Microsoft deal with Justice Department approved by court

In November 2002 US District Judge Colleen Kollar-Kotelly accepted most provisions of the proposed settlement to the dispute between Microsoft and the US Government that had then been running for four years.

Massachusetts is the only state still fighting against the settlement terms. It appealed the granting of judicial approval to the settlement, arguing that the District Court had abused its discretion by accepting some terms put forward by Microsoft, while rejecting others put forward by opposing Attorneys General.

Two industry groups, the Computer and Communications Industry Association (CCIA) and the Software and Information Industry Association (SIIA) had also lodged an appeal, arguing against an earlier ruling that denied them the chance to bring their own appeal of the settlement.

The settlement

Under the terms of the settlement, Microsoft is still allowed to tie software such as web browser, e-mail client and media player with Windows. However, it is not allowed to enter into exclusive agreements or retaliate against computer manufacturers using rival software products.

The company is also obliged to license its software to manufacturers on uniform terms for five years, and to allow both manufacturers and consumers to remove icons for Windows features and to create programs utilising the integrated Windows functions.

The decision specifically requires Microsoft to ensure that rival browsers can interoperate with Windows in the same way that its own servers do.

In practical terms, Judge Kollar-Kotelly receives progress reports on the settlement every six months, the latest of which (in April) again raised concerns that the terms of the license offered by Microsoft were too restrictive.

The Appeal

Of the nine US states that refused to sign the 2001 settlement at the time, the only one still fighting was Massachusetts. The latest stage of the States' appeal against the settlement was heard in November, but the ruling issued yesterday effectively puts an end to any further argument.

According to the ruling, approved unanimously by six appellate judges at the US Court of Appeals for the District of Columbia Circuit: "The order approving the consent decree in the public interest is affirmed". The district court had not abused its discretion.

With regard to the CCIA and SIIA, the court agreed that they should be allowed to bring their own appeal against the terms of the settlement, but on consideration of their arguments against the settlement the court said: "We find no merit in any of CCIA's and SIIA's objections, substantive or procedural. We therefore uphold the district court's approval of the consent decree as being in the public interest."

Microsoft welcomed the victory. According to Brad Smith, senior vice president and leading lawyer with the company:

"Of all the steps we've taken over the past two years, this is the most important step in resolving our legal issues and moving forward. Today's unanimous decision sends a clear and emphatic message that the settlement reached two years ago is a fair and appropriate resolution of these issues."

Smith continued:

"At the heart of this case was the question of whether Microsoft should be required to remove software code from our products, or provide multiple versions of our products with certain features removed. This unanimous decision clearly states that removing code would be a huge step backwards for consumers and for the industry as a whole."

The Massachusetts Attorney General, CCIA and SIIA have yet to comment.