Appeals Court OKs Microsoft Settlement

Article excerpt

WASHINGTON _ Microsoft Corp., beset by battles with government regulators, won a legal victory Friday when a federal appeals court approved a settlement over anticompetitive marketing practices _ and rebuked a federal judge who emerged as a powerful critic of the computer software maker.

The U.S. Court of Appeals for the District of Columbia Circuit said a lower court judge should not have rejected an antitrust settlement between the Justice Department and Microsoft, the largest personal computer software company.

The pact required Microsoft to alter contracts with personal computer manufacturers that allegedly shut out competing operating system software.

More significantly, the appeals court disqualified U.S. District Judge Stanley Sporkin, saying he exceeded his authority by attempting to broaden the case. The three-member appeals court returned the case to a different lower court judge with a recommendation for approval.

Wall Street welcomed the development, sending Microsoft stock up $2.12 to close at $87 a share on the Nasdaq Stock Market on heavy volume of 5.8 million shares.

Legal experts said the outcome wasn't surprising given the controversial nature of Sporkin's decision, which the Justice Department earlier called "an invitation to anarchy in the enforcement of antitrust law." Sporkin, in a brief telephone interview, declined comment, saying he was still reading the opinion.

But the significance could be overshadowed by a new Justice Department antitrust investigation of Microsoft, announced last week, into its proposed on-line network and software patent infringement agreements.

"If the government takes action on the network and patents, then this decision is not of significance for the industry," said Gary Reback, a Palo Alto, Calif.-based attorney representing software companies highly critical of Microsoft.

Just last month, Microsoft dropped its planned $2 billion merger with personal finance software Intuit Inc. after the Justice Department sued to block the merger.

Kimberly Ellwanger, a senior corporate attorney for Microsoft, said the company was "absolutely delighted with today's decision," which resolves a major portion of the government's 4-year investigation of its business practices.

At issue was so-called "consent decree" the Justice Department and Microsoft reached last July concerning Microsoft's licensing agreements with personal computer makers. …