DOJ v. MSFT: Appeals Court Stays Preliminary Injunction as to Win98

(May 13, 1998)   The U.S. Court of Appeals for the District of Columbia issued an Order staying Judge Thomas Penfield Jackson's preliminary injunction, as it applies to Windows 98.  Microsoft will release Win98 to computer manufacturers on May 15.  The Appeals Court has not yet ruled on Microsoft's appeal of the entire preliminary injunction.

Microsoft is now not barred by the present action from selling its Windows 98 software, which integrates Microsoft Internet Explorer (MSIE) browsing functions with other software.  The ruling was reached unanimously by the three judge panel, and released late Tuesday in the form of a two page Order.

The Appeals Court explained its reason for granting the stay as follows:

Whatever the United States's chances of winning permanent injunctive relief with respect to Windows 95 in the proceeding currently in the district court, they appear very weak with respect to Windows 98.  The United States presented no evidence suggesting that Windows 98 was not an "integrated product: and thus exempt from the prohibitions of Section IV(E)(i).  (So far as we know, it presented no evidence at all about Windows 98, and at oral argument appeared quite indeterminate as to whether it had any claim that the preliminary injunction applied to it.)  To the extent that the preliminary injunction awards the United States relief to which it has made no effort to show an entitlement under the consent decree, we must grant the stay.

Microsoft is pleased with the Order.  "We think this ruling is good news for consumers," said William H. Neukom, Microsoft SVP for law and corporate affairs in a press release. "We're gratified that the Court acted so promptly and agreed with our position in staying this unsupportable aspect of the preliminary injunction."  He added that "We don't believe there is any legal basis for blocking or delaying Windows 98, and there certainly is no consumer benefit from denying the latest technology to millions of American consumers."

The current Department of Justice (DOJ) action could soon become irrelevant.  The action is based upon an alleged violation of the anti-tying section of the original 1995 Consent Decree between Microsoft and the DOJ.  The Appeals Court Order states that the Windows 98 does not violate that section.  And even if the Appeals Court were to rule that the sale of Windows 95 with MSIE violates the consent decree, it would have little impact, because Microsoft will not want to sell many units of Win95 once Win98 is out.

However, the DOJ is contemplating filing yet another legal action against Microsoft based on another legal theory.  The announcement may come this Thursday.

Also, Sun Microsystems, which sued Microsoft last October alleging various trademark violations and other claims pertaining to Java, filed a motion on Tuesday in that action asking that Microsoft be enjoined from distributing Windows 98.

The contents of that motion are not widely known.  The motion was filed under seal.  Tech Law Journal has not obtained a copy.