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Microsoft's Motion for More Time to Respond to
Motion for PI. IN THE UNITED STATES DISTRICT COURT
DEFENDANT’S MOTION FOR AN ENLARGEMENT OF TIME 1. Pursuant to Rules 6(b) and 16 of the Federal Rules of Civil Procedure, defendant Microsoft Corporation ("Microsoft") hereby moves (1) for an enlargement of time for Microsoft to respond to the motion for a preliminary injunction filed by the Antitrust Division of the U.S. Department of Justice ("DOJ"), and (2) for entry of a scheduling order providing Microsoft with adequate time to conduct discovery and prepare its response to the DOJ’s motion, which reflects the cumulative result of extensive investigations conducted over nearly two years. Microsoft is filing the same motion in Civil Action No. 98-1233, which was commenced by various States and the District of Columbia (the "States") against Microsoft on the same day that the DOJ filed this action. 2. Counsel for Microsoft conferred with counsel for the DOJ about this motion pursuant to Local Rule 108(m). Counsel for the DOJ stated that the DOJ does not oppose Microsoft’s motion to enlarge the time for Microsoft to respond to the DOJ’s motion for a preliminary injunction, but that the DOJ does not agree to the schedule proposed by Microsoft in this motion and that the DOJ will provide its views to the Court on this subject at the May 22, 1998 conference. BACKGROUND 3. On May 18, 1998, the DOJ and twenty States each filed lengthy complaints with this Court (1) alleging numerous violations of Sections 1 and 2 of the Sherman Act and the States’ respective antitrust statutes, and (2) seeking a sweeping mandatory preliminary injunction that would give the DOJ and the States substantially all of the relief they seek as a permanent injunction following a full trial on the merits. 4. The extraordinary relief requested by the DOJ and the States would require Microsoft, among other things, to develop a new operating system that would not include any "Internet Explorer" technologies. Such an operating system—which would take many months (if not years) to develop and test—would bear little, if any, resemblance to Windows 98 because Internet Explorer technologies are such a critical element of that product. And the new operating system built to the DOJ’s and States’ specifications would be of no commercial value: all other vendors of operating system software currently include Internet-related technologies in their products, reflecting clear consumer demand for such functionality. 5. In addition, the preliminary injunction requested by the DOJ and the States would require Microsoft to give computer manufacturers a license to "modify" Microsoft’s operating system products by substituting "non-Microsoft Internet browser software for Microsoft’s Internet browser software" or by replacing the Windows user interface, one of the principal features of the operating system. Even if the requested relief were feasible, and it is not, issuance of such relief would constitute an unprecedented confiscation of Microsoft’s intellectual property rights. Windows 98 is a single product that is covered by copyright as well as multiple patents and trade secret rights. Microsoft is perfectly entitled to license the operating system intact, just as an author can require that chapters not be deleted from his or her book. Microsoft is also entitled to brand prominently its products with its valuable Windows trademark on the user interface so that consumers will know that they are using an authentic and high quality operating system that Microsoft developed and stands behind. 6. Finally, the DOJ and the States seek to require Microsoft by a preliminary injunction to incorporate into its Windows 98 operating system another company’s competing software product, namely, "the most current version of the Netscape browser." Such a mandatory carriage requirement is unprecedented outside the context of publicly regulated entities—which Microsoft is not—and would require Microsoft to make Windows 98 a distribution vehicle for a product that Netscape claims is used by more than 60% of consumers accessing the Internet. 7. In support of their requests for sweeping preliminary injunctive relief that would thrust this Court into the "unwelcome position" of designing computer operating system software, IX Phillip E. Areeda, Antitrust Law ¶ 1700j, at 15 (1991), the DOJ and the States filed lengthy memoranda (the two memoranda together total 114 pages) along with thousands of pages of exhibits. Those exhibits—which consist of affidavits and excerpts of deposition testimony by both Microsoft employees and numerous third parties, as well as large numbers of other documents covering a substantial period of time—are the product of many months of investigations by both the DOJ the States. In fact, the DOJ began investigating Microsoft’s inclusion of Internet-related technologies in Windows 95 (the predecessor to Windows 98) in August 1996, and the States began their investigations that led to their action no later than February 1997. Moreover, the DOJ was given a detailed demonstration of the Windows 98 user interface (which is provided by Internet Explorer technologies) at a meeting in San Francisco in November 1996. The DOJ’s and States’ papers contain citations to deposition testimony and numerous documents that were obtained by the DOJ long before it filed its contempt petition under the Consent Decree in October 1997. 8. It is a daunting task simply to read the mass of papers submitted by the DOJ and the States. Obviously, Microsoft has not yet had an opportunity to cross-examine any of the third parties that submitted affidavits or gave ex parte deposition testimony to the DOJ or the States or to examine any of the other third parties that the DOJ or the States interviewed during their investigations. Nor has Microsoft had an opportunity to review any of the documents that those third parties produced to the DOJ or the States during their extensive coordinated investigations. 9. Given the breadth of the injunctive relief requested by the DOJ and the States—and the severe adverse impact that such relief would have not only on Microsoft, but also on other companies in the personal computer industry (particularly the thousands of independent software vendors that depend on the integrity of Microsoft’s operating systems as the platform on which they build their products)—Microsoft deserves adequate time to conduct discovery and prepare its response to the DOJ’s and States’ preliminary injunction motions. Microsoft therefore respectfully requests by this motion that this Court (1) enlarge the time for Microsoft to respond to the DOJ’s motion for a preliminary injunction, and (2) enter a scheduling order (a) providing Microsoft with adequate time to conduct discovery and prepare its response to the DOJ’s motion and (b) establishing a schedule of orderly proceedings leading up to a full evidentiary hearing on the DOJ’s preliminary injunction motion. ARGUMENT 10. Local Rule 205(c) provides that a defendant ordinarily must serve and file its opposition to an application for a preliminary injunction "accompanied by all affidavits on which the defendant intends to rely" within "five days after service of the application." That five-day time period is not absolute, however, and may be enlarged by the Court in the exercise of its discretion. See Barnstead Broadcasting Corp. v. Offshore Broadcasting Corp., 869 F. Supp. 35, 39 n.2 (1994) (noting that court enlarged response time despite Local Rule 205(c)’s requirement). Local Rule 205(d) similarly provides: "On request of the moving party together with a statement of the facts which make expedition essential, a hearing on an application for a preliminary injunction shall be set by the Court no later than 20 days after its filing, unless the Court earlier decides the motion on the papers or makes a finding that a later hearing date will not prejudice the parties." The circumstances of this case clearly warrant a significant enlargement of the time periods set out in Local Rules 205(c) and (d). 11. As an initial matter, it is important to bear in mind that the cases that the DOJ and States have filed are different from the contempt proceedings that the DOJ commenced in October 1997 under the Consent Decree. Having brought plenary actions under Sections 1 and 2 of the Sherman Act, the DOJ and the States now must prove, among other things, the relevant product and geographic markets and the ability of Microsoft to exercise monopoly power in such markets. Those matters alone in this case will require extensive pre-trial discovery (including discovery of expert economists) and lengthy evidentiary presentations at trial. Microsoft now is entitled to an opportunity to rebut the assertions of the DOJ and the States on those and all other issues and the products of their coordinated investigations on which they rely. These endeavors merit and require the amounts of time and attention provided in the schedule proposed below. 12. Neither the DOJ nor the States have identified a condition of urgency that requires this Court to consider their preliminary injunction motions on a highly expedited schedule. Although the DOJ requests "an expedited briefing schedule and an immediate hearing on its motion for a preliminary injunction" (DOJ Mem. at 13), the DOJ does not identify anything that is going to happen in the next few months that it contends requires such expedition. In addition, the DOJ does not provide "a statement of the facts" that make it "essential" for the Court to hold a hearing on its motion within 20 days pursuant to Local Rule 205(d). Nor does the DOJ explain how it would be prejudiced by a later hearing date. 13. The DOJ (and presumably the States) have been aware of Microsoft’s plans to release Windows 98 for more than a year given that those plans have been a matter of public knowledge. The DOJ and the States nevertheless waited to file their complaints until the very day that Microsoft made Windows 98 available to computer manufacturers. In light of this delay in filing their complaints, the DOJ and the States are in an exceedingly poor position to contend (and they do not expressly do so in their motion papers) that they would be prejudiced by a thorough consideration of their motions for a preliminary injunction based on a complete evidentiary record. 14. In contrast, Microsoft would be severely prejudiced if it were forced to respond to the DOJ’s and States’ motions without a reasonable opportunity to conduct discovery and prepare its response. The DOJ and States have had many months to assemble evidence from third parties and draft their voluminous papers. To rebut the DOJ’s and States’ arguments on the four factors that must be shown to obtain a preliminary injunction and to provide this Court with an adequate factual basis on which to rule on the DOJ’s and States’ motions, Microsoft should be afforded ample time to conduct discovery, develop supporting evidence and prepare its opposition papers. Indeed, requiring Microsoft to respond to the veritable mountain of papers filed by the DOJ and the States in a scant five days would be grossly unfair. As the court held in FTC v. Atlantic Richfield Co., No. 90-1657, 1990 WL 117290, at *1 (D.D.C. Aug. 3, 1990), "order[ing] defendants to immediately counter the Government’s extensive allegations would be unreasonable" given that "plaintiff’s motion for preliminary injunction concerns complex factual and legal issues which [the Government] has had ten months to consider and develop." (A copy of that opinion is annexed hereto as Exhibit A.) PROPOSED SCHEDULE 15. Given the number and breadth of the allegations raised by the DOJ’s and States’ motions and the unprecedented and far-reaching nature of the relief they are seeking—which is substantially all of the relief they seek as a permanent injunction following a full trial on the merits—Microsoft proposes that the Court adopt the following schedule in advance of a full evidentiary hearing on the DOJ’s and States’ preliminary injunction motions. This schedule assumes that the DOJ and the States will not require any additional discovery in support of their motions for a preliminary injunction inasmuch as they have been investigating these issues for many months—in the DOJ’s case, for almost two years.
This schedule would permit the DOJ’s and States’ motions to be resolved in a timely but orderly and well-informed manner without prejudicing any of the parties to this action. CONCLUSION 16. For the foregoing reasons, Microsoft respectfully requests that this Court (1) enlarge the time for Microsoft to respond to the DOJ’s motion for a preliminary injunction and (2) enter a scheduling order (a) providing Microsoft with adequate time to conduct discovery and prepare its response to the DOJ’s motion and (b) establishing a fair and reasonable schedule for further proceedings in advance of a full evidentiary hearing on the DOJ’s pending preliminary injunction motion. Dated: New York, New York May 21, 1998
CERTIFICATE OF SERVICE I hereby certify that on this 21st day of May, 1998, I caused true and correct copies of the foregoing Defendant’s Motion for an Enlargement of the Time to Respond to Plaintiff’s Motion for Preliminary Injunction and for Entry of a Scheduling Order Providing Defendant with Adequate Time to Conduct Discovery Before Filing Its Response to be served by facsimile and overnight courier upon: A. Douglas Melamed, Esq. Phillip R. Malone, Esq.
______________________ IN THE UNITED STATES DISTRICT COURT
[PROPOSED] ORDER UPON CONSIDERATION OF the Defendant’s Motion for an Enlargement of the Time to Respond to Plaintiff’s Motion for a Preliminary Injunction and for Entry of a Scheduling Order Providing Defendant with Adequate Time to Conduct Discovery Before Filing Its Response, and it appearing to the Court that such an Order is necessary and appropriate to provide defendant with sufficient time to respond to plaintiff’s motion for a preliminary injunction, IT IS HEREBY ORDERED that defendant’s motion for an enlargement of the time to respond to plaintiff’s motion for preliminary injunction is GRANTED; IT IS FURTHER ORDERED that the following schedule shall apply to plaintiff’s motion for a preliminary injunction: (i) discovery on issues relevant to plaintiff’s motion for a preliminary injunction shall commence immediately and conclude 180 days following the entry of this Order, (ii) Microsoft Corporation shall file its response to plaintiff’s motion for a preliminary injunction within 210 days following the entry of this Order, and (iii) plaintiff shall file its reply in support of its motion within 224 days following the entry of this Order; and IT IS FURTHER ORDERED that the Court thereafter will schedule an evidentiary hearing on plaintiff’s motion for a preliminary injunction. Dated: Washington, D.C. May __, 1998 SO ORDERED:
Please serve copies of Order on: Phillip R. Malone William H. Neukom James R. Weiss Richard J. Urowsky
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