The introduction of Windows XP at the end of October will be a real test of whether Microsoft can put its continuing legal difficulties behind it. It is being suggested that the US government should seek an injunction to prevent the launch, but the downturn has created doubts about the wisdom of attacking a successful tech firm.
It is hoped that Windows XP will boost PC sales.
The case of USA v Microsoft initially went disastrously wrong for Microsoft.
Judge Jackson, who heard the case in the US Federal District Court, first made findings of fact in which he was scathing about Microsoft's conduct; he then issued conclusions of law in which he found that Microsoft had committed a variety of illegal actions and he ordered that Microsoft should be broken up.
The case then went to the US Court of Appeals, which found in Microsoft's favour on many points. In particular, the Court of Appeals found that Judge Jackson had engaged in misconduct by talking to several reporters.
As a result, the Court of Appeal threw out Judge Jackson's order that Microsoft be broken up. The case is supposed to go back to a new judge in the US District Court for a possible re-examination of some issues and the penalties.
However, Microsoft has applied for permission to bring an appeal to the US Supreme Court, arguing that, given Judge Jackson's misconduct, the Court of Appeal should have set aside his findings of fact and conclusions of law as well as the break-up order. If this is successful, then the US Justice Department might have to retry the whole case.
Microsoft's market power is based upon its intellectual property rights; it owns the copyright in the Windows program, which is used as an operating system by 90 per cent of the world's Intel-compatible PCs. This monopoly is not illegal; it is only when Microsoft abuses this monopoly position and harms consumers that Microsoft has broken the law.
If Microsoft does not succeed in its appeal to the Supreme Court, new remedies will have to be imposed on Microsoft in respect of those breaches of the law. One concerns Microsoft's bundling of Internet Explorer from Windows. The US Court of Appeals did not necessarily object to Microsoft selling two programs for the price of one but it did object to the "commingling" of code between them.
Windows XP contains an instant messaging service, a media player and other "add-on" programs. Critics of Microsoft suggest that the US Justice Department should seek an injunction to prevent the "commingling" of these programs code with that of Windows XP.
One point which the US Court of Appeals held against Microsoft was in relation to its claim that its intellectual property rights in its Windows programs gave it an absolute right to use those rights without worrying about antitrust liability. The Court of Appeals rejected this claim.
This rejection gives a boost to those who want to question the use of intellectual property rights on the internet.
Much intellectual property can be easily converted into electronic data and distributed quickly, cheaply and conveniently online. This should be good news for consumers, but not for the expensive distribution chains and shops that sell CDs, DVD and packaged software.
The US Justice Department has commenced an antitrust investigation into two internet music systems, Pressplay and MusicNet, which are joint ventures backed by five major record labels and expected to be introduced in the autumn. This investigation is expected to examine how these major record companies are using their intellectual property rights to control online distribution.
Denis Kelleher is a practising barrister and co-author of Information Technology Law in Ireland
