Microsoft and DOJ Argue Over DOJ Attempt to Expand Antitrust Case
(September 3, 1998) Microsoft and the Department of Justice both filed motions yesterday related to the government's eleventh hour attempt to expand its antitrust case to include allegations about Microsoft's dealings with Intel and Apple and other matters not included in the Complaint filed on May 18.
Monday night the Department of Justice (DOJ) filed a brief which for the first time alleged that Microsoft's alleged illegal anticompetitive behavior includes its dealings with Intel, Apple, and RealNetworks. The government yesterday filed papers alleging that Microsoft has refused to produce documents pertaining to its business dealings with Intel and Apple, and asking the judge to order that Microsoft produce these records within 24 hours.
Microsoft filed papers yesterday seeking to limit the issues in the case to exclude the recent allegations regarding Intel and Apple. Microsoft seeks in the alternative to have the trial delayed in order to prepare defenses to these new charges.
Relevant Pleadings DOJ's Complaint, 5/18/98. |
The trial is currently set to start on September 23 in U.S. District Court in Washington DC, with Judge Thomas Penfield Jackson presiding.
| DOJ Motion |
The DOJ filed a Motion to Compel Discovery and a longer Memorandum in Support which contains its legal arguments. The Memorandum argues that the new charges, and the evidence which it now seeks, are relevant to its case.
The DOJ brief contends that "evidence of Microsoft’s attempts to induce others, including Intel and Apple, to take action to hamper Netscape or Java or to undermine the threat they pose to Microsoft’s monopoly is relevant to and probative of numerous key issues here. Similarly, evidence that Microsoft sought to induce other firms, including Intel and Apple, not to compete with it and to curtail their software development efforts is relevant to demonstrate Microsoft’s overall conduct in securing or maintaining its monopoly and the cumulative anticompetitive effect of such conduct."
The government seeks the following records from Microsoft:
"1) documents relating to any meetings or communications between Paul Maritz or Bill Gates and any representative of Intel Corporation between January 1, 1995 and December 31, 1997 (Request No. 3);
(2) documents relating to any meetings or communications between Eric Engstrom or Chris Phillips of Microsoft and any representative of Apple Computer, Inc. that occurred between January 1, 1996 and August 14, 1998 (Request No. 4);
(3) documents relating to any meetings or communications between Microsoft and any PC OEM relating to Apple’s QuickTime technology, and
(4) certain Microsoft databases relating to OEM license agreements for Microsoft operating system products (Request No. 1)."
The government's Complaint contains no allegations regarding Microsoft's dealings with Intel or Apple. The government first raised these allegations in its Opposition to Microsoft's Motion for Summary Judgment, which it filed very late on Monday. Also, the government did not request the records in dispute until August 14. The government's brief says that Microsoft refused to produce these records on the grounds that they are not relevant, and for other reasons.
| Microsoft Motion |
Microsoft also filed a motion with the court yesterday. It is not a response to the government's motion. However, it goes to the same topic. Microsoft's Memorandum in Support of Motion to Limit Issues for Trial states that:
"Microsoft is prepared to proceed on September 23 with an evidentiary presentation addressing the matters placed in issue by plaintiffs three months ago in their complaints. But in the course of just the last few weeks, plaintiffs have gradually made clear their intention to broaden this case far beyond the "surgical strike" they started out with¾ and with which they apparently have become disenchanted¾ by injecting a whole range of additional issues. All of these new issues are factually complicated, and Microsoft has not been given fair notice of, or a reasonable opportunity to prepare a defense to, any of them, through discovery or otherwise."
Microsoft contends that the issues for trial are defined by the claims stated in the Complaint, namely, tying of Internet Explorer to Windows, and Microsoft's alleged exclusionary contracts with OEMS, ICPs, and ISPs. Microsoft argues that the new allegations first mentioned in the DOJ Opposition to Motion for Summary Judgment raise new and unrelated claims. The memorandum states that "Plaintiffs said at the start of the case that their focus was on Microsoft’s inclusion of Internet Explorer technologies in Windows 98 and the promotion and distribution of those technologies to the installed base of Windows 98 users."
The DOJ Opposition Brief which raised the new allegations was filed under seal. A heavily redacted version was made available to the public. Hence, it is not possible to know the extend of the new allegations which have been raised by the government. Microsoft's memorandum lists and describes these new allegations, which it wants excluded from trial, as follows:
The Microsoft memorandum concludes that "Plaintiffs are seeking to head down a path that would either transform this case into an IBM-like "kitchen sink" monstrosity, with a greatly expanded (and therefore necessarily delayed) trial, or would deny Microsoft procedural due process by permitting plaintiffs to expand the scope of their claims without warning on the eve of trial. Microsoft accordingly moves for an order excluding the new matters raised by plaintiffs from the issues to be tried."
Related Stories |
| DOJ Files Opposition to Microsoft's Motion for Summary
Judgment, 9/2/98. Microsoft Files Motion for Summary Judgment, 8/11/98. Appeals Court Overturns Microsoft Injunction, 6/24/98. Government Files Antitrust Action Against Microsoft, 5/19/98. |
Charles Rule, a predecessor of Joel Klein as head of the Antitrust Division, delivered a speech to the National Press Club yesterday morning in which he said that the government is "frantically scrounging" for new allegations, since the Court of Appeals' June 23 decision destroyed the government's browser tying arguments. Rule is a legal advisor and spokesman for Microsoft on antitrust issues. He stated:
"Last but not least, despite almost a decade of continuous investigations of Microsoft and two years of putting together its current case against Microsoft, the government is now frantically scrounging for any additional anti-Microsoft allegations no matter how trivial -- in a last-ditch effort to resuscitate its case. The government, for example, now points to Microsoft's discussions with Intel and Apple, among others, as evidence that Microsoft has engaged in some vague "pattern" of anticompetitive practices -- never mind that such discussions are commonplace in the computer industry and that none of the alleged conduct remotely amounts to a violation of existing antitrust rules.
None of these allegations are new; the government was aware of them when it wrote its original complaint. If the government really thinks they are relevant, why weren't they included in the complaint? Why are they only now being raised? The reason is that the government has become desperate."
Even without these last minute allegations, it was questionable whether the judge could proceed to try the case as early as September 23. The parties have not completed pre-trial documentary discovery. They have not finished taking depositions. The Court has not yet ruled on the DOJ's Motion for Preliminary Injunction. The parties have not finished briefing Microsoft's Motion for Summary Judgment. The judge has not yet heard oral argument on the summary judgment motion. The judge has not yet ruled upon the motion for summary judgment.