IN THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

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No. 97-5343

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UNITED STATES OF AMERICA,

Petitioner-Appellee,

v.

MICROSOFT CORPORATION,

Respondent-Appellant.

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ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

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RESPONSE OF THE UNITED STATES TO APPELLANT

MICROSOFT'S MOTION FOR EXPEDITED CONSIDERATION AND

FOR AN EXPEDITED BRIEFING SCHEDULE

In its December 18, 1997, Order requiring the United States to respond to Appellant Microsoft's Motion For Expedited Consideration And For An Expedited Briefing Schedule ("Motion"), this Court stated "it appears that this matter will be expedited" and requested the United States "address any reason that [the appeal] not be expedited to the degree sought by appellant." Order (Dec. 18, 1997).

1. Microsoft has not offered the requisite "strongly compelling" "reasons" for priority on this Court's docket. Despite its claim that the preliminary injunction was procedurally infirm and will cause it irreparable harm, Microsoft neither requested further relief from the district court nor sought a stay of its order. Microsoft's failure to seek a stay pending appeal poignantly demonstrates that the district court's preliminary injunction imposes on Microsoft no significant hardship, let alone threatens serious irreparable harm that might warrant accelerating the appellate process.

Indeed, Microsoft's construction of the preliminary injunction imposes on it no burden at all. According to Microsoft, the district court required it to provide Original Equipment Manufacturers ("OEMs") with two options to a license that compels an OEM to take Internet Explorer 3 along with Windows 95 (the preexisting conditioned license). First, an OEM may license what Microsoft itself characterizes as a "patently deficient" version of Windows 95. Motion at 5. Second, an OEM may license a version of Windows 95 that is over two years old. See Microsoft Telephone Press Conference Tr. 2-3 (Dec. 15, 1997) (attached as Exhibit 1). As Microsoft concedes, neither option will be regarded by OEMs as commercially viable. See id. at 6-7, 14; Kempin Dep. ¶ 10 (lodged by Microsoft Dec. 9, 1997) ("I am not aware of any interest among OEMs in installing outmoded versions of Windows 95."). Thus, far from "directing" Microsoft to "license[] a degraded product," Motion at 5, Microsoft's reading of the injunction ensures that it will not license OEMs anything other than exactly what Microsoft wishes to license. Microsoft's interpretation of the injunction's operation with regard to Internet Explorer 4 similarly imposes no hardship, as Microsoft reads the order simply to maintain the status quo.

Although we disagree with Microsoft's interpretation of the preliminary injunction, the United States believes that Microsoft could comply with it by, among other things, implementing trivial modifications to the software it licenses to OEMs that includes Windows 95 (known as "OEM Service Releases" or "OSRs"). By "uninstalling" Internet Explorer from Windows 95, which Microsoft permits end users who have purchased a computer loaded with the most recent OSR release to accomplish by reloading Internet Explorer 3 and invoking the "Add/Remove Programs" utility, Microsoft could deactivate browser functionality without impairing the underlying operating system. Microsoft, in recent public statements, has confirmed that this form of compliance with the district court's order could be implemented with ease. See David Bank & Dean Takahashi, Microsoft Seeks Alternative Ways to Comply With Court, Wall St. J., Dec. 19, 1997, at B4 (reporting that Microsoft Vice President Brad Chase "conceded there are simple ways to deactivate Internet Explorer"). Microsoft, then, can point to no substantial burden that would flow from adoption of either party's view of the injunction's proper scope.

Nor is there merit to Microsoft's claim, see Motion at 15, that the possibility the preliminary injunction might be read to apply to its anticipated Windows 98 release justifies highly-expedited proceedings. Microsoft has publicly taken the position that the issuance of the preliminary injunction "will not affect the launch of Windows 98 in the first half of 1998." Microsoft Appeals Preliminary Injunction (Dec. 15, 1997) [http://www.microsoft.com/

corpinfo/press/1997/Dec97/12-15doj.htm]. Indeed, Microsoft represented to this Court that any concern that the injunction might impact on Windows 98 amounts to "unfounded" "speculation." Motion at 15. Speculation cannot support a claim of irreparable harm. See Wisconsin Gas Co. v FERC, 758 F.2d 669, 674 (D.C. Cir. 1985) (per curiam).

To be sure, the district court in the course of further proceedings might reject Microsoft's construction of the injunction. In that event, Microsoft would be free to forestall any asserted irreparable injury by seeking a stay pending appeal from the district court and, if necessary, from this Court -- although, as explained above, the injunction as read by the United States threatens no such harm. But what Microsoft cannot do, yet sought to accomplish here by declining to request a stay pending appeal, is to manufacture the very circumstances that it erroneously claims warrant expedition.

2. Nonetheless, if the Court determines that briefing should go forward on the highly- expedited schedule proposed by Microsoft, with Microsoft's Opening Brief to be filed within 21 days of issuance of a briefing order, the United States would be prepared to file its Appellee Brief 21 days thereafter. If Microsoft is allowed additional time in which to file its Opening Brief, we request a briefing schedule allowing the United States to file its brief 30 days after the filing of Microsoft's brief. In either event, Microsoft's Reply Brief should be due 7 days after the filing of the United States' brief.

The United States has not decided whether it will file a cross appeal. The United States accordingly requests that any briefing schedule set by the Court provide that, if the United States notices a cross appeal, it may file its joint Appellant/Appellee brief by the date on which its Appellee brief otherwise would be due, and that Microsoft be given the same amount of time the court authorizes between the filing of Microsoft's Opening Brief and the filing of the United States' brief in which to file its joint Reply/Appellee Brief. In that event, the United States should be required to file its Cross Appeal Reply Brief 7 days thereafter.

Respectfully submitted.

Of Counsel:

CHRISTOPHER S CROOK

PHILLIP R. MALONE

STEVEN C. HOLTZMAN

PAULINE T. WAN

KARMA M. GIULIANELLI

MICHAEL C. WILSON

SANDY L. ROTH

JOHN F. COVE, JR.

Antitrust Division

U.S. Department of Justice

450 Golden Gate Avenue

San Francisco, CA 94102

JOEL I. KLEIN

Assistant Attorney General

A. DOUGLAS MELAMED

Deputy Assistant Attorney

General

CATHERINE G. O'SULLIVAN

MARK S. POPOFSKY

Attorneys

Antitrust Division

U.S. Department of Justice

601 D Street, NW

Washington, DC 20530

(202) 514-3764

December 22, 1997

CERTIFICATE OF SERVICE

I hereby certify that on December 22, 1997, I caused the foregoing RESPONSE OF THE UNITED STATES TO APPELLANT MICROSOFT'S MOTION FOR EXPEDITED CONSIDERATION AND FOR AN EXPEDITED BRIEFING SCHEDULE to be hand-served by courier upon:

Richard Urowsky, Esq. c/o

Sullivan & Cromwell

1701 Pennsylvania Avenue, NW

Washington, DC 20006

and to be served by facsimile upon:

Richard Urowsky, Esq.

Sullivan & Cromwell

125 Broad Street

New York, New York 10004

William H. Neukom, Esq.

Microsoft Corporation

One Microsoft Way

Redmond, Washington 98052

James R. Weiss

Preston Gates Ellis & Rouvelas Meeds

1725 New York Avenue, NW

Washington, DC 20006

_________________________

MARK S. POPOFSKY

Attorney

Antitrust Division

Appellate Section

601 D Street, NW

Washington, DC 20530

EXHIBIT 1