1998)  Microsoft filed a Motion for Summary Judgment in US District Court on Monday, August 10, in the antitrust suit filed on May 18 by the Department of Justice and nineteen states.  The motion, which relies heavily on the US Court of Appeals decision of June 23, seeks dismissal of the case.

Microsoft also simultaneous filed its opposition to the governments' motion for preliminary injunction.

The case is set to go to trial on September 8, 1998.  Judge Thomas Penfield Jackson is presiding.

Microsoft's 88 page summary judgment memorandum argues that it is entitled to judgment on all claims asserted by either the federal or state governments.  However, it devotes the most attention to the government's claim that Microsoft has illegally tied Internet Explorer to Windows.

"We believe the central elements of the government’s claims have been refuted by the factual record and the recent Appeals Court decision upholding Microsoft’s decision to develop operating systems that work well with the Internet," said William H. Neukom, Microsoft's SVP for Law and Corporate Affairs in a press release. "We are asking the court to dismiss the government’s lawsuit in its entirety, but, at a minimum, we hope the court will expedite resolution of this case by dismissing many of the key claims."

Summary judgment, generally, is a pre-trial remedy sought where, based upon facts not in dispute, and an application of the law to those facts, a party is entitled to a judgment on a claim.  The judge cannot decide disputed facts in a summary judgment proceeding.  If any facts material to a claim are disputed, then summary judgment cannot be granted on that claim.

The memorandum is supported by three volumes of documentary evidence, two of which are confidential.  Sections of the legal pleadings made available to the public also included redacted sections.

Microsoft argued at the outset of its memorandum that there are three central undisputed facts in case.  It wrote:

"Three basic facts, none of which can be genuinely disputed, fatally undermine plaintiffs’ claims in this case. Specifically, plaintiffs cannot show that (i) the software code in Windows 98 that provides web browsing functionality is a "separate product" that can be removed without seriously degrading the operating system, (ii) the inclusion of Internet Explorer technologies in Windows 98 generates no benefits for consumers and software developers, or (iii) Netscape is prevented by any of the Microsoft conduct at issue from utilizing numerous available channels to distribute its web browsing software broadly to consumers. In the absence of a genuine issue of material fact requiring trial, Microsoft is entitled to summary judgment."  (at page 3)

The second claim in the government's complaint alleged that Microsoft unlawfully tied its browser to its operating systems in violation of Section I of the Sherman Act.  The government plead that "Windows operating systems and Microsoft's Internet browser software are separate products."

In its summary judgment memorandum Microsoft argues that the facts demonstrate that Microsoft has integrated browsing functions into its operating systems since the early 1990s, and that its browsing functions are fully integrated into its operating systems.   It also argues that the Court of Appeals ruled in June that there is a "genuine integration."

The first claim in the government's complaint alleged that Microsoft engaged in unlawful exclusive dealing and other exclusionary agreements in violation of Section 1 of the Sherman Act.  In particular, the government alleged that "Microsoft's agreements with ISPs, ICPs, and others pursuant to which such companies agree not to license, distribute, or promote non-Microsoft products (or to do so only on terms that materially disadvantage such products), and its agreements with OEMs restricting modification or customization of the PC boot-up sequence and screens, unreasonably restrict competition and thus violate Section 1 of the Sherman Act. These agreements unreasonably restrain trade and restrict the access of Microsoft's competitors to significant channels of distribution, thereby restraining competition in the Internet browser market, among other markets."

Microsoft argues that its "agreements with ISPs, ICPs and OLSs are routine cross-marketing arrangements" and "not exclusive dealing arrangements."   Microsoft argues that the government's claim fails for two reasons.  First, "the agreements in question did not unreasonably restrain competition."   Second, even if the agreements were exclusively dealing arrangements, "Netscape has numerous alternative channels of distribution available to it, and Netscape is using them very effectively."

The government also plead that Microsoft had an illegal monopoly of the personal computer operating system market, and had illegally attempted to monopolize the browser market.  Microsoft argues in its summary judgment memorandum that these claims must fail because the government cannot prove that Microsoft engaged in predatory conduct.   Microsoft further argues that this is an essential element of those claims.

The full text of Microsoft's court filings can be found in the Microsoft website in both HTML and MS Word formats.  The following are links to HTML versions of the two key documents filed on Monday.

• Defendant Microsoft Corporation's Memorandum in Support of Its Motion for Summary Judgment.
• Defendant Microsoft Corporation's Memorandum in Opposition to Plaintiff's Motions for a Preliminary Injunction.