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UNITED STATES AND PLAINTIFF STATES JOINT PRETRIAL STATEMENT Pursuant to Local Rule 209(b), the Courts Amended Scheduling Order filed September 14, 1998, and the proposed Second Amended Scheduling Order filed with the Court October 6, 1998, the United States and the Plaintiff States hereby file their Joint Pretrial Statement. I. STATEMENT OF THE CASE
Plaintiffs allege in their Complaints and will prove at trial that Microsoft, the dominant supplier of personal computer desktop operating systems for more than 15 years, has engaged in a pattern of anticompetitive conduct that has illegally preserved its dominance of the PC operating system market and that threatens illegally to extend that dominance to other markets. As the Court observed in the hearing on September 3, 1998, this case essentially involves three broad series of allegations: that Microsoft has maintained its operating system monopoly through a variety of exclusionary acts and predatory conduct; that it has unreasonably restrained competition through a variety of unreasonable restraints of trade, including tying and other exclusionary agreements; and that it has attempted to monopolize the market for Internet browsers. Tr. at 9. Plaintiffs will establish inter alia that Microsoft has recognized and illegally attempted to thwart two recent developments in the software industry that have the potential to erode the applications programming barrier to entry that protects Microsofts monopoly position, and thereby ultimately to threaten Microsofts PC operating system monopoly. Those developments are Internet browsers (primarily Netscapes Navigator browser), which are used to access and view material on the ever-expanding World Wide Web, and Java. Plaintiffs proof at trial will show that, among other actions taken to protect its Windows monopoly, Microsoft has engaged in a pattern of anticompetitive conduct to eliminate the potential threats posed by Netscape and Java. Microsoft entered into a series of anticompetitive agreements with customers and competitors to restrict the distribution and use of non-Microsoft Java and to substitute the use of Microsofts version of Java. Microsoft also actively undertook to eliminate Netscape as a viable browser supplier, thereby eliminating Netscapes distribution of Java and forestalling Netscapes potential as a platform that could erode the primary barrier to entry into operating system competition with Microsoft. Microsoft attempted both to stop Netscape from competing with it altogether, and to eliminate Netscapes ability to compete effectively as a browser supplier through a series of predatory and anticompetitive acts and agreements. Among other things, Microsoft:
Rather than competing legitimately and on the merits, Microsoft has resorted to these and other predatory and anticompetitive agreements and conduct. Microsofts conduct with respect to Java and browsers are examples, and part, of a broad pattern of antitcompetitive conduct designed to eliminate competition, to maintain and strengthen Microsofts core monopoly over PC operating systems, and to monopolize key applications markets. Because Microsofts unlawful practices are continuing and are imposing ongoing harm to competition, plaintiffs filed with their Complaints motions for a preliminary injunction, as well as requests for permanent relief.
Plaintiffs are the United States of America; 19 states: New York, California, Connecticut, Florida, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, New Mexico, North Carolina, Ohio, South Carolina, Utah, West Virginia, and Wisconsin; and the District of Columbia. The defendant is Microsoft Corporation.
This Court has jurisdiction over the federal claims alleged in the Complaints pursuant to Section 4 of the Sherman Act, 15 U.S.C. § 4, and 28 U.S.C. §§ 1331, 1337. The Court has supplemental jurisdiction over the various state-law claims alleged in the States Complaint pursuant to 28 U.S.C. § 1367(a). II. PLAINTIFFS STATEMENT OF CLAIMS Plaintiffs Complaints advance four separate claims that Microsoft has violated the federal antitrust laws:
The Plaintiff States also assert, in addition to the federal antitrust claims that are discussed above, parallel claims under their state antitrust and/or unfair competition and related laws (See State Comp. ¶¶ 98-141).1 III. PLAINTIFFS STATEMENT OF DEFENSES The Plaintiff States have raised the following defenses to Microsofts counterclaims: That the counterclaims (1) fail to state a claim upon which relief may be granted; (2) are barred for lack of subject matter jurisdiction; (3) do not present an actual case or controversy; (4) do not present any claim which is ripe for judicial determination; (5) are not appropriately before this Court because any issue raised therein is implicated by the Sixth and Seventh Affirmative Defenses which Microsoft has already asserted in this action; (6) are barred due to sovereign immunity; (7) are barred due to prosecutorial immunity; and (8) are barred because the filing of the First Amended Complaint is protected by the First Amendment. IV. SCHEDULE OF WITNESSES TO BE CALLED BY PLAINTIFFS Pursuant to Paragraph 7 of the Courts Pretrial Order No. 2, entered August 6, 1998, and Paragraph 2 of the proposed Second Amended Scheduling Order, filed with the Court October 6, 1998, plaintiffs will simultaneously exchange with defendant and file with the Court their Schedule of Witnesses, in the form of an Appendix A to this Pretrial Statement, on October 8, 1998. Pursuant to Paragraph 8 of Pretrial Order No. 2, plaintiffs Schedule of Witnesses will not include rebuttal witnesses to be called after the close of defendants case-in-chief. V. LIST OF EXHIBITS TO BE OFFERED IN EVIDENCE BY PLAINTIFFS Pursuant to Paragraph 4 of the proposed Second Amended Scheduling Order, plaintiffs are exchanging today with defendant a draft list of exhibits to be offered in evidence at trial (as a draft Appendix B to this Pretrial Statement). Also pursuant to Paragraph 4 of the proposed Second Amended Scheduling Order, plaintiffs will exchange with defendant on October 10, 1998, and file with the Court on October 13, 1998, their final List of Exhibits to be Offered in Evidence, in the form of a final Appendix B. VI. PLAINTIFFS DESIGNATION OF DEPOSITION EXCERPTS Pursuant to Paragraphs 4 and 11 of Pretrial Order No. 2, and Paragraph 5 of the proposed Second Amended Scheduling Order, plaintiffs will serve on defendant and file with the Court their deposition designations, in the form of an Appendix C to this Pretrial Statement, at the same time as plaintiffs are required to file the direct examinations of their trial witnesses, currently October 13, 1998. VII. PLAINTIFFS ITEMIZATION OF DAMAGES Plaintiffs Complaints do not seek monetary damages against defendant, although the Plaintiff States do seek certain penalties pursuant to their state law claims. VIII. PLAINTIFFS REQUEST FOR RELIEF In a civil antitrust action brought by the United States, once a defendant has been determined to have violated the antitrust laws, the permanent relief fashioned by the court should accomplish two objectives: it should (1) prevent "a recurrence of the violation," and (2) "eliminate [the violations] consequences." National Society of Prof. Engrs v. United States, 435 U.S. 679, 697 (1978). See also United States v. United States Gypsum Co., 340 U.S. 76, 88 (1950) ("A trial court upon a finding of a conspiracy in restraint of trade and a monopoly has the duty to compel action by the conspirators that will, so far as practicable, cure the ill effects of the illegal conduct, and assure the public freedom from its continuance."). In their Complaints and Motions for Preliminary Injunction, plaintiffs identified certain relief that is immediately necessary to preserve competition in the market for internet browser software.2 Plaintiffs also requested that the Court declare that Microsofts actions had violated the antitrust laws, and "enter such other preliminary and permanent relief as is necessary and appropriate to restore competitive conditions in the markets affected by Microsofts unlawful conduct" and "such additional relief as it may find just and proper." U.S. Compl. ¶¶ 1, 3, 4.3
Depending on the nature and scope of the violations determined by the Court at trial, plaintiffs will seek such additional permanent relief as is necessary to restore competitive conditions and to prevent Microsoft from committing similar violations in the future. To that end, plaintiffs may request that the Court conduct additional proceedings for the purpose of hearing evidence concerning such additional relief. Further proceedings of this kind are common in antitrust actions brought by the United States under the antitrust laws. See, e.g., Ford Motor Co. v. United States, 405 U.S. 562, 571 (1972); United States v. E.I. DuPont De Nemours & Co., 366 U.S. 316, 320 (1961); see also Cascade Natural Gas Corp. v. El Paso Natural Gas Co., 386 U.S. 129, 136-37 (1967). DATED: October 6, 1998
[other signatories omitted] [Certificate of Service omitted]
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