Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-03-05030/USCOURTS-caDC-03-05030-0/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 

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Notice: This opinion is subject to formal revision before publication in the

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 4, 2003 Decided June 30, 2004

No. 02-7155

COMMONWEALTH OF MASSACHUSETTS, EX REL.,

APPELLANT

v.

MICROSOFT CORPORATION,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 98cv01233)

–————

 Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

USCA Case #03-5030 Document #833270 Filed: 06/30/2004 Page 1 of 83
2

No. 03-5030

UNITED STATES OF AMERICA,

APPELLEE

v.

MICROSOFT CORPORATION, ET AL.,

APPELLEES

THE COMPUTER AND COMMUNICATIONS INDUSTRY ASSOCIATION AND

THE SOFTWARE AND INFORMATION INDUSTRY ASSOCIATION,

APPELLANTS

Appeal from the United States District Court

for the District of Columbia

(No. 98cv01232)

–————

Steven R. Kuney argued the cause for appellant Commonwealth of Massachusetts, ex rel., in No. 02-7155. With him on

the briefs were Brendan V. Sullivan, Jr., Thomas F. Reilly,

Attorney General, Attorney General’s Office of the Commonwealth of Massachusetts, and Glenn S. Kaplan, Assistant

Attorney General. John E. Schmidtlein and Nicholas J.

Boyle entered appearances.

Robert H. Bork argued the cause for appellants The Computer and Communications Industry Association, et al., in No.

03-5030. With him on the briefs were Kenneth W. Starr,

Glenn B. Manishin, Stephanie A. Joyce, Mark L. Kovner,

and Elizabeth S. Petrela.

Kenneth W. Starr, Robert H. Bork, David M. Gossett,

Elizabeth S. Petrela, David M. Falk, and Mitchell S. Pettit

were on the brief of amici curiae The Computer and Communications Industry Association, et al., in support of appellant

in No. 02-7155. Glenn B. Manishin entered an appearance.

USCA Case #03-5030 Document #833270 Filed: 06/30/2004 Page 2 of 83
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Deborah P. Majoras, Deputy Assistant Attorney General,

U.S. Department of Justice, argued the cause for appellee

United States of America in No. 03-5030. With her on the

brief were R. Hewitt Pate, Assistant Attorney General, and

Catherine G. O’Sullivan and David Seidman, Attorneys.

Michael Lacovara and Steven L. Holley argued the causes

for appellees. With them on the briefs were John L. Warden, Richard J. Urowsky, Richard C. Pepperman II, Bradley

P. Smith, Thomas W. Burt, David A. Heiner, Jr., Charles F.

Rule, and Dan K. Webb.

Before: GINSBURG, Chief Judge, and EDWARDS, SENTELLE,

RANDOLPH, ROGERS, and TATEL, Circuit Judges.

Opinion for the Court filed by Chief Judge GINSBURG.

I. Background TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT 5

II. Commonwealth of Massachusetts v. Microsoft,

No. 02-7155TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT 10

A. Remedial Proposals TTTTTTTTTTTTTTTTTTTTTTTTT 11

1. Commingling TTTTTTTTTTTTTTTTTTTTTTTTTTTT 11

2. Java deceptionTTTTTTTTTTTTTTTTTTTTTTTTTTT 20

3. Forward-looking provisions TTTTTTTTTTTTTTT 24

a. Disclosure of APIs TTTTTTTTTTTTTTTTTTTT 24

b. Disclosure of communications protocols TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT 35

4. Web ServicesTTTTTTTTTTTTTTTTTTTTTTTTTTTT 39

5. Market Development ProgramsTTTTTTTTTTTT 42

6. Open Source Internet Explorer TTTTTTTTTTTT 44

7. Java must-carry TTTTTTTTTTTTTTTTTTTTTTTTT 50

B. Cross-cutting Objections TTTTTTTTTTTTTTTTTTTTT 51

1. ‘‘Fruits’’ TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT 51

2. Presumption TTTTTTTTTTTTTTTTTTTTTTTTTTTT 54

III. CCIA and SIIA v. United States & Microsoft,

No. 03-5030TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT 55

A. Intervention TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT 55

B. The Public Interest Finding TTTTTTTTTTTTTTTTTT 59

1. Issues overlapping Massachusetts’ case TTTT 61

a. ComminglingTTTTTTTTTTTTTTTTTTTTTTTTT 62

b. Java TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT 63

USCA Case #03-5030 Document #833270 Filed: 06/30/2004 Page 3 of 83
4

c. Disclosure of APIs TTTTTTTTTTTTTTTTTTTT 65

d. Adequacy of definitionsTTTTTTTTTTTTTTTT 67

e. ‘‘Fruits’’ TTTTTTTTTTTTTTTTTTTTTTTTTTTTT 69

2. Non-overlapping issues TTTTTTTTTTTTTTTTTTT 70

a. Enforcement TTTTTTTTTTTTTTTTTTTTTTTTT 70

b. User interfaceTTTTTTTTTTTTTTTTTTTTTTTT 73

c. Anti-retaliation TTTTTTTTTTTTTTTTTTTTTTT 75

C. Procedural ClaimsTTTTTTTTTTTTTTTTTTTTTTTTTTT 75

1. Government’s disclosure TTTTTTTTTTTTTTTTTT 76

2. Microsoft’s disclosureTTTTTTTTTTTTTTTTTTTTT 81

IV. Conclusion TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT 83

* * *

GINSBURG, Chief Judge: In United States v. Microsoft

Corp., 253 F.3d 34 (D.C. Cir. 2001) (Microsoft III), we

affirmed in part and reversed in part the judgment of the

district court holding Microsoft had violated §§ 1 and 2 of the

Sherman Antitrust Act, vacated the associated remedial order, and directed the district court, on the basis of further

proceedings, to devise a remedy ‘‘tailored to fit the wrong

creating the occasion’’ therefor, id. at 107, 118-19. On remand, the United States and certain of the plaintiff states

entered into a settlement agreement with Microsoft. Pursuant to the Antitrust Procedures and Penalties (Tunney) Act,

15 U.S.C. §§ 16(b)-(h), the district court held the parties’

proposed consent decree, as amended to allow the court to act

sua sponte to enforce the decree, was in ‘‘the public interest.’’

Meanwhile, the Commonwealth of Massachusetts and several

other plaintiff states refused to settle with Microsoft and

instead litigated to judgment a separate remedial decree.

The judgment entered by the district court in their case

closely parallels the consent decree negotiated by the United

States.

Massachusetts alone appeals the district court’s entry of

that decree. It argues the district court abused its discretion

in adopting several provisions Microsoft proposed while rejecting several others Massachusetts and the other litigating

states proposed. Massachusetts also challenges a number of

the district court’s findings of fact. Based upon the record

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before us in Microsoft III and the record of the remedial

proceedings following remand, we affirm the district court’s

remedial decree in its entirety.

The Computer and Communications Industry Association

(CCIA) and the Software and Information Industry Association (SIIA) separately appeal the district court’s denial of

their motion, following the district court’s approval of the

consent decree between the United States and Microsoft, to

intervene in the case for the purpose of appealing the district

court’s public-interest determination. They argue the factors

the district court was to consider in determining whether to

allow them to intervene weighed in their favor. We agree

and reverse the district court’s denial of their motion to

intervene for the purpose of appealing that court’s publicinterest determination.

CCIA and SIIA make various arguments — some overlapping those raised by Massachusetts — that the consent

decree between the United States and Microsoft is not in the

public interest. They also argue the parties did not satisfy

the procedural requirements of the Tunney Act. For these

reasons, they seek vacatur of the district court’s order approving the consent decree and a remand for entry of ‘‘a

proper remedy.’’ 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.

I. Background

The facts underlying the present appeals have been recounted several times. See New York v. Microsoft Corp., 224

F. Supp. 2d 76 (D.D.C. 2002) (States’ Remedy); United States

v. Microsoft Corp., 231 F. Supp. 2d 144 (D.D.C. 2002) (U.S.

Consent Decree); see also Microsoft III. We therefore limit

our discussion of the facts and of the proceedings to a brief

review of events prior to our remand in 2001 and a more

detailed account of what has transpired since then.

In May 1998 the United States filed a complaint against

Microsoft alleging violations of federal antitrust laws. At the

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same time, a number of states and the District of Columbia

filed a complaint against Microsoft alleging violations of both

federal and state antitrust laws. The two complaints, which

the district court consolidated, sought various forms of relief,

including an injunction against certain of Microsoft’s business

practices.

After a lengthy bench trial the district court entered findings of fact, United States v. Microsoft Corp., 84 F. Supp. 2d

9 (D.D.C. 1999) (Findings of Fact), and held Microsoft had

violated §§ 1 and 2 of the Sherman Act by illegally maintaining its monopoly in the market for ‘‘Intel-compatible PC

operating systems,’’ by attempting to monopolize the browser

market, and by tying its Windows operating system to its

Internet Explorer (IE) browser. United States v. Microsoft

Corp., 87 F. Supp. 2d 30 (D.D.C. 2000) (Conclusions of Law).

The district court also held Microsoft violated the antitrust

laws of the several states. Id. at 56. Based upon its findings

of fact and conclusions of law, the district court decreed that

Microsoft would be split into two separate companies, one

selling operating systems and one selling program applications. See United States v. Microsoft Corp., 97 F. Supp. 2d

59 (D.D.C. 2000) (Remedy I). Microsoft appealed the decisions of the district court, alleging several legal and factual

errors.

We upheld the district court’s ruling that Microsoft violated

§ 2 of the Sherman Act by the ways in which it maintained its

monopoly, but we reversed the district court’s finding of

liability for attempted monopolization, and we remanded the

tying claim to the district court to apply the rule of reason

rather than the rule of per se illegality. See Microsoft III.

We also vacated the district court’s remedial decree, for three

reasons: ‘‘First, [the district court had] failed to hold an

evidentiary hearing despite the presence of remedies-specific

factual disputes’’; ‘‘[s]econd, the court did not provide adequate reasons for its decreed remedies’’; and third, we had

‘‘drastically altered the scope of Microsoft’s liability, and it

[was] for the District Court in the first instance to determine

the propriety of a specific remedy for the limited ground of

liability which we ha[d] upheld.’’ Id. at 107.

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On remand the district court ordered the parties to file a

Joint Status Report. This they did in September 2001,

whereupon the district court ordered them to undertake

settlement discussions. See United States v. Microsoft Corp.,

2001 U.S. Dist. LEXIS 24272 (D.D.C. Sept. 28, 2001). As a

result, the United States and the States of Illinois, Louisiana,

Maryland, Michigan, New York, North Carolina, Ohio, and

Wisconsin, and the Commonwealth of Kentucky, agreed to

enter into a consent decree with Microsoft. On November 6,

2001 the settling parties filed a Revised Proposed Final

Judgment, 1 Joint Appendix in No. 03-5030 (hereinafter J.A.

(I)) at 113-30, for the district court’s review. The States of

California, Connecticut, Florida, Iowa, Kansas, Minnesota,

Utah, and West Virginia, the Commonwealth of Massachusetts, and the District of Columbia refused to enter into the

consent decree. The district court therefore bifurcated the

remaining proceedings: On ‘‘Track I’’ was the district court’s

‘‘public interest’’ review of the proposed consent decree, as

required by the Tunney Act whenever the Government proposes to settle a civil antitrust case, see 15 U.S.C. § 16(e); on

‘‘Track II’’ was the continuing litigation between the nonsettling states (hereinafter ‘‘the States’’) and Microsoft concerning the remedy.

Track I

On November 15, 2001 the Government filed its Competitive Impact Statement (CIS), 1 J.A. (I) at 136-202, as required

by the Act, 15 U.S.C. § 16(b), and on November 28, 2001 it

published in the Federal Register both the Revised Proposed

Final Judgment and the CIS for public comment. 66 Fed.

Reg. 59,452 (Nov. 28, 2001). In February 2002 the Government filed with the district court its response to the more

than 32,000 public comments it had received, along with a

Second Revised Proposed Final Judgment, 6 Joint Appendix

in No. 02-7155 (hereinafter J.A. (II)) at 3664-81, reflecting

modifications agreed to by the settling parties in the light of

the public comments. The public comments, which the Government made available at its website in March 2002, were

subsequently published in the Federal Register as well. 67

Fed. Reg. 23,654 (May 3, 2002). The Tunney Act also

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requires the defendant to file with the district court ‘‘any and

all written or oral communications TTT with any officer or

employee of the United States’’ relating to the proposed

consent judgment. 15 U.S.C. § 16(g). Microsoft made such

a filing in December 2001 and again in March 2002. See Part

III.C.2.

The Tunney Act provides the district court with several

procedural options to aid it in making its determination

whether the proposed consent decree is in the public interest.

The court may ‘‘take testimony of Government officials or

experts’’ as it deems appropriate, 15 U.S.C. § 16(f)(1); authorize participation by interested persons, including appearances by amici curiae, id. § 16(f)(3); review comments and

objections filed with the Government concerning the proposed

judgment, as well as the Government’s response thereto, id.

§ 16(f)(4); and ‘‘take such other action in the public interest

as the court may deem appropriate,’’ id. § 16(f)(5). The

district court exercised several of these options. It held a

hearing with the purpose of having the parties provide to the

court information it needed to decide whether to approve the

Second Revised Proposed Final Judgment. The district court

denied CCIA’s request to intervene in the case, see id.

§ 16(f)(3), but it did allow CCIA and SIAA to participate in

the hearing as amici curiae. In July 2002 the district court

concluded both the Government and Microsoft had complied

with the requirements of the Tunney Act and held that the

matter was ripe for the court to determine whether the

decree was in the ‘‘public interest.’’ United States v. Microsoft Corp., 215 F. Supp. 2d 1, 23 (D.D.C. 2002) (Tunney Act

Proceedings).

On November 1, 2002 the district court ruled the Second

Revised Proposed Final Judgment would be in the public

interest if modified in one respect: The parties would have to

provide for the district court to ‘‘retain jurisdiction to take

action sua sponte in conjunction with the enforcement of the

decree.’’ U.S. Consent Decree, at 202. This they did in a

Third Revised Proposed Final Judgment, which the district

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court duly entered. United States v. Microsoft Corp., 2002

WL 31654530 (D.D.C. Nov. 12, 2002) (Final Consent Decree).1

On December 20, 2002 CCIA and SIIA filed a joint motion

for leave to intervene, as of right or alternatively by permission, see FED. R. CIV. P. 24, for the purpose of appealing the

district court’s judgment that the consent decree was in the

‘‘public interest.’’ The district court denied their motion,

United States v. Microsoft Corp., 2003 WL 262324 (D.D.C.

Jan. 11, 2003) (Order Denying Intervention), and the movants

now appeal both the district court’s denial of their motion for

leave to intervene and, if allowed, the district court’s publicinterest determination under the Tunney Act.

Track II

Pursuant to the district court’s scheduling order of September 28, 2001, Microsoft and the States submitted competing

remedial proposals in December of that year. This time the

States did not propose to divide Microsoft but, as discussed in

Part II.A.6, they did include proposals the district court

considered structural in nature, including requirements that

Microsoft offer ‘‘open source licensing for Internet Explorer’’

and ‘‘auction to a third party the right to port Microsoft

Office to competing operating systems.’’ Microsoft objected

to the States’ proposed remedy and offered as an alternative

the Revised Proposed Final Judgment to which it had agreed

in the Track I proceedings. Both sides later submitted

revised proposals. In February 2002 Microsoft submitted the

Second Revised Proposed Final Judgment, and in March the

1 The district court also held the ‘‘public interest’’ standard

made applicable to the Government’s case by the Tunney Act

should be applied to the settlement between the settling states and

Microsoft in order to meet the generally applicable requirement of

circuit law that any consent decree ‘‘fairly and reasonably resolve[ ]

the controversy in a manner consistent with the public interest.’’

New York v. Microsoft Corp., 231 F. Supp. 2d 203, 205 (D.D.C.

2002) (citing Citizens for a Better Env’t v. Gorsuch, 718 F.2d 1117,

1126 (D.C. Cir. 1983)). The district court’s public-interest determination in the settling states’ case is not at issue in the current

appeals.

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States submitted a Second Proposed Remedy (SPR), 6 J.A.

(II) at 3160-3201. The Second Revised Proposed Final Judgment and the SPR are the two proposals the district court

ultimately reviewed.

After an expedited discovery schedule, the hearing on

remedies began in March 2002 and ran for 32 trial days

spanning three months, over which time the court reviewed

written direct testimony and heard live testimony from dozens of witnesses.2

 States’ Remedy, at 87. The district court

issued its findings of fact and its legal conclusions in a

combined opinion. The final judgment in the proceedings on

Track II — that is, the remedy adopted by the district

court — is attached as an appendix to the district court’s

opinion. See States’ Remedy, at 266-77.

Massachusetts alone among the States appeals. We address the Commonwealth’s appeal in Part II below and

CCIA’s and SIIA’s appeal in Part III.

II. Commonwealth of Massachusetts

v. Microsoft, No. 02-7155

We review the district court’s findings of fact for clear

error, United States ex rel. Modern Elec., Inc. v. Ideal Elec.

Sec. Co., 81 F.3d 240, 244 (D.C. Cir. 1996); see also FED. R.

CIV. P. 52(a) (‘‘[f]indings of fact TTT shall not be set aside

unless clearly erroneous’’), but resolve issues of law de novo,

2 The States presented the testimony of thirteen fact witnesses:

Peter Ashkin, James Barksdale, John Borthwick, Anthony Fama,

Richard Green, Mitchell Kertzman, Dr. Carl Ledbetter, Michael

Mace, Steven McGeady, Larry Pearson, David Richards, Jonathan

Schwartz, and Michael Tiemann; and of two expert witnesses: Dr.

Andrew Appel and Dr. Carl Shapiro. Microsoft presented the

testimony of fifteen fact witnesses: Dr. James Allchin, Linda Wolfe

Averett, Scott Borduin, David Cole, Heather Davisson, Brent Frei,

William Gates III, James Thomas Greene, Chris Hofstader, Christopher Jones, Will Poole, W.J. Sanders III, Robert Short, Gregg

Sutherland, and Richard Ulmer; and of four experts: Dr. John

Bennett, Dr. Kenneth Elzinga, Dr. Stuart Madnick, and Dr. Kevin

Murphy.

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Modern Elec., Inc., 81 F.3d at 244. We review the district

court’s decision whether to grant equitable relief only for

abuse of discretion. See Microsoft III, at 105; see also Ford

Motor Co. v. United States, 405 U.S. 562, 573 (district court

‘‘clothed with ‘large discretion’ to fit the decree to the special

needs of the individual case’’).

A. Remedial Proposals

Massachusetts objects to several provisions the district

court included in the remedial decree. The Commonwealth

also appeals the district court’s refusal to adopt certain other

provisions proposed by the States.

1. Commingling

In Microsoft III we upheld the district court’s finding that

Microsoft’s integration of IE and the Windows operating

system generally ‘‘prevented OEMs from pre-installing other

browsers and deterred consumers from using them.’’ 253

F.3d at 63-64. Because they could not remove IE, installing

another browser meant the OEM would incur the costs of

supporting two browsers. Id. at 64. Accordingly, OEMs had

little incentive to install a rival browser, such as Netscape

Navigator. Relying upon the district court’s findings of fact,

we determined that Microsoft took three actions to bind IE to

Windows: (1) it excluded IE from the ‘‘Add/Remove Programs’’ utility; (2) it commingled in the same file code related

to browsing and code used by the operating system so that

removal of IE files would cripple Windows; and (3) it designed Windows in such a manner that, in certain circumstances, a user’s choice of an internet browser other than IE

would be overridden. Id. at 64-65. Although all three acts

had anticompetitive effects, only the first two had no offsetting justification and, therefore, ‘‘consitute[d] exclusionary

conduct[ ] in violation of § 2.’’ Id. at 67. As for overriding

the user’s choice of an internet browser, we held the plaintiffs

had neither rebutted Microsoft’s proffered technical justification nor demonstrated that its justification was outweighed by

the anticompetitive effect. We therefore concluded Microsoft

was not ‘‘liable for this aspect of its product design.’’ Id.

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On remand, turning to the commingling of IE and Windows

code, the district court stated that an appropriate remedy

‘‘must place paramount significance upon addressing the exclusionary effect of the commingling, rather than the mere

conduct which gives rise to the effect.’’ States’ Remedy, at

156. The court was concerned about adopting any remedy

that would require Microsoft to remove Windows software

code — as the States’ proposed remedy would do — based

upon what it perceived to be a very difficult, even if not

‘‘technologically impossible,’’ task. Id. at 157. For instance,

the court found the States did not offer a reasonable method

of distinguishing ‘‘operating system’’ code from ‘‘nonoperating system’’ code, such as code that provides middleware functionality.3

 Id. Moreover, based upon ‘‘testimony of

various [independent software vendors (ISVs)] that the quality of their products would decline if Microsoft were required

to remove code from Windows,’’ the court concluded both

ISVs and consumers would be harmed if Microsoft were

forced to redesign Windows by removing software code. Id.

at 158. Finally, the district court was alert to ‘‘the admonition [in the case law] that it is not a proper task for the Court

to undertake to redesign products.’’ Id.; see also United

States v. Microsoft Corp., 147 F.3d 935, 948 (D.C. Cir. 1998)

(Microsoft II) (‘‘Antitrust scholars have long recognized the

undesirability of having courts oversee product design’’). Accordingly, the district court instead approved the proposed

requirement that Microsoft ‘‘permit OEMs to remove end3 As we explained in Microsoft III, the term ‘‘middleware’’

refers to software products that expose their ‘‘Applications Programming Interfaces,’’ upon which software developers rely in

writing applications. 253 F.3d at 53; see also Findings of Fact

¶ 28, at 17. The middleware at issue in Microsoft III was primarily

web-browsing software. The district court’s remedy in this case,

however, covers a far broader array of middleware. Accordingly,

the district court was at pains to define Microsoft’s middleware and

that of its rivals. See States’ Remedy §§ VI.J, VI.K, VI.M, VI.N, at

275-76. We need not here recount the district court’s extensive

treatment of those definitions, see States’ Remedy, at 112-21, but

the definitions are discussed as needed below.

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user access to aspects of the Windows operating system

which perform middleware functionality.’’ States’ Remedy, at

159. Specifically, § III.H of the decree requires Microsoft to

‘‘[a]llow end users TTT and OEMs TTT to enable or remove

access to each Microsoft Middleware Product or NonMicrosoft Middleware Product TTTT’’ Id. at 270.

Massachusetts maintains the district court erred by addressing the remedy to the exclusionary effect of commingling and not to the commingling itself. In response, Microsoft points out that in the liability proceedings the plaintiffs

were concerned primarily with end-user access and that the

decree originally entered by the district court likewise addressed Microsoft’s binding its middleware to its operating

system; the remedy was to allow both OEMs and end users

to remove access to Microsoft middleware. Remedy I, at 68.

That is why on remand the district court observed that

‘‘[n]othing in the rationale underlying the commingling liability finding requires removal of software code to remedy the

violation.’’ States’ Remedy, at 158. We agree; the district

court’s remedy is entirely consistent with its earlier finding

that ‘‘from the user’s perspective, uninstalling Internet Explorer [with the Add/Remove Programs utility is] equivalent

to removing the Internet Explorer program from Windows.’’

Findings of Fact ¶ 165, at 51.

The district court’s decision to fashion a remedy directed at

the effect of Microsoft’s commingling, rather than to prohibit

commingling, was within its discretion. The end-user access

provision does this, and it avoids the drawbacks of the States’

proposal requiring Microsoft to redesign its software. Allowing an OEM to block end-user access to IE gives the OEM

control over the costs associated with supporting more than

one internet browser. Indeed, had Microsoft not removed IE

from the Add/Remove Programs utility in the first place,

OEMs would have retained a simple and direct method of

avoiding such costs. See, e.g., Direct Testimony of Dr. Stuart

Madnick ¶ 177, 5 J.A. (II) at 2887.

Massachusetts says there is unrebutted testimony in the

record indicating the removal of end-user access is insuffiUSCA Case #03-5030 Document #833270 Filed: 06/30/2004 Page 13 of 83
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cient ‘‘to reduce OEMs’ disincentives to install rival middleware.’’ Not so. The cited testimony is that end-users ‘‘may

accidentally trigger one program when they mean to trigger

another. This is especially so when, under Microsoft’s Proposed Remedy, Windows is allowed to launch Microsoft middleware on a system on which a consumer has not chosen

Microsoft’s program to be the default version of the application.’’ Direct Testimony of Peter Ashkin ¶ 78, 5 J.A. (II) at

3100; see also ¶¶ 77, 79-80, id. at 3100-01. First, this testimony indicates only that removal of end-user access to IE may

not eliminate every last ‘‘accidental’’ invocation of IE, not that

the incidence will not be reduced, as it no doubt will be.

Second, under § III.H.2 end users and OEMs may ‘‘designate

a Non–Microsoft Middleware Product to be invoked in place

of [a] Microsoft Middleware Product TTT in any case where

the Windows Operating System Product would otherwise

launch the Microsoft Middleware Product TTT,’’ States’ Remedy § III.H.2, at 270-71, which apparently provides OEMs a

method to address the conduct about which Massachusetts is

concerned.

Finally, the accidental invocations claimed in the cited

testimony do not reflect the nature of the concerns OEMs

had at the time the district court made its Findings of Fact.

The district court found Microsoft had combined commingling

of code and removal of IE from the Add/Remove Programs

utility in a manner that ensured the presence of IE on the

Windows desktop. See Findings of Fact ¶ 241, at 69. The

lack of any way to remove end-user access to IE — now

squarely addressed in § III.H of the decree — made the IE

icon an ‘‘unavoidable presence’’ on the Windows desktop; that

was what led ‘‘to confusion among novice users.’’ Id. ¶ 217, at

63. More, that is, was involved than the occasional invocation

of IE by accident; IE was always present because Microsoft

prevented OEMs from removing both the code and the enduser’s access to it. The accidental invocations of Microsoft

middleware claimed in the Ashkin testimony — to the extent

not already resolved by § III.H.2 — are hardly likely to

generate the level of support costs OEMs faced when the IE

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icon was on every desktop. Certainly the cited testimony is

no evidence of such significant costs.

The district court fashioned a remedy aimed at reducing

the costs an OEM might face in having to support multiple

internet browsers. The court thereby addressed itself to

Microsoft’s efforts to reduce software developers’ interest in

writing to the Application Program Interfaces (APIs) exposed

by any operating system other than Windows. Far from

abusing its discretion, therefore, the district court, by remedying the anticompetitive effect of commingling, went to the

heart of the problem Microsoft had created, and it did so

without intruding itself into the design and engineering of the

Windows operating system. We say, Well done!

But soft! Massachusetts and the amici claim the district

court nonetheless erred in rejecting a ‘‘code removal’’ remedy

for Microsoft’s commingling, principally insofar as the court

was concerned with ‘‘Microsoft’s ability to provide a consistent API set,’’ which Microsoft referred to as the problem of

Windows’ ‘‘fragmentation.’’4

 They argue that any effort to

keep software developers writing to Microsoft’s APIs — and

thereby avoiding ‘‘fragmentation’’ — is not procompetitive but

rather ‘‘an argument against competition.’’

The district court raised its concern about fragmentation in

connection with the States’ proposal that Microsoft be required to remove its middleware code from the code of its

Windows operating system, as follows:

Microsoft shall not, in any Windows Operating System

Product TTT it distributes TTT Bind any Microsoft Middleware Product to the Windows Operating System unless Microsoft also has available to license, upon the

4 Massachusetts also argues the district court erred insofar as

it rejected the States’ proposal because the proposal did not provide

adequate guidance for determining which code constitutes Microsoft

middleware and was otherwise too difficult technically. The district

court’s findings, however, discussed in part at the outset of this

section, fully support its reasons for rejecting the States’ unbinding

remedy. See States’ Remedy, 245-52; see also id. at 255.

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16

request of any Covered OEM licensee or Third-Party

Licensee, and supports both directly and indirectly, an

otherwise identical but ‘‘unbound’’ Windows Operating

System Product TTTT

SPR § 1, 6 J.A. (II) at 3166. In other words, Microsoft

would be required to make it possible for OEMs and end

users to ‘‘readily remove or uninstall [from Windows] the

binary code’’ of any Microsoft Middleware Product (as that

term is defined in the States’ proposal). Id. §§ 22.d & 22.e, 6

J.A. (II) at 3193. The district court found evidence the

States’ proposal ‘‘would hinder, or even destroy Microsoft’s

ability to provide a consistent API set.’’ States’ Remedy, at

252. This evidence included testimony that it would be

impossible for Microsoft to maintain the same high level

of operating-system balance and stability on which software developers and customers rely. Developers will be

less likely to write software programs to an unstable or

unpredictable operating system based on the risk that

their programs will not function as designed, thereby

reducing customer satisfaction.

Direct Testimony of Scott Borduin ¶ 61, 2 J.A. (II) at 1327.5

The district court concluded, ‘‘The weight of the evidence

indicates the fragmentation of the Windows platform would

be significantly harmful to Microsoft, ISVs, and consumers.’’

States’ Remedy, at 253.

Massachusetts argues the district court’s finding ‘‘ignores

and is at odds with this Court’s holding that Microsoft’s

desire to keep developers focused on its APIs was merely

another way of saying it ‘wants to preserve its power in the

operating system market,’ ’’ citing Microsoft III, at 71. Indeed, as we stated in Microsoft III, ‘‘Microsoft’s only explana5 See also Madnick ¶ 197, 5 J.A. (II) at 2899 (‘‘To the extent

that licensees used the non-settling States’ remedies to create

multiple versions of Windows with differing combinations of APIs,

applications developers and consumers would lose one of the greatest benefits of Windows — a platform for applications that supports

new functionality while providing backward compatibility for most

existing applications’’).

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17

tion for its exclusive dealing [contracts with Internet Access

Providers (IAPs)] is that it wants to keep developers focused

upon its APIs — which is to say, it wants to preserve its

power in the operating system market.’’ Id. We went on to

state, however, that this ‘‘is not an unlawful end, but neither

is it a procompetitive justification for the specific means here

in question, namely, exclusive dealing contracts with IAPs.’’

Id.

Massachusetts would turn our observation about Microsoft’s rationale for its exclusive contracts with IAPs into a

critique of the district court’s concern with the extreme

fragmentation of Windows the court found was likely to occur

if it adopted the States’ code removal proposal. But the two

points cannot be equated. The States made a proposal the

district court found might have resulted in there being ‘‘more

than 1000’’ versions of Windows. See States’ Remedy, at 253

(citing Direct Testimony of Dr. John Bennett ¶¶ 47, 55, 5 J.A.

(II) at 2997-98, 3001). Letting a thousand flowers bloom is

usually a good idea, but here the court found evidence, as

discussed above, that such drastic fragmentation would likely

harm consumers. See also Direct Testimony of Dr. Kenneth

Elzinga ¶ 102, 5 J.A. (II) at 2739-40 (‘‘Lowering barriers to

entry by destroying TTT real benefits TTT harms consumers

and is not pro-competitive’’). Although it is almost certainly

true, as both Massachusetts and the amici claim, that such

fragmentation would also pose a threat to Microsoft’s ability

to keep software developers focused upon its APIs, addressing the applications barrier to entry in a manner likely to

harm consumers is not self-evidently an appropriate way to

remedy an antitrust violation. See Brooke Group Ltd. v.

Brown & Williamson Tobacco Corp., 509 U.S. 209, 224 (1993)

(‘‘It is axiomatic that the antitrust laws were passed for ‘the

protection of competition, not competitors,’ ’’ quoting Brown

Shoe Co. v. United States, 370 U.S. 294, 320 (1962) (emphases

in original)).

The district court’s end-user access provision fosters competition by opening the channels of distribution to nonMicrosoft middleware. It was Microsoft’s foreclosure of

those channels that squelched nascent middleware threats

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18

and furthered the dominance of the API set exposed by its

operating system. The exclusive contracts into which Microsoft entered with IAPs were likewise aimed at foreclosing

channels through which rival middleware might otherwise

have been distributed. Prohibiting Microsoft from continuing

those exclusive arrangements, see States’ Remedy § III.G, at

269-70, would not have the same deleterious effect upon

consumers as would the fragmentation of Windows.

Amici CCIA and SIIA seem to view fragmentation as

merely competition by another name. Accordingly, they see

fragmentation as a natural, if only temporary, consequence of

economic forces: ‘‘Competition of any kind will lead to a

multiplicity of standards, at least temporarily.’’ The redesign

of Windows required by the States’ proposal, however, would

not be the result of competition on the merits, as CCIA and

SIIA seem to suggest. Certainly they point to no economic

force that would prompt (or, if such a redesign were mandated, sustain) the degree of fragmentation the States’ proposal

is predicted to produce. Nor do they explain how such

fragmentation would, as they claim, ‘‘spark innovation that

benefits consumers.’’ They instead quote National Society of

Professional Engineers (NSPE) v. United States, 435 U.S.

679, 689 (1978), for the proposition that the Supreme Court

has ‘‘foreclose[d] the argument that because of the special

characteristics of a particular industry, monopolistic arrangements will better promote trade and commerce than competition.’’ But that case provides no support for CCIA’s and

SIIA’s argument here. Like the two cases the Supreme

Court cited in making the statement just quoted, see United

States v. Trans-Missouri Freight Ass’n, 166 U.S. 290 (1897);

and United States v. Joint Traffic Ass’n, 171 U.S. 505 (1898),

NSPE involved an agreement among competitors limiting the

output of their services. Those arrangements, which were

analyzed under § 1 of the Sherman Act, are not analogous to

Microsoft’s monopoly of the market for operating systems,

which is due not only to the exclusionary practices we found

unlawful in Microsoft III but also to ‘‘positive network effects,’’ see Findings of Fact, at 20. Moreover, in NSPE the

district court made no findings there were any potential

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19

benefits from the profession’s ‘‘ethical prohibition against

competitive bidding.’’ 435 U.S. at 686. In sharp contrast,

here the district court made extensive findings both about the

potential harm to consumers from fragmentation and about

the dubious benefits of the States’ proposal.6

 From these

findings the court concluded, ‘‘There is no indication that

there is any competitive or economic advantage to [the degree

of fragmentation entailed in the States’ proposal] and, quite

to the contrary, such a result would likely be detrimental to

the consumer.’’ States’ Remedy, at 252-54. Although we

understand that competition on the merits itself would likely

elicit multiple standards — recall the competition between the

VHS and Beta videotape standards — or even that some as

yet unimagined technology might reduce the harm to consumers from fragmentation, CCIA and SIIA fail to demonstrate

the district court was unduly concerned about the extent of

fragmentation likely to arise from the States’ proposal.

Finally, Massachusetts argues the district court’s findings

relating to fragmentation ‘‘fail to respect’’ the findings of fact

made in the liability proceedings. Specifically, the Commonwealth points to Findings of Fact ¶ 193, at 56-57: ‘‘Microsoft’s contention that offering OEMs the choice of whether or

not to install certain browser-related APIs would fragment

the Windows platform is unpersuasive.’’ That statement was

addressed to the unbinding of IE and Windows, not to the

States’ proposal, from which the court anticipated far more

extensive fragmentation. The district court’s rejection of the

States’ proposal, therefore, is not inconsistent with any of the

findings of fact in the liability proceedings.

6 For example, the court found that ISVs would ‘‘fare worst’’

under the proposal because they ‘‘would not have any assurance

that a particular functionality was present in any given configuration of the new unbound Windows [which,] at least in the short term

TTT would likely cause existing applications to fail. [In the longer

run there is the risk that] software code distributed with one ISV’s

application would conflict with that distributed with another ISV’s

application, leading to the so-called ‘DLL Hell’ problem that results

when multiple versions of the same basic components try to coexist

on a single PC.’’ States’ Remedy, at 253-54.

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20

Relatedly, the amici point to ‘‘Microsoft’s own fragmentation’’ of Windows through the publication of successive versions, such as Windows 98, Windows 2000, and Windows XP.

The district court addressed this concern and found such

fragmentation to be of ‘‘relatively small degree’’ because

‘‘Microsoft is able to work towards maintaining backward

compatibility with previous versions.’’ States’ Remedy, at

253.

To be sure, the remedy the district court adopted does not

prevent all fragmentation of the Windows operating system;

indeed, it adopted the end-user access provision, which allows

OEMs to install rival browsers and other non-Microsoft middleware, with their associated APIs, and to remove the end

user’s access to IE. Accordingly, fragmentation may yet

occur, but if so it will be caused by OEMs competing to

satisfy the preferences of end users, not forced artificially

upon the market as it would be under the States’ proposal.

2. Java deception

Massachusetts argues the district court erred in not including a remedy addressed specifically to Microsoft’s deception

of Java software developers. Unbeknownst to Java software

developers, Microsoft’s Java developer tools included certain

words and directives that could be executed only in Windows’

Java runtime environment. We held this deception ‘‘served

to protect [Microsoft’s] monopoly of the operating system in a

manner not attributable either to the superiority of the

operating system or to the acumen of its makers, and therefore was anticompetitive.’’ Microsoft III, at 77. Because

Microsoft failed to provide a procompetitive explanation for

its deception of software developers — indeed, there appears

to be no purpose at all for the practice that would not itself be

anticompetitive — we held its conduct was exclusionary, in

violation of § 2 of the Sherman Act. Id.

On remand the district court found a lack of ‘‘any evidence’’

Microsoft’s previous Java deception was a continuing threat

to competition. States’ Remedy, at 265. The Java deception

‘‘concern[ed] a single, very specific incident of anticompetitive

conduct by Microsoft,’’ which conduct Microsoft had ceased in

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21

accordance with a consent decree into which it had entered in

another case in another court. Id. For these reasons, the

district court did not include a provision in the remedial

decree addressed to this unlawful but now terminated conduct.

Massachusetts, quoting United States v. W.T. Grant Co.,

345 U.S. 629, 632 (1953), claims that without specific relief

prohibiting such deception, Microsoft is ‘‘free to return to [its]

old ways.’’ Microsoft responds that Massachusetts does not

make a showing of the type of abuse contemplated by the

Supreme Court in W.T. Grant. We agree. That case involved an interlocking directorate allegedly unlawful under

§ 8 of the Clayton Act. Soon after the Government filed suit,

the common director voluntarily resigned from the relevant

boards, after which the district court refused the Government’s request for an injunction prohibiting him and the

corporations from violating § 8 in the future. The Supreme

Court held the defendants’ sworn profession of an intention

not to revive the interlock was insufficient to moot the case.

However, the Court also held — and this is key — the district

court was in the best position to determine whether there was

a ‘‘significant threat of [a] future violation,’’ and it had not

abused its discretion in refusing to award injunctive relief.

Id. at 635-36. Far from supporting Massachusetts’ argument,

therefore, W.T. Grant confirms the district court’s broad

discretionary power to withhold equitable relief as it reasonably sees fit.

Massachusetts maintains the district court abused its discretion insofar as it found ‘‘no evidence that this deception, or

any similar deception, has persisted.’’ States’ Remedy, at

190. Massachusetts here claims Microsoft’s Chairman and

Chief Software Architect, William Gates III, in testimony

‘‘admitted that Microsoft routinely makes knowingly inaccurate claims regarding its compliance with industry standards,’’ into which the district court should have inquired

further. The cited testimony in fact concerns Microsoft’s

efforts to comply with frequently changing standards.7

 Not

7 See 4/24/02 pm Tr. at 4988-89 (Gates trial testimony), 6 J.A.

(II) at 3141-42; see also Direct Testimony of Dr. Andrew Appel

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22

surprisingly, nothing Gates said suggests anything in the

least nefarious.

Despite its failure to demonstrate any continuing competitive threat from Microsoft’s previous deception of Java software developers, Massachusetts presses the States’ proposed

‘‘truth in standards’’ provision, which would regulate certain

business practices that were not at issue in Microsoft III.

Specifically, the States’ proposal would require Microsoft to

(1) continue supporting any industry standard it has publicly

claimed to support ‘‘until it publicly disclaims such support or

the standard itself expires or is rescinded by the standardsetting body,’’ and (2) ‘‘continue to support an industry standard any time it makes a proprietary alteration to the standard.’’ Id. at 190; see also SPR § 16, 6 J.A. (II) at 3183. As

an initial matter, our holding the district court did not abuse

its discretion in refusing to enjoin a recurrence of Microsoft’s

Java deception casts grave doubt upon the need for a broad

provision applicable not only to Java but to all industry

standards. Be that as it may, we address Massachusetts’

arguments in favor of such a provision.

First Massachusetts claims the district court erred as a

matter of law insofar as it regarded the proposed truth-instandards provision as being ‘‘unrelated to the violation found

by th[is] court.’’ That is not, however, how the district court

saw the matter. Addressing only the first requirement quoted in the previous paragraph, the district court specifically

referred to Microsoft’s deception of Java developers in holding there was no showing a ‘‘broad order’’ prohibiting any

similar deception was ‘‘either appropriate or necessary.’’ See

States’ Remedy, at 190. It never said that requirement was

‘‘unrelated’’ to the violations found by this court in Microsoft

III. That much we think is unarguable.

As Microsoft correctly points out, it was the second aspect

of the truth-in-standards provision the district court deemed

‘‘unrelated to any finding of liability,’’ id. at 190, 263-64, and

¶ 145, 2 J.A. (II) at 1303-04 (stating Microsoft has ability to mislead

third parties with respect to standards, but giving neither instances

nor any indication of likelihood of such conduct).

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23

correctly so. Indeed, this court held that Microsoft’s development of the Windows Java Virtual Machine (JVM), which was

incompatible with Sun’s JVM, did not violate the antitrust

laws. Microsoft III, at 75. It was only Microsoft’s having

misled software developers into thinking the two were compatible that had an anticompetitive effect. Id. at 76-77. We

therefore hold the district court permissibly refused to require that Microsoft continue to support a standard after

making a proprietary modification to it, even if the modification makes the standard incompatible with the original.

Massachusetts also complains the record does not support

the district court’s other reasons for rejecting the proposed

truth-in-standards provision. We disagree. The district

court found no evidence the ‘‘industry standard’’ provision

would ‘‘enhance competition in the monopolized market’’ for

Intel-compatible PC operating systems. States’ Remedy, at

264 & n.134. Compliance with industry standards is ‘‘largely

a subjective undertaking,’’ id. at 190, such that ‘‘full compliance with a standard is often a difficult and ambiguous

process,’’ id. at 264 (quoting Madnick ¶ 208, 5 J.A. (II) at

2905). Massachusetts points to no specific instance in which

competition would have been or would be enhanced by compelling Microsoft to support an industry standard after it

made a proprietary alteration thereto. Instead Massachusetts invokes expert testimony that Microsoft’s proprietary

control over ‘‘important interfaces’’ would make it ‘‘harder’’

for rival operating systems to compete with Windows. Direct

Testimony of Dr. Carl Shapiro ¶ 185, 2 J.A. (II) at 860. This

is far too general a statement from which to infer the

proposed truth-in-standards provision would enhance competition rather than merely assist competitors — and perhaps

retard innovation. The district court found that industry

standards can ‘‘vary widely in complexity and specificity, such

that various implementations of a particular standard are

often incompatible.’’ States’ Remedy, at 264 (quoting Madnick ¶ 207, 5 J.A. (II) at 2904). Microsoft, therefore, may not

be able to comply with some of the industry standards

contemplated by the States’ proposal. And the States’ own

economic expert testified that ‘‘slow-moving standards bodUSCA Case #03-5030 Document #833270 Filed: 06/30/2004 Page 23 of 83
24

ies’’ are commonly unable to keep up with rapidly changing

technology markets. 4/14/02 pm Tr. at 3677 (Shapiro trial

testimony), 8 J.A. (II) at 4572; see also CARL SHAPIRO & HAL

R. VARIAN, INFORMATION Rules 240 (1999) (advocating business

strategy that does not ‘‘freeze TTT activities during the slow

standard-setting process’’).

The district court aptly described the problems with the

States’ truth-in-standards proposal and correctly concluded

the proposed remedy went beyond the liability contemplated

by this court. The court did not abuse its discretion, therefore, in refusing to adopt the proposal.

3. Forward-looking provisions

The district court exercised its discretion to fashion appropriate relief by adopting what it called ‘‘forward-looking’’

provisions, which require Microsoft to disclose certain of its

APIs and communications protocols. Although nondisclosure of this proprietary information had played no role

in our holding Microsoft violated the antitrust laws, ‘‘both

proposed remedies recommend[ed] the mandatory disclosure

of certain Microsoft APIs, technical information, and communications protocols for the purposes of fostering interoperation.’’ States’ Remedy, at 171. In approving a form of such

disclosure — while, as discussed below, rejecting the States’

proposal for vastly more — the district court explained ‘‘the

remedy [must] not [be] so expansive as to be unduly regulatory or provide a blanket prohibition on all future anticompetitive conduct.’’ Id. (citing Zenith Radio Corp. v. Hazeltine

Research, Inc., 395 U.S. 100, 133 (1969)). We are also

mindful that, although the district court is ‘‘empowered to

fashion appropriate restraints on [Microsoft’s] future activities both to avoid a recurrence of the violation and to eliminate its consequences,’’ NSPE, 435 U.S. at 697, the resulting

relief must ‘‘represent[ ] a reasonable method of eliminating

the consequences of the illegal conduct,’’ id. at 698.

 a. Disclosure of APIs

The district court recognized the ‘‘hallmark of the platform

threat’’ to the Windows monopoly posed by rival middleware

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25

is the ability to run on multiple operating systems: The

‘‘ready ability to interoperate with the already dominant

operating system will bolster the ability of such middleware

to support a wide range of applications so as to serve as a

platform.’’ States’ Remedy, at 172. In order to facilitate

such interoperation the district court required Microsoft to

disclose APIs ‘‘used by Microsoft Middleware to interoperate

with a Windows Operating System Product.’’ Id. § III.D, at

268.

Massachusetts objects to this provision on several grounds.

First, the Commonwealth argues ‘‘the middleware covered by

§ III.D lacks the platform potential of the middleware threat

that Microsoft thwarted’’ and, therefore, ‘‘will necessarily be

inadequate to restore competition.’’ The validity of Massachusetts’ objection depends upon the meaning of ‘‘Microsoft

Middleware.’’

Microsoft Middleware is defined as ‘‘software code’’ that:

1. Microsoft distributes separately from a Windows Operating System Product to update that Windows

Operating System Product;

2. is Trademarked or is marketed by Microsoft as a

major version of any Microsoft Middleware Product

TTT; and

3. provides the same or substantially similar functionality as a Microsoft Middleware Product.

Id. § VI.J, at 275. A ‘‘Microsoft Middleware Product’’ includes, among other things, ‘‘the functionality provided by

Internet Explorer, Microsoft’s Java Virtual Machine, Windows Media Player, Windows Messenger, Outlook Express

and their successors in a Windows Operating System Product.’’ Id. § VI.K, at 275.

In support of its argument, Massachusetts notes that Microsoft’s own experts ‘‘doubted the platform potential of

several forms of middleware included in what became the

remedy’s definition.’’8

 In response, Microsoft points out that

8 E.g., Direct Testimony of Dr. Kevin Murphy ¶ 176, 5 J.A. (II)

at 2648 (‘‘the definition of ‘Middleware’ includes some products that

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the definition of ‘‘Microsoft Middleware’’ adopted by the

district court is not faulty simply because Microsoft’s experts

discounted as platform threats some of the middleware products it covers. The logic of that response is obvious, which

makes it unsurprising that Massachusetts makes no reply.

Amici CCIA and SIIA take a different tack, claiming the

definition is defective because Microsoft itself determines

which software code to distribute separately. Microsoft responds that the amici ‘‘ignore[ ] the thousands of Windows

APIs that Microsoft publicly discloses in the ordinary course

of business,’’ and cites testimony, most of it conclusory,

extolling the adequacy of those APIs for software developers.

See, e.g., Direct Testimony of Brent Frei of Onyx Software

¶¶ 18-22, 6 J.A. (II) at 3413-15; Direct Testimony of Chris

Hofstader of Freedom Scientific ¶¶ 57-59, 9 J.A. (II) at 5453-

55. Be that as it may, the district court considered arguments by the States similar to the one now advanced by the

amici, and it rejected the related testimony of the States’

witnesses. States’ Remedy, at 116-17. The court instead

found ‘‘Microsoft often distributes separately certain technologies which are included in new releases of Windows because

such distribution enables users of previous Windows versions

to take advantage of the latest improvements to these technologies.’’ Id. at 117 (citing Direct Testimony of Microsoft’s

Christopher Jones ¶ 61, 5 J.A. (II) at 2532, and Will Poole

¶ 76, 5 J.A. (II) at 2493). The court explained:

Such distribution benefits Microsoft, as it permits Microsoft to continually improve the quality of its products,

even after they are sold, and to expand the user base of

new technology without waiting for consumers to purchase an entirely new operating system.

Id. These benefits would be lost to Microsoft if it were to

‘‘manipulate its products to exclude specific code from the

definition’’ of middleware. Id.

pose no apparent (even nascent) threat to the operating system’’);

Elzinga ¶ 135, id. at 2754 (‘‘particularly implausible that an email

client (such as Outlook Express) or instant messaging software

(such as Windows Messenger) will become a platform threat’’).

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The amici do not deny Microsoft has routinely distributed

its middleware separately from Windows. Instead, they

speculate Microsoft may henceforth avoid separate distribution in order to avoid the disclosure contemplated by § III.D.

They claim an expanded definition of middleware, such as

that proposed by the States, is necessary to ‘‘prevent[ ]

Microsoft from defining its obligations into meaningless superficiality.’’

Microsoft points to the district court’s finding, supported by

evidence in the record, that it is not necessary or even

desirable, in order to remove the artificial impediments erected by Microsoft to the establishment of a platform threat to

Windows, to expand the definition of Microsoft middleware to

cover all software that ‘‘expose[s] even a single API.’’ Id. at

118-19. The district court rejected the States’ broader definition of middleware in part because it wanted ‘‘bright lines by

which Microsoft can determine what portions of Windows

code are affected by the remedy.’’ Id. at 117. The amici do

not respond to the district court’s concerns about the expansive scope of the States’ definition of middleware. Nor do

they explain how the States’ proposal would ‘‘identify the

specific pieces of Windows,’’ id., constituting middleware for

the purpose of Microsoft’s disclosure obligation. Instead,

they merely claim the States’ proposal ‘‘add[s] sufficient

precision to identify and enforce a concrete obligation.’’ This

unreasoned assertion is hardly a ground upon which to overturn the district court’s reasoned explanation for adopting a

‘‘bright line[ ]’’ approach to Microsoft’s disclosure obligation.

Further, the amici fail to refute the district court’s reasoning

that ‘‘economic forces TTT countervail the likelihood’’ that

Microsoft would stop separately distributing its software code

in order to avoid having to disclose APIs pursuant to § III.D.

Id.

We hold the district court did not abuse its discretion in

delineating the middleware covered for the purposes of disclosure. As discussed, the term ‘‘Microsoft Middleware’’ both

includes and extends beyond the functionality of the middleware at issue in this case. Id. §§ VI.J & VI.K, at 275-76; see

also id. at 115. The amici merely speculate that the middleUSCA Case #03-5030 Document #833270 Filed: 06/30/2004 Page 27 of 83
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ware covered by § III.D will not provide a serious platform

threat. Moreover, the district court’s reasons for believing

economic self-interest deters Microsoft from avoiding separate distribution of its software code are persuasive. And we

should be particularly disinclined to require more disclosure

where, as here, the district court is adopting a forwardlooking provision addressing conduct not previously held to

be anticompetitive. See generally, Frank H. Easterbrook,

The Limits of Antitrust, 63 TEX. L. REV. 1, 14-15 (1984)

(supporting use of presumptions in antitrust law to avoid

condemning procompetitive practices). Nonetheless, out of

an abundance of caution the district court provided that, in

the event Microsoft were to ‘‘make a practice’’ of sacrificing

the advantages of separate distribution in order to frustrate

the purpose of the remedy, Massachusetts ‘‘could petition the

Court for relief on this point.’’9

 States’ Remedy, at 117 n.34.

9 Massachusetts also argues the district court abused its discretion by refusing to define Microsoft’s Common Language Runtime

(CLR) as a Microsoft Middleware Product and hence subject to the

API-disclosure requirement of § III.D. The district court described the CLR as middleware similar to Java but a part of

Microsoft’s new ‘‘.NET framework,’’ a Web-services initiative comprising ‘‘server-based applications that can be accessed directly by

other software programs, as well as by the consumer through a

variety of devices, including the PC, cellular phone, and handheld

device.’’ States’ Remedy, at 126; see also Borduin ¶ 80, 2 J.A. (II)

at 1333 (explaining importance of CLR in .NET initiative). As

discussed in Part II.A.4 below, the district court refused to address

Web services in the remedial decree, stating that ‘‘this case cannot

be used as a vehicle by which to fight every potential future

violation of the antitrust laws by Microsoft envisioned by Microsoft’s competitors.’’ States’ Remedy, at 133. Just so, and the

district court therefore did not abuse its discretion by refusing to

list the CLR along with the other functionalities specified in the

definition of Microsoft Middleware Product. See id. at 275. Because Microsoft’s Web-services initiative and Microsoft Middleware

are not mutually exclusive categories, however, the CLR may yet

become subject to the disclosure requirement of § III.D if it

satisfies the definition of Microsoft Middleware in the decree, see

States’ Remedy § VI.J, at 275. That definition requires, among

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Massachusetts further argues the district court made no

finding the required disclosure of APIs under the decree

would ‘‘meaningfully assist’’ developers of middleware. Massachusetts objects both to the breadth of disclosure — that is,

the number of APIs to be disclosed under § III.D — and to

the ‘‘depth’’ or detail of the disclosure, with respect to which

Massachusetts claims ‘‘the remedy fails to require the disclosure of sufficient information to ensure that the mandated

disclosure may be effectively utilized.’’

As to breadth, § III.D by its terms expands the scope of

required disclosure beyond the functionality of the middleware at issue in our decision on liability, as discussed above.

Such expanded but not unlimited disclosure ‘‘represents a

reasonable method’’ of facilitating the entry of competitors

into a market from which Microsoft’s unlawful conduct previously excluded them, NSPE, 435 U.S. at 698, particularly in

view of the inherently uncertain nature of this forwardlooking provision.

Moreover, in laying claim to still broader disclosure of

APIs, Massachusetts simply ignores the district court’s findings with respect to the economic and technological effects of

disclosure. As Microsoft points out, however, these findings

reflect the district court’s concern that a forward-looking

provision requiring overly broad disclosure could undermine

Microsoft’s incentive to innovate and, more particularly, that

the States’ proposed disclosure provision could enable competitors to ‘‘clone’’ Windows. The extremely broad scope of

the States’ proposal bears out the district court’s concern.

First, ‘‘interoperate’’ is defined in a way that makes it essentially synonymous with ‘‘interchange.’’ See States’ Remedy,

at 227 (citing Madnick ¶ 86, 5 J.A. (II) at 2836-37). Meanwhile, § 4 of the SPR would require Microsoft to disclose ‘‘all

APIs’’ that enable any ‘‘Microsoft Middleware Product,’’ Microsoft application, or Microsoft software program to interoperate with ‘‘Microsoft Platform Software.’’ 6 J.A. (II) at

other things, the middleware to be ‘‘distribute[d] separately’’ from

Windows; according to Microsoft’s counsel at oral argument, there

is record evidence that has already occurred.

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3172-73. Finally, ‘‘Microsoft Middleware Product’’ and ‘‘Microsoft Platform Software’’ are defined so broadly that, when

required to ‘‘interoperate’’ with one another, they include

essentially any two pieces of Microsoft software on a PC. See

States’ Remedy, at 227-28; see also Gates ¶ 296, 8 J.A. (II) at

4772-73; Madnick ¶¶ 148-49, 151, 5 J.A. (II) at 2870, 2872. As

a result, the district court found the broad scope of the APIs

required to be disclosed under the States’ proposal would give

rivals the ability to clone Microsoft’s software products;10 and

cloning would allow them to ‘‘mimic’’ the functionality of

Microsoft’s products rather than to ‘‘create something new.’’

States’ Remedy, at 229. They could also ‘‘develop products

that implement Microsoft’s Windows technology at a far

lower cost [than Microsoft itself] since they would have access

to all of Microsoft’s research and development investment.’’

Id. The effect upon Microsoft’s incentive to innovate would

be substantial; not even the broad remedial discretion enjoyed by the district court extends to the adoption of provisions so likely to harm consumers.

The amici claim the district court’s ‘‘concern about ‘cloning’

TTT rested in part on a misunderstanding of what an API is.’’

This assertion is simply at odds with the testimony upon

which the district court relied in concluding competitors could

clone Microsoft’s software and mimic its functionality.11

Moreover, the amici fail entirely to address the district

court’s conclusion, based upon findings of fact, that cloning

10 See, e.g., States’ Remedy, at 227 (citing 5/10/02 pm Tr. at

7111-12 (Bennett trial testimony), 6 J.A. (II) at 3596 (‘‘Well, if you

read [the definition of Interoperate], it says: Effectively, access,

utilize and/or support the full features and functionality of one

another. That, to me, taken in its entirety TTT means the ability to

clone.’’)).

11 See, e.g., States’ Remedy, at 229 (citing Gates ¶¶ 289-90, 8

J.A. (II) at 4770-71 (‘‘Once provided with the equivalent of the

blueprints for Windows, competitors TTT would have little trouble

writing their own implementation of everything valuable that Windows provides today, including the capabilities it provides to developers via APIs’’)).

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would deny ‘‘Microsoft the returns from its investment in

innovation.’’12 Id. at 176.

Microsoft also points to the adverse technological effects

that would have ensued from broader disclosure of its internal

interfaces. The district court found overly broad disclosure

of APIs would limit Microsoft’s ability to modify interfaces, a

limitation that ‘‘threatens to stifle innovation and product

flexibility.’’ Id. at 177. The court also found that disclosure

of internal interfaces, which the States’ proposal would require, would force Microsoft to publish APIs where the

interfaces are unstable. Id. at 230-31. That ‘‘could pose a

substantial threat to the security and stability of Microsoft’s

software,’’ id. at 231; reliance upon such interfaces may

‘‘cause third-party software not to work or Windows to

crash,’’ id. at 230. Massachusetts does not challenge any of

these findings, although they clearly support the district

court’s refusal to require the broad disclosure of APIs proposed by the States.

Massachusetts also insists the depth of Microsoft’s required

disclosure under § III.D is ‘‘inadequate.’’ The Commonwealth first argues the depth of Microsoft’s disclosure obligation is unclear because the definition of ‘‘API’’ is circular

and non-specific. The term is defined in § VI.A as an

‘‘application programming interface, including any interface

that Microsoft is obligated to disclose pursuant to III.D.’’ Id.

§ VI.A, at 274. Massachusetts points to the testimony of the

12 In a footnote to its argument concerning the disclosure of

communications protocols, Massachusetts asserts the district court

clearly erred in suggesting the States’ proposed definition could

lead to cloning, for which assertion it cites the opinion of Dr. Appel

that ‘‘the States’ Remedy does not allow such copying,’’ ¶ 99, 2 J.A.

(II) at 1284; see also ¶¶ 100-07, id. at 1284-88. This testimony,

although contrary to the district court’s finding that the States’

broad definition of interoperation could lead to cloning, is hardly

sufficient for us to conclude the district court’s finding is clearly

erroneous. See Microsoft III, at 66 (‘‘In view of the contradictory

testimony in the record, some of which supports the District Court’s

finding TTT, we cannot conclude that the finding was clearly erroneous’’).

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States’ computer science expert, who said ‘‘Microsoft’s definition of ‘API’ is almost entirely a circular reference to Section

III.D, and it therefore does not adequately define what

information must be provided as part of the API disclosure.’’

Appel ¶ 60, 2 J.A. (II) at 1269. We note that most of this

expert’s testimony regarding the definition of API is a legal

analysis rather than the opinion of a computer scientist and is

therefore beyond the ‘‘knowledge, skill, experience, training,

or education’’ for which he was qualified as an expert. FED.

R. EVID. 702. In any event, his legal analysis is wrong; the

definition of API is not circular. API is defined in two places

in the decree. The definition quoted above and cited by the

States’ computer expert is the one found in the ‘‘Definitions’’

section of the decree for the use of the term in every section

of the decree other than § III.D. See States’ Remedy

§ VI.A, at 274. The term is defined separately in § III.D,

for the purpose of Microsoft’s disclosure obligation under that

section, as ‘‘the interfaces, including any associated callback

interfaces,’’ that permit Microsoft Middleware to obtain ‘‘services’’ from Windows. Microsoft clearly understood, as the

States’ computer expert apparently did not, the latter definition is the one applicable to Microsoft’s disclosure of APIs

under the decree.13

Second, Massachusetts claims there is unrebutted testimony in the record indicating the depth of disclosure mandated

by § III.D is not ‘‘adequate for those whose innovative software constitutes a potential threat to Windows.’’ The cited

testimony, however, does not cast doubt upon the district

court’s decision. The witnesses expressed concern that the

extent of Microsoft’s obligation to disclose file formats, registry settings, and similar information is unclear and explained

the type of enhanced disclosure software developers would

13 See States’ Remedy, at 235; see also 5/2/02 pm Tr. at 6128

(Poole trial testimony) (stating in response to question whether he

knew ‘‘exactly’’ which APIs Microsoft is obliged to disclose under

§ III.D: ‘‘Yes. We know how to look for the list of points they [sic]

make their interfaces, associated call back interfaces, et cetera, and

ensure that we are in compliance relative to the code that we

separately distribute.’’).

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like, but the testimony amounts to no more than conclusory

statements.14 That software developers prefer more, rather

than less, expansive and detailed disclosure of APIs and

technical information is hardly surprising, but the testimony

is not sufficient to support Massachusetts’ implication that the

disclosures required by § III.D will not materially assist

developers of potential middleware threats to Windows. Recall the district court did not undertake to assure the viability

of Microsoft’s rivals. Rather, the court settled upon a level of

disclosure that would ‘‘bolster’’ the ability of rival middleware

to serve as a platform threat to Microsoft; ‘‘help’’ rival

middleware interoperate with Windows; and ‘‘have the potential to increase the ability of competing middleware to threaten [Windows].’’ Id. at 172.

Finally, Massachusetts argues the disclosure mandated by

§ III.D need not be timely made. In the case of a ‘‘new

major version of Microsoft Middleware,’’ § III.D requires

disclosure ‘‘no later than the last major beta test release of

that Microsoft Middleware.’’ For a new version of Windows,

disclosure must occur in a ‘‘Timely Manner,’’ defined as the

time of the first release of a beta test version of Windows

through the Microsoft Developer Network or upon the distribution of 150,000 or more copies of the beta version. Id.

§ VI.R, at 276.

Massachusetts nonetheless insists ‘‘[t]he remedy is at odds

with the record on timeliness.’’ Microsoft responds by pointing to evidence that requiring disclosure ‘‘before the software

code underlying those APIs has been fully developed and

14 For instance, one developer requested disclosure of certain

‘‘complicated interfaces’’ that Microsoft ‘‘had not anticipated’’ software developers needing. 3/26/02 pm Tr. at 1452-53 (trial testimony of Steven McGeady), 6 J.A. (II) at 3375-76; see also 3/20/02 pm

at Tr. at 732-35 (trial testimony of David Richards of RealNetworks), id. at 3404-05 (requesting further disclosure of technical

information and APIs); Direct Testimony of David Richards ¶ 65 &

n.11, 2 J.A. (II) at 1081-83 (same); Direct Testimony of Richard

Green ¶ 161, id. at 982 (same). Massachusetts also cites testimony

concluding the depth of Microsoft’s disclosure obligation is ‘‘not

clear.’’ E.g., Richards ¶ 90, id. at 1099-1100.

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tested, as the TTT States requested, would create serious

logistical problems for both Microsoft and third-party software developers.’’ See, e.g., Direct Testimony of Microsoft’s

Linda Wolfe Averett ¶ 18, 6 J.A. (II) at 3261 (‘‘Until Microsoft

is confident that it has figured out how to provide a particular

functionality, it does not want third-party developers building

products that rely on our functionality’’). Although clearly

favoring the definitions of timeliness adopted by the district

court, Microsoft’s evidence is not required in this instance

because the testimony Massachusetts cites itself underscores

Microsoft’s ‘‘strong incentive’’ to disclose its APIs in a timely

fashion so that software developers will write applications

based upon them. See, e.g., Borduin ¶ 35, 2 J.A. (II) at 1318-

19. Without timely disclosure, ‘‘there would be far fewer and

lower quality programs written for Microsoft’s operating systems.’’ Id. Microsoft’s incentive to make timely disclosure of

APIs is obvious: the ability of software developers to write

applications that rely upon Microsoft’s APIs depends upon

the developers having access to them. As the district court

found in the liability phase, ‘‘Microsoft must convince ISVs to

write applications that take advantage of the new APIs, so

that existing Windows users will have [an] incentive to buy an

upgrade.’’ Findings of Fact ¶ 44, at 21-22. The court also

found Microsoft offered inducements to software developers

to ensure they ‘‘promptly develop new versions of their

applications adapted to the newest version of Windows.’’ Id.

Massachusetts points to no evidence, and offers no reason to

think, this incentive is insufficient to induce timely disclosure

under § III.D of the decree. To the contrary, the evidence

Massachusetts offers merely confirms the economic incentives

Microsoft faces in releasing its APIs to ISVs in a timely

manner.

In sum, the district court’s findings are fully adequate to

support its decision with respect to disclosure. They are

comprehensive and sufficiently detailed to provide a clear

understanding of the factual basis for the court’s decision.

See Folger Coffee Co. v. M/V Olivebank, 201 F.3d 632, 635

(5th Cir. 2000); see also 9A CHARLES ALAN WRIGHT & ARTHUR

R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 2571 (2d ed.

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1995). We do not find persuasive Massachusetts’ arguments

that the district court overstated or misapprehended the

significance of the disclosure required by the decree. In light

of the forward-looking nature of the API disclosure provision,

the court reasonably balanced its goal of enhanced interoperability with the need to avoid requiring overly broad disclosure, which it determined could have adverse economic and

technological effects, including the cloning of Microsoft’s software. Moreover, we cannot overlook the threat — as documented in the district court’s findings of fact in the liability

phase — posed by Netscape and Java, which relied upon

Microsoft’s then more limited disclosure of APIs. Microsoft

managed to squelch those threats, at least for a time, but that

does not diminish the competitive significance of the disclosure of Microsoft’s APIs, a disclosure enhanced by the decree.

We therefore hold the district court did not abuse its

discretion in fashioning the remedial provision concerning

Microsoft’s disclosure of APIs.

b. Disclosure of communications protocols

The district court also included in the decree a provision

requiring Microsoft to disclose certain communications protocols. See States’ Remedy § III.E, at 269. As with APIs, we

did not hold Microsoft’s disclosure practices with respect to

communications protocols violated § 2 of the Sherman Act.

Communications protocols involve technologies — servers and

server operating systems — that are not ‘‘middleware’’ as we

used that term in our prior decision. See Microsoft III, at

53-54. It is therefore not surprising the district court described the provision requiring the disclosure of communications protocols as the ‘‘most forward-looking’’ in the decree.

States’ Remedy, at 173 (emphasis in original).

Communications protocols provide a common ‘‘language’’

for ‘‘clients’’ and ‘‘servers’’ in a computing network. A network typically involves interoperation between one or more

large, central computers (the servers) and a number of PCs

(the clients). By interoperating with the server, the clients

may communicate with each other and store data or run

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applications directly on the server. The district court found

that servers may use any of several different operating

systems, id. at 121 (citing Direct Testimony of Robert Short

¶ 22, 6 J.A. (II) at 3528-29; Madnick ¶ 44, 5 J.A. (II) at 2814-

15), but most clients run a version of Windows, id. (citing

Madnick ¶ 44, 5 J.A. (II) at 1814-15). In a ‘‘heterogeneous

network,’’ that is, one comprising different types of hardware

and of operating systems, interoperation can be difficult.

One method of addressing the difficulty is to specify use of a

‘‘common language’’ understood by all the computing elements of the network. The district court specified one such

language, known as ‘‘native communication,’’ in § III.E of the

decree.15 That section requires Microsoft to make available

to third parties ‘‘on reasonable and non-discriminatory terms

TTT any Communications Protocol that is TTT (i) implemented

in a Windows Operating System Product installed on a client

computer, and (ii) used to interoperate, or communicate,

natively (i.e., without the addition of software code to the

client operating system product) with a Microsoft server

operating system product.’’

Native communication differs from other forms of communication because it does not require that additional software

be installed on the client. Other approaches may require

adding ‘‘software to the server to make the client computer

‘think’ it is communicating in a homogeneous network,’’ id. at

122 (citing Madnick ¶¶ 68-75, 5 J.A. (II) at 2826-29), or adding

‘‘software code to the client which enables the client to

communicate more effectively with the server,’’ id. (citing

Madnick ¶¶ 68, 76-82, 5 J.A. (II) at 2826-27, 2829-35). As the

district court stated, ‘‘Interoperation made possible by software added onto Microsoft’s PC operating system products is

less clearly related to the facts of this case because it expands

beyond the relevant market of Intel-compatible PC operating

15 Examples of native communication include ‘‘basic Internet

protocols like Transmission Control Protocol/Internet Protocol

(‘TCP/IP’), HyperText Transfer Protocol (‘HTTP’) and File Transfer Protocol (‘FTP’), all of which are supported natively in both

Windows clients and non-Microsoft servers.’’ See Short ¶ 36, 6 J.A.

(II) at 3535-36.

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systems to address the ability of an application to interoperate with a server.’’ Id. at 173 (emphasis in original). The

court therefore held Microsoft need not disclose communications protocols used to interoperate non-natively.

In determining the scope of the remedy, the district court

acknowledged that network and server-based applications are

not middleware in the sense that ‘‘the software physically

resides on the PC and functions as a platform for other

applications.’’ Id. at 129. Still, the court reasoned that such

applications are capable of functioning in a manner similar to

that of middleware ‘‘by providing a layer between the operating system and top-level applications.’’ Id. The court’s

reasoning is supported by its finding that ‘‘[s]oftware developers are increasingly writing programs that rely, or ‘call,’ on

APIs exposed by server operating systems such that the

server operating system provides the ‘platform’ for applications.’’ Id. at 123 (citing Direct Testimony of Novell, Inc.’s

Dr. Carl Ledbetter ¶¶ 47-48, 2 J.A. (II) at 1163-64; Direct

Testimony of Richard Green ¶ 76, 2 J.A. (II) at 956; 5/27/02

am Tr. at 1508-09 (Ledbetter trial testimony)). For these

reasons the district court, in extending Microsoft’s disclosure

to communications protocols, concluded ‘‘server operating systems can perform a function akin to that performed by

traditional middleware.’’ Id. at 172.

Massachusetts argues § III.E will not enhance interoperability and there is no evidence, and the district court made no

finding, that it will. Microsoft responds that ‘‘a substantial

degree of interoperability already exists between Windows

desktop operating systems and non-Microsoft server operating systems’’ and the ability of third parties to license those

protocols from Microsoft pursuant to § III.E will enhance

interoperability. The parties’ divergent predictions point up

the difficulties inherent in crafting a forward-looking provision concerning a type of business conduct as to which there

has not been a violation of the law.

To be sure, as the Supreme Court observed in International Salt Co. v. United States, 332 U.S. 392, 400 (1947), ‘‘When

the purpose to restrain trade appears from a clear violation of

law, it is not necessary that all of the untraveled roads to that

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end be left open and that only the worn one be closed.’’ True

enough, but when the district court undertakes to block the

untraveled roads by adopting a forward-looking provision, its

discretion is necessarily less broad because, without liability

findings to mark the way, it is in danger of imposing restrictions that prevent the defendant from forging new routes to

serve consumers.

Massachusetts objects that the district court should not

have limited the disclosure requirement of § III.E to protocols for native communications, which the district court found

is only ‘‘one of at least five basic approaches to achieving

interoperability between Windows client operating systems

and non-Microsoft server operating systems.’’ States’ Remedy, at 234 (citing Short ¶ 35, 6 J.A. (II) at 3535). We think

the district court prudently sought not to achieve complete

interoperability but only to ‘‘advance’’ the ability of nonMicrosoft server operating systems to interoperate with Windows and thereby serve as platforms for applications. It was

not an abuse of discretion for the court not to go further;

indeed, to have done so in the absence of related liability

findings would have been risky.

Massachusetts points to the testimony underlying the

States’ proposed findings for its claim that the disclosure

required by § III.E ‘‘would not provide a level of interoperability sufficient to give competing software the opportunity to

gain marketplace acceptability.’’ Those proposed findings,

however, called for ‘‘full’’ and ‘‘seamless’’ interoperability, e.g.,

States’ Proposed Findings ¶¶ 700, 708, 3 J.A. (II) at 1613,

1615, and, more specifically, for disclosure of the ‘‘proprietary

protocols’’ for certain of Microsoft’s software products, including the protocols that allow Microsoft’s server-based email

software (Microsoft Exchange) to interoperate with its PCbased email software (Microsoft Outlook), ¶ 704, id at 1614.

Microsoft responds that, though Massachusetts may want to

extend the remedy to these products, the district court did

not abuse its discretion by ‘‘refusing to extend the remedy so

far beyond the liability determinations affirmed on appeal.’’

We agree. It was not inappropriate for the district court to

require only the disclosures necessary to provide a basic link

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between non-Microsoft operating systems and PCs running

Windows. That there are other methods for achieving the

same or an even greater degree of interoperability — perhaps

even methods allowing the ‘‘full’’ and ‘‘seamless’’ interoperability claimed by Massachusetts — does not render insufficient what is already the ‘‘most forward-looking’’ provision in

the decree.

Finally, Massachusetts argues the district court erred by

failing to define the term ‘‘interoperate’’ in the decree. The

district court found ‘‘the term ‘interoperate’ captures a continuum[ ] rather than an absolute standardTTTT [T]he Court’s

remedial decree utilizes a very simple definition of the term

which is intended to capture the reasonable spectrum of the

continuum.’’ States’ Remedy, at 172 n.75. Evidence in the

record supports the district court’s finding.16 The court

rejected the States’ proposed definition, which, as we have

seen, the court found equates ‘‘interoperate’’ with ‘‘interchangeab[le]’’ and would give others the ability to clone many of

Microsoft’s products. Id. at 227 (citing 5/10/02 pm Tr. at

7111-12 (Bennett trial testimony), 6 J.A. (II) at 3596). In

light of the conflicting testimony in the record, some of which

clearly supports the district court’s finding that ‘‘interoperation’’ is reasonably understood not as a binary concept, meaning two network elements either do or do not interoperate,

but rather as a ‘‘continuum,’’ meaning their communication is

a matter of degree, we cannot hold the district court’s finding

to be clearly erroneous. Microsoft III, at 66.

In sum, the district court did not abuse its discretion or

otherwise err in adopting a provision limiting to native communication Microsoft’s obligation to disclose communications

protocols.

4. Web Services

Massachusetts next argues the district court erred by

failing to adopt a remedy addressed to Web services. In

16 See, e.g., 5/10/02 pm Tr. at 7110 (Bennett trial testimony), 6

J.A. (II) at 3596 (explaining required disclosure as portion of

continuum or spectrum of interoperability that allows ‘‘two programs [to] exchange and make effective use of each other’s data’’).

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particular, Massachusetts claims the court should have extended Microsoft’s disclosure obligation beyond interoperation of server operating systems and PCs running Windows

to reach interoperation among ‘‘other nodes of the network

encompassed by network-based computing and the Web services paradigm, such as multiple servers or handheld devices.’’17 Microsoft responds by pointing out there was no

mention of Web services in the liability phase of this case, and

by claiming it has no monopoly power in the market for Web

services, ‘‘if such a [market] exists.’’ Also, the district court

found ‘‘Web-browsing software of the type addressed during

the liability phase will play no role in the creation, delivery, or

use of many Web services.’’ States’ Remedy, at 127.

Although the district court encountered ‘‘substantial disagreement’’ about what constitutes a Web service, id. at 126,

it found the middleware at issue in Microsoft III, namely,

Web-browsing software, ‘‘is not integral to the functioning of

Web services because many Web services will involve direct

communications between devices or programs and will not be

accessed by an end user at all.’’ Id. at 126-27 (citing Direct

Testimony of Dr. James Allchin ¶¶ 43-45, 2 J.A. (II) at 1218-

19). Far from ignoring this area of rapid innovation, as

Massachusetts claims, the district court concluded Web services are simply too far removed from the source of Microsoft’s liability in this case — as to which the relevant market

is operating systems for Intel-compatible PCs — to be implicated in the remedy. Id. at 133 (‘‘mere importance of Web

services to Microsoft and the industry as a whole is not

sufficient to justify extending the remedy in this case to

regulate Microsoft’s conduct in relation to Web services’’).

Nor did the court think the States had sufficiently ‘‘explained

how the increase in the use of non-PC devices in conjunction

17 Although Massachusetts does not mention it, the States’

proposal would have done just that, see SPR § C, 6 J.A. (II) at

3172; see also SPR § 4, id. at 3172-73, extending Microsoft’s

disclosure obligation to interoperability with respect to, among

others, ‘‘Handheld Computing Devices’’ — a term defined in the

SPR to include ‘‘cellular telephone[s], personal digital assistant[s],

and Pocket PC[s],’’ SPR § 22.k, id. at 3194.

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with Web services will reduce Microsoft’s monopoly in the

market for PC operating systems.’’ Id. at 134.

Massachusetts claims the district court excluded Web services based upon the clearly erroneous premise ‘‘that this new

paradigm is a threat to the PC, and not to Windows.’’ For a

correct understanding Massachusetts points us to the testimony of Jonathon Schwartz, Chief Strategy Officer at Sun

Microsystems: ‘‘[S]o long as consumers can access Web

services using competing devices and operating systems, they

are free to switch away from Windows if competing alternatives are more attractive.’’ Direct Testimony ¶ 37, 2 J.A. (II)

at 882; see also Direct Testimony of John Borthwick ¶ 74, 7

J.A. (II) at 4117 (if ‘‘developers of web services adopt industry standard protocols,’’ then applications will not rely upon

Windows and users will therefore be less reliant upon Windows). According to Massachusetts, the district court acknowledged as much when it stated:

The Chief Strategy Officer for Sun Microsystems, Inc.,

Jonathon Schwartz, testifying on behalf of Plaintiffs TTT

theorized that ‘‘[i]f the most popular applications are

delivered as Web services, instead of [as] stand-alone PC

applications, the applications barrier protecting Windows

could be substantially eroded.’’

States’ Remedy, at 127 (brackets in original). Clearly, however, the district court expressed its view that Schwartz was

‘‘theoriz[ing],’’ not stating a conclusion based upon fact. In

any event, the district court was primarily — and correctly —

focused upon whether a provision addressing Web services

could be linked to Microsoft’s liability in Microsoft III; it

could not.

Moreover, it does not follow that, because a proposed

requirement could reduce the applications barrier to entry, it

must be adopted. Recall the applications barrier to entry

arose only in part because of Microsoft’s unlawful practices;

it was also the product of ‘‘positive network effects.’’ 84 F.

Supp. 2d at 20. If the court is not to risk harming consumers, then the remedy must address the applications barrier to

entry in a manner traceable to our decision in Microsoft III.

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This the decree does by opening the channels of distribution

for non-Microsoft middleware. The district court reasonably

determined, based upon evidence in the record, a provision

addressing Web services might not be so benign. States’

Remedy, at 134.

Massachusetts also complains (albeit only in a footnote)

that, because the district court included a remedy affecting

servers, there is ‘‘no basis for distinguishing Web services,’’

which are part of the same, new platform threat. We disagree. Disclosure of communications protocols is a ‘‘most

forward-looking remedy,’’ id. at 173 (emphasis in original);

the district court, which was not compelled to venture even

that far from its moorings in Microsoft III, was well within its

discretion, therefore, not to go further.

5. Market Development Programs

Massachusetts argues the remedy should be modified to

prevent Microsoft from offering to OEMs discounts, known as

Market Development Programs (MDPs). The Commonwealth’s claim is based in part upon its concern that Microsoft

will use MDPs ‘‘to ensure that OEMs will not exercise

whatever flexibility the remedy provides’’ them. On its face,

Massachusetts’ concern appears to be that the new freedoms

provided to OEMs under the decree will be ineffectual because Microsoft has retained the ability to offer OEMs favorable discounts. Be that as it may, the district court rejected

the States’ proposal to prevent Microsoft from offering discounts, see SPR § 2.a, 6 J.A. (II) at 3168, noting this court

‘‘did not condemn Microsoft’s use of MDPs and, in fact,

steadfastly refused to condemn practices which, at their core,

‘offered a customer an attractive deal.’ ’’ States’ Remedy, at

166 (quoting Microsoft III, at 68). The district court also

cited evidence in the record — testimony both of Microsoft’s

and of the States’ economic experts — that MDPs may be

employed procompetitively. Id. at 211. Upon weighing the

evidence, the district court concluded ‘‘the weight of the

economic testimony favors preservation of Microsoft’s ability

to offer MDPs, provided that Microsoft cannot impose the

MDPs in a discriminatory or retaliatory manner.’’ Id.; see

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also id. at 166 (MDPs must be ‘‘based upon reasonable,

objective criteria, which are enforced uniformly and without

discrimination’’).

Massachusetts argues the district court ‘‘committed an

error of law’’ by failing to prohibit all MDPs, referring us to

United States v. Loew’s, Inc., 371 U.S. 38 (1962), for the

proposition that ‘‘[t]o ensure TTT that relief is effectual,

otherwise permissible practices connected with the acts found

to be illegal must sometimes be enjoined,’’ id. at 53. In

Loew’s, several major film distributors had violated § 1 of the

Sherman Act by ‘‘block-booking,’’ or tying popular films with

less popular films in licensing agreements with television

stations. Id. at 40-41. The district court enjoined the practice but did not accept the Government’s proposal to enjoin

certain ‘‘otherwise permissible practices’’ that could be used

to ‘‘subject[ ] prospective purchasers to a ‘run-around’ on the

purchase of individual films.’’ Id. at 55. Although the Supreme Court ultimately adopted the Government’s proposed

modifications because they would help ‘‘to prevent the recurrence of the illegality,’’ id. at 56, the Court pointed out that

‘‘[t]he trial judge’s ability to formulate a decree tailored to

deal with the violations existent in each case is normally

superior to that of any reviewing court,’’ id. at 52. Here the

district court did impose restraints upon Microsoft’s ‘‘otherwise permissible practices’’ by requiring that any MDPs be

both uniform and nondiscriminatory. States’ Remedy, at 166.

Massachusetts has not shown that any additional restraint is

necessary.

Massachusetts also argues the district court clearly erred

in determining MDPs are procompetitive because ‘‘this directly contradicts its own findings regarding Microsoft’s ability to

frustrate the remedy.’’ The Commonwealth here relies upon

testimony that Microsoft conditioned MDPs upon an OEM’s

compliance with certain technical requirements, including a

specified configuration of hardware and software, restrictions

on the boot-up sequence, and a specified allocation of computer memory. See, e.g., Ashkin ¶¶ 119-22, 5 J.A. (II) at 3114-16.

That testimony, however, reflects the competitive landscape

as it was prior to the adoption of the remedy now in place.

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Whereas an OEM licensing Windows from Microsoft previously had little flexibility to include rival middleware, now it

may choose either to distribute non-Microsoft middleware or

to get a discount from Microsoft, as it sees fit. True, this

choice may be skewed if Microsoft offers deep discounts, but

the district court required Microsoft to offer MDPs to all

comers on the same uniform and non-discriminatory terms; it

cannot target a discount solely at an OEM that dallies with

rival middleware. Massachusetts gives us no reason to think

Microsoft is likely to pursue a deep discount strategy seemingly made bootless by those conditions.

Without a clear indication that Microsoft can or will use its

discounts in a fashion that, as Massachusetts claims, ‘‘subverts’’ the other provisions of the remedy, we again refuse to

condemn a practice that ‘‘offer[s the] customer an attractive

deal.’’ Microsoft III, at 68. Accordingly, we hold the district

court did not abuse its discretion by refusing to prohibit,

rather than placing protective conditions upon, Microsoft’s

offer of discounts.

6. Open Source Internet Explorer

Massachusetts argues the district court abused its discretion in rejecting the States’ ‘‘open-source IE’’ provision, which

would require that

Microsoft TTT disclose and license all source code for all

Browser software [and that the license] grant a royaltyfree, non-exclusive perpetual right on a nondiscriminatory basis to make, use, modify and distribute

without limitation products implementing or derived

from Microsoft’s source codeTTTT

SPR § 12, 6 J.A. (II) at 3178. Microsoft responds that this

type of remedy is unnecessary because the decree already

proscribes the anticompetitive conduct by which Microsoft

had unlawfully raised the applications barrier to entry and

thereby diminished the threat posed by platforms rivaling

Microsoft’s operating system.

The district court rejected the States’ proposal for three

reasons. First, the open-source IE proposal ‘‘ignores the

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45

theory of liability in this case,’’ which was directed at Microsoft’s unlawful ‘‘response to cross-platform applications, not

operating systems,’’ States’ Remedy, at 185; the proposed

remedy would directly benefit makers of non-Microsoft operating systems, even though the harm, if any, to them was

indirect. Second, the proposal would ‘‘provide [a] significant

benefit to competitors but [has] not been shown to benefit

competition.’’ Id. Finally, the proposal would work a ‘‘de

facto divestiture’’ and therefore should be analyzed as a

structural remedy pursuant to this court’s opinion on liability.

Id. at 186; see also Microsoft III, at 106 (‘‘In devising an

appropriate remedy, the District Court also should consider

whether plaintiffs have established a sufficient causal connection between Microsoft’s anticompetitive conduct and its dominant position in the OS market’’). Here the court carefully

considered the ‘‘causal connection’’ between Microsoft’s anticompetitive conduct and its dominance of the market for

operating systems, and held the causal link insufficient to

warrant a structural remedy. States’ Remedy, at 186.

Massachusetts argues the district court ‘‘improperly ignored evidence that IE’s dominance is competitively important for Microsoft’’ and complains that Microsoft ‘‘advantage[s] its own middleware by using the browser to limit the

functionality of competing products.’’ These are not objections, however, to the district court’s reasons for rejecting the

States’ proposal. Rather, they are criticisms of what Massachusetts terms the district court’s ‘‘implicit determination that

[certain] facts were not relevant’’ to its analysis of the opensource IE provision. For instance, Massachusetts points to

the testimony of David Richards of RealNetworks stating

there would be ‘‘substantial end user benefit’’ if Microsoft

disclosed enough APIs to allow competitors such as RealNetworks to create their own versions of the ‘‘Media Bar,’’ one of

Microsoft’s recent additions to the IE interface. See Direct

Testimony ¶¶ 79-84, 2 J.A. (II) at 1094-99. According to

Richards, the Media Bar is a version of Microsoft’s Windows

Media Player ‘‘embedded as the default media player’’ in IE.

¶ 79, id. at 1094-95. If Microsoft were to disclose the internal

architecture of the Media Bar, including the APIs upon which

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46

it relies, he says, then end users could ‘‘play back more digital

formats within the [IE] browser than [Microsoft’s] Windows

Media Player, including our own RealAudio and RealVideo

formats.’’ ¶¶ 81, 82, id. at 1098.

Massachusetts argues the district court’s disregard of this

testimony ‘‘was wrong as a matter of law,’’ for which proposition it cites FTC v. Texaco, Inc., 555 F.2d 862 (D.C. Cir.

1977). As an initial matter, Massachusetts’ reliance upon

Texaco is misplaced. In Texaco we said ‘‘the appellate court

has the authority — and the duty — to determine the proper

legal premise and to correct the legal error of the trial judge,

without limitation by the doctrines of ‘clearly erroneous’ and

‘abuse of discretion’ that are applicable to review of factual

determinations.’’ Id. at 876 n.29. Here the district court did

not, as Massachusetts claims, commit an error of law ‘‘in

assessing the link between Microsoft’s unlawful acts and its

control of the dominant browser.’’ To be sure, Richards’

testimony makes clear Microsoft’s competitors would benefit

from Microsoft’s disclosure of the APIs necessary for them to

replicate Microsoft’s Media Bar. Neither that nor any other

testimony Massachusetts cites, however, indicates the district

court relied upon an improper ‘‘legal premise’’ in its ‘‘implicit

determination’’ of relevance.

The district court’s premise, as discussed more fully below,

was that the fruit of Microsoft’s unlawful conduct was not the

harm particular competitors may have suffered but rather

Microsoft’s freedom from platform threats posed by makers

of rival middleware. See Part II.B.1. The district court

properly focused, therefore, upon opening the channels of

distribution to such rivals; facts tending to show harm to

specific competitors are not relevant to that task. Also recall

the district court was properly concerned with avoiding a

disclosure requirement so broad it could lead to the cloning of

Microsoft’s products. That, in essence, appears to be what

the cited testimony would require with respect to Microsoft’s

Media Bar.

Massachusetts next argues the district court ‘‘misunderstood’’ that the States’ open-source IE proposal could ‘‘reesUSCA Case #03-5030 Document #833270 Filed: 06/30/2004 Page 46 of 83
47

tablish a cross-platform browser,’’ thereby allowing applications to be written to APIs exposed by IE and, as a result,

lower the applications barrier to entry. As discussed in

preceding sections of this opinion, the decree the district

court approved includes several provisions addressed directly

to Microsoft’s efforts to extinguish nascent threats to its

operating system. Specifically, the decree restores the conditions necessary for rival middleware to serve as a platform

threat to Windows and thereby speaks directly to our holding

with respect to liability. See Microsoft III. Moreover, the

district court found the States’ open-source IE proposal ignores the theory of liability in this case not because the court

‘‘misunderstood’’ the implications of the proposal but because

the proposal would most likely benefit makers of competing

operating systems, namely, Apple and Linux, rather than

restore competitive conditions for potential developers of rival

middleware. States’ Remedy, at 242-43.18 That is why the

court concluded the open-source IE proposal would help

specific competitors but not the process of competition. See

id. at 185, 244; see also Elzinga ¶ 85, 5 J.A. (II) at 2732

(open-source IE provision is a ‘‘transparent ‘IP grab’ ’’ that

would ‘‘help competitors but harm competition’’). Massachusetts would refute the court’s conclusion with the testimony of

the States’ economic expert, who said open-source IE would

‘‘lower the applications barrier.’’ Shapiro ¶ 101, 2 J.A. (II) at

829. But that conclusory statement, even if an accurate

prediction, does not point up any error on the part of the

district court in refusing to adopt the open-source proposal.

There is more than one way to redress Microsoft’s having

18 As an economic matter, of course, the source of the threat to

Microsoft’s monopoly of the market for Intel-compatible PC operating systems, whether it be rival middleware or rival operating

systems, is not important. In remedying Microsoft’s violations of

the antitrust laws, however, it was reasonable for the district court

to focus upon the restoration of competitive conditions facing makers of rival middleware rather than lending a hand to makers of

rival operating systems; it was middleware with the potential to

create a platform threat, not rival operating systems, against which

Microsoft acted unlawfully. Findings of Fact, at 28-30.

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unlawfully raised the applications barrier. And it was certainly within the district court’s discretion to address the

applications barrier to entry as it did, namely, by restoring

the conditions in which rival makers of middleware may

freely compete with Windows. Indeed, to have addressed

itself narrowly to aiding specific competitors, let alone competitors that were not the target of Microsoft’s unlawful

efforts to maintain its monopoly, could well have put the

remedy in opposition to the purpose of the antitrust laws.

See Brooke Group, 509 U.S. at 224 (antitrust laws designed to

protect ‘‘competition, not competitors’’).

Massachusetts also complains the district court, in rejecting

the open-source IE provision, erred by probing the causal

connection between Microsoft’s unlawful acts and harm to

consumers. In response Microsoft points out that the district

court viewed the States’ proposed relief as structural and

therefore applied a test of causation along the lines we set out

in Microsoft III. See 253 F.3d at 106-07. Our instruction to

the district court was to consider on remand whether divestiture was an appropriate remedy in light of the ‘‘causal

connection between Microsoft’s anticompetitive conduct and

its dominant position in the TTT market [for operating systems].’’ Id. at 106. Structural relief, we cautioned, ‘‘is

designed to eliminate the monopoly altogether TTT [and]

requires a clearer indication of a significant causal connection between the conduct and creation or maintenance of

market power.’’ Id. (emphasis in original) (citing 3 PHILLIP

E. AREEDA & HERBERT HOVENKAMP, ANTITRUST LAW ¶ 653b, at

91-92 (1996)).

As Massachusetts correctly notes, we were there addressing the district court’s order to split Microsoft into two

separate companies, whereas on remand, the district court

was addressing the States’ open-source IE proposal. But the

district court reasonably analogized that proposal to a divestiture of Microsoft’s assets. States’ Remedy, at 185, 244. The

court pointed to testimony both of Microsoft’s and of the

States’ economic experts characterizing the open-source IE

remedy as ‘‘structural’’ in nature. Id. at 244 (citing Elzinga

¶ 104, 5 J.A. (II) at 2740-41; 4/11/02 am Tr. at 3324 (Shapiro

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trial testimony), 8 J.A. (II) at 4502). Although Microsoft

could continue to use its intellectual property under the opensource IE proposal, the ‘‘royalty-free, non-exclusive perpetual

right’’ of others to use it as well would confiscate much of the

value of Microsoft’s investment, which Gates put at more than

$750 million, ¶ 128, 8 J.A. (II) at 4714, and the court clearly

found to be of considerable value. See States’ Remedy, at

241, 244.

Massachusetts claims United States v. National Lead Co.,

332 U.S. 319 (1947), upheld compulsory licensing as a remedy

while at the same time rejecting the need for divestiture.

The licenses in National Lead, however, were not to be free;

on the contrary, the Supreme Court specifically pointed out

that reducing ‘‘all royalties automatically to a total of zero TTT

appears, on its face, to be inequitable without special proof to

support such a conclusion.’’ Id. at 349. (The Court left open

the possibility that royalties might be set at zero or at a

nominal rate, but only where the patent was found to be of

nominal value.) Here the States proposed Microsoft be required to license IE ‘‘royalty-free,’’ SPR § 12, 6 J.A. (II) at

3178. Therefore, National Lead is worse than no support for

the States’ proposal; it tells us that proposal is ‘‘on its face

TTT inequitable.’’ 332 U.S. at 349.

Finally, Massachusetts claims the district court erred in

rejecting the open-source IE proposal on the ground it ‘‘is

predicated not upon the causal connection between Microsoft’s illegal acts and its position in the PC operating system

market, but rather the connection between the illegal acts

and the harm visited upon Navigator.’’ This plainly misstates

the issue as we remanded it. We were concerned a drastic

remedy, such as divestiture, would be inappropriate if Microsoft’s dominant position in the operating system market could

not be attributed to its unlawful conduct. Microsoft III, at

106-07. The district court did not abuse its discretion by

insisting that an analogous form of structural relief — namely, divesting Microsoft of much of the value of its intellectual

property — likewise meets the test of causation. Massachusetts’ statement that the open-source IE provision ‘‘is predicated TTT [upon] the connection between the illegal acts and

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the harm visited upon Navigator’’ highlights precisely why

the district court was right to reject that provision: The

remedy in this case must be addressed to the harm to

competition, not the harm visited upon a competitor.

The district court’s remedy is appropriately addressed to

the channels of distribution for non-Microsoft middleware,

including rival browsers such as Netscape Navigator. The

court did not abuse its discretion by refusing to adopt the

States’ proposed open-source IE provision for the benefit of

Microsoft’s competitors.

7. Java must-carry

Massachusetts argues the district court erred in refusing to

require Microsoft to distribute with Windows or IE a Suncompliant Java runtime environment, as the States had proposed. Consider:

For a period of 10 years from the date of entry of the

Final Judgment, Microsoft shall distribute free of charge,

in binary form, with all copies of its Windows Operating

System Product and Browser TTT a competitively performing Windows-compatible version of the Java runtime

environment TTT compliant with the latest Sun Microsystems Technology Compatibility Kit.

SPR § 13, 6 J.A. (II) at 3179-80. The district court rejected

this proposal because it did not think appropriate a remedy

that ‘‘singles out particular competitors and anoints them with

special treatment not accorded to other competitors in the

industry.’’ States’ Remedy, at 189. Microsoft adds that the

proposal would give ‘‘Sun’s Java technology a free-ride on

Microsoft’s OEM distribution channel.’’

Massachusetts argues the district court was wrong as a

matter of law in thinking that mandated distribution of Java

would benefit a competitor and not competition: ‘‘If the

district court were correct that broad distribution of Java

did not benefit competition, then this Court could not have

held that Microsoft’s undermining of Java’s distribution was

anticompetitive.’’ Not surprisingly, this non sequitur misrepresents the reasoning of the district court. That court

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focused upon remedying Microsoft’s unlawful foreclosure of

distribution channels for rival middleware, not upon propping up a particular competitor. Massachusetts also complains that if any measure that helps a ‘‘would-be competitor

of a monopolist’’ is rejected out of hand, then ‘‘competition

can never be restored to a monopolized market.’’ There is a

real difference, however, between redressing the harm done

to competition by providing aid to a particular competitor

and redressing that harm by restoring conditions in which

the competitive process is revived and any number of competitors may flourish (or not) based upon the merits of their

offerings. Even in the latter instance, of course, a competitor identifiable ex ante may benefit but not because it was

singled out for favorable treatment.

Massachusetts also complains the district court ignored

evidence ‘‘that the widespread availability of the crossplatform Java runtime environment on PCs would reduce the

applications barrier to entry.’’ According to Massachusetts,

only if Java is available on PCs at ‘‘a percentage that approaches the percentage of PCs running Windows’’ will developers write to it. Testimony cited by Massachusetts extolling

the benefits of Java ubiquity, e.g., Green ¶ 53, 2 J.A. (II) at

949; Shapiro ¶ 131, id. at 840, does not, however, call into

question the district court’s rejection of the States’ proposal

as ‘‘market engineering,’’ States’ Remedy, at 262 (quoting

Murphy ¶ 239, 5 J.A. (II) at 2678), aimed at benefitting a

specific competitor.

B. Cross-cutting Objections

Massachusetts also raises arguments that pertain to multiple provisions of the remedial decree. One such objection

goes to the district court’s overall approach to fashioning a

remedy.

1. ‘‘Fruits’’

Massachusetts also objects that, because the district court

did not require open-source IE licensing and mandatory

distribution of Sun’s Java technology, the decree fails to

‘‘deny Microsoft the fruits of its exclusionary conduct.’’ As

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recounted in Part I above, we rejected the remedy at issue in

Microsoft III in part because the district court had ‘‘failed to

provide an adequate explanation for the relief it ordered.’’

253 F.3d at 103. We had expected the district court to

discuss the ‘‘objectives the Supreme Court deems relevant’’ to

fashioning relief in an antitrust case. Id. One of those

objectives, as Massachusetts notes, is to ‘‘deny to the defendant the fruits of its statutory violation.’’ Id. (citing United

States v. United Shoe Mach. Corp., 391 U.S. 244, 250 (1968)).

The district court’s omission of any discussion addressed to

this objective was particularly troublesome because that court

had ordered the break-up of a company that was not the

product of mergers or acquisitions, see, e.g., id. at 99, 106,

much less unlawful mergers or acquisitions. In any event,

the fruits of a violation must be identified before they may be

denied. This would be a difficult, not to say imprudent, task

for a reviewing court to undertake in the first instance when

the remedy requires a divestiture but there are no clear lines

of perforation. We could not, for instance, ‘‘go[ ] into the

record far enough to be confident’’ what had been identified

as fruits were actually ‘‘the products of the unlawful practices

which the defendants have inflicted on the industry,’’ as the

Supreme Court could in identifying ‘‘at least some’’ of the

defendant’s acquisitions as ‘‘the fruits of [the] monopolistic

practices or restraints of trade’’ being remedied in United

States v. Paramount Pictures, Inc., 334 U.S. 131, 152 (1948).

The present decree, however, does not require that Microsoft be broken up. Nor did the district court adopt any other

of the States’ proposals it deemed structural in nature —

open-source IE, as discussed above, and the ‘‘porting’’ of

Microsoft Office. The district court also specifically rejected

the idea that IE was the fruit of Microsoft’s anticompetitive

conduct, finding, ‘‘[n]either the evidentiary record from the

liability phase, nor the record in this portion of the proceeding, establishes that the present success of IE is attributable

entirely, or even in predominant part, to Microsoft’s illegal

conduct.’’ States’ Remedy, at 185-86 n.81; see also id. at 244

n.121. Rather, the fruit of its violation was Microsoft’s

freedom from the possibility rival middleware vendors would

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pose a threat to its monopoly of the market for Intelcompatible PC operating systems. The district court therefore reasonably identified opening the channels of distribution

for rival middleware as an appropriate goal for its remedy.

By ‘‘pry[ing] open’’ these channels, International Salt, 332

U.S. at 401, the district court denied Microsoft the ability

again to limit a nascent threat to its operating system monopoly. The district court certainly did not abuse its discretion

by adopting a remedy that denies Microsoft the ability to take

the same or similar actions to limit competition in the future

rather than a remedy aimed narrowly at redressing the harm

suffered by specific competitors in the past. This distinction

underlies the difference between a case brought in equity by

the Government and a damage action brought by a private

plaintiff.

Massachusetts also complains the district court erred in

applying a ‘‘stringent but-for test’’ of causation in determining

whether ‘‘advantages gained by Microsoft could be considered

a fruit of Microsoft’s illegality.’’ Here it points to a footnote

in which the district court, in the course of rejecting the

States’ open-source IE proposal, questioned the extent to

which the success of IE could be traced to Microsoft’s unlawful conduct. See States’ Remedy, at 242 & n.119. We have

already determined the district court properly refused to

impose that structural remedy without finding a significant

causal connection ‘‘between Microsoft’s anticompetitive conduct and its dominant position in the TTT market [for operating systems].’’ Microsoft III, at 106; see also Part II.A.6.

More important, the fruit of Microsoft’s unlawful conduct, as

mentioned, was its ability to deflect nascent threats to its

operating system by limiting substantially the channels available for the distribution of non-Microsoft middleware.

Therefore, to quote a leading treatise, regardless whether the

‘‘maximum feasible relief’’ in this case could have included

either open-source IE or Java must-carry or both, the district

court clearly did not abuse its discretion by adopting a more

‘‘tailored remed[y]’’ that directly addressed the fruit of Microsoft’s unlawful conduct. 3 PHILLIP E. AREEDA & HERBERT

HOVENKAMP, ANTITRUST LAW ¶ 650, at 67-68 (2d ed. 2002).

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Finally, even if stunting Navigator and Java specifically were

deemed the fruits of Microsoft’s violations, the decree would

still be adequate because it opens the way to their distribution, both directly through the end-user access provision in

§ III.H and generally through the other conduct prohibitions

found in § III of the decree.

2. Presumption

Finally, Massachusetts charges the district court improperly indulged but did not acknowledge an ‘‘apparent presumption’’ in favor of Microsoft’s proposed remedy, ‘‘while holding

the States to a quantum of proof it did not demand of

Microsoft.’’ The district court’s obligation in fashioning a

remedial decree was, as we said in reviewing the original

decree in the Government’s case, ‘‘to enter that relief it

calculates will best remedy the conduct it has found to be

unlawful,’’ Microsoft III, at 105. The district court brings

broad discretion to its discharge of this obligation, again as

we have explained before.

In this case, the district court was presented with two

remedial proposals: The States made their proposal and

Microsoft proposed the decree it had negotiated with the

Government in the Track I proceedings. The district court

considered both proposals and rejected most of the provisions

the States proposed on the ground they went far beyond this

court’s rationale in holding Microsoft had violated the antitrust laws. If that ground holds, then no ‘‘unspoken presumption’’ need be conjured up to explain the district court’s

decision.

Our review both of Microsoft’s and of the States’ proposals

confirms the district court was on solid ground: Its reasoning

was based upon evidence in the record, was sound, and

involved no abuse of discretion. Some of the States’ proposals exceeded, under any reasonable interpretation, our liability holding in Microsoft III. For instance, the open-source IE

provision approached the type of structural relief we singled

out when cautioning the district court against relief that

exceeds evidence of a causal connection between Microsoft’s

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anticompetitive conduct and its dominance in the operating

systems market.

Massachusetts also claims the district court expressed concern about the ‘‘supposed lack of economic analysis’’ supporting the States’ remedy without remarking the lack of economic analysis supporting the remedy it adopted. Massachusetts’

claims are demonstrably incorrect.

As our review has shown, there is ample evidence in the

record to support the district court’s findings. Likewise,

there was substantial economic testimony to support the

district court’s conclusions. We need not revisit each of the

issues we have already addressed in order to reject the

Commonwealth’s broad, unsubstantiated claims to the contrary.

III. CCIA and SIIA v. United States

& Microsoft, No. 03-5030

CCIA and SIIA seek to intervene for the purpose of

appealing the district court’s determination that the consent

decree between the Government and Microsoft is in the

‘‘public interest,’’ as required by the Tunney Act. They raise

several of the issues we addressed in Part II and they raise a

number of issues unique to the settlement proceedings, including the Government’s and Microsoft’s compliance with the

procedural requirements of the Act.

A. Intervention

The district court denied the joint motion of CCIA and

SIIA to intervene for purposes of appealing the court’s

public-interest determination in U.S. Consent Decree. They

argue the district court erred in denying intervention because

their ‘‘claim or defense and the main action have a question of

law or fact in common,’’ as required for permissive intervention pursuant to Federal Rule of Civil Procedure 24(b)(2).

See also Massachusetts School of Law at Andover, Inc.

(MSL) v. United States, 118 F.3d 776, 779 (D.C. Cir. 1997)

(Rule 24 governs intervention for purpose of filing appeal

under Tunney Act). The district court had also to ‘‘consider

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whether the intervention will unduly delay or prejudice the

adjudication of the rights of the original parties.’’ FED. R.

CIV. P. 24(b)(2). In denying CCIA’s and SIIA’s motion, the

district court was concerned only with this latter requirement, to which we shall return in a moment. First, we

examine whether the would-be intervenors’ claim does have a

question of law or fact in common with the underlying action.

CCIA and SIIA say they have a ‘‘claim or defense’’ in

common with the main action in this case because their

members Netscape and Sun Microsystems — ‘‘the very firms

this Court identified as the victims of Microsoft’s anticompetitive conduct’’ — have brought ‘‘antitrust claims that overlap

with the Government’s case.’’ See Netscape Communications

Corp. v. Microsoft Corp., No. 02-00097 (D.D.C., filed Jan. 22,

2002); Sun Microsystems, Inc. v. Microsoft Corp., No. 02-

01150 (N.D. Cal., filed March 8, 2002). Unable to deny that

point, the Government and Microsoft instead argue CCIA’s

and SIIA’s intervention in this case would not produce the

type of efficiency gains that ordinarily make intervention

worthwhile when there are common issues because, unlike in

MSL, there is no possibility in this case of a ‘‘trial on the

merits.’’ MSL, 118 F.3d at 782. Of course, there has already

been a trial on the merits. Still, if we determine the consent

decree is not in the public interest and remand the case for

further proceedings on the remedy, then there is a possibility

the final court-ordered remedy will provide some additional

relief addressed to the issues Netscape and Sun have raised

in their private actions.

The Government further contends permissive intervention

in this case is inappropriate because Netscape and Sun,

having sued Microsoft, may protect their rights apart from

this proceeding. The Government cites Roe v. Wade, 410

U.S. 113, 125-27 (1973), in support of its claim that the

‘‘pendency of another action in which an applicant can protect

its rights ordinarily counsels against permissive intervention.’’

In Roe, however, the Supreme Court denied intervention

because the intervenor — a doctor seeking declaratory and

injunctive relief in federal court ‘‘with respect to the same

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tions simultaneously pending in state court,’’ id. at 126 — had

made ‘‘no allegation of any substantial and immediate threat

to any federally protected right that cannot be asserted in his

defense against the state prosecutions.’’ Id. Intervention

was therefore denied pursuant to the ‘‘national policy forbidding federal courts to stay or enjoin pending state court

proceedings except under special circumstances.’’ Younger v.

Harris, 401 U.S. 37, 41 (1971). No such policy suggests the

would-be intervenors in this case should be limited to another

forum for airing their grievances. On the contrary, as in

MSL, because the private antitrust claims of the associations’

members overlap substantially with those here in suit, intervention ‘‘might produce efficiency gains.’’ 118 F.3d at 782.

Turning to the second requirement for intervention, recall

what we said in MSL:

Once a common question of fact or law is found, Rule

24(b)(2) says that the district court, in exercising its

discretion, ‘‘shall consider whether the intervention will

unduly delay or prejudice the adjudication of the rights

of the original parties.’’ The ‘‘delay or prejudice’’ standard presumably captures all the possible drawbacks of

piling on parties; the concomitant issue proliferation and

confusion will result in delay as parties and court expend

resources trying to overcome the centrifugal forces

springing from intervention, and prejudice will take the

form not only of the extra cost but also of an increased

risk of error.

118 F.3d at 782. Further, ‘‘the ‘delay or prejudice’ standard

of Rule 24(b)(2) appears to force consideration of the merits

of the would-be intervenor’s claims.’’ Id. Hence, the district

court in this case noted CCIA’s and SIIA’s arguments regarding ‘‘defects’’ in the consent decree were ‘‘identical to

those made in their Tunney Act filings.’’ Order Denying

Intervention, at *4. And having once reviewed those filings

in making its public-interest determination and finding them

‘‘not to fatally undermine’’ the proposed consent decree, the

court held them insufficient to warrant intervention. Id.

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CCIA and SIIA now argue that, if they are allowed to

intervene, ‘‘There will be no delay caused by [their] appeal

because this Court will have to decide the proper remedy for

Microsoft’s antitrust violations in [Massachusetts’] appeal regardless of what happens here.’’ The Government acknowledges there would be no ‘‘undue delay’’ because the ‘‘consent

decree is currently in force, as is an identical and unchallenged decree in the litigation between Microsoft and the

settling states.’’

We think it sufficient the consent decree was already in

place in the settling states’ case when CCIA and SIIA sought

intervention in December 2002: Allowing them to appeal

from the Tunney Act proceeding will not delay ‘‘adjudicat[ing]

TTT the rights of the original parties,’’ FED. R. CIV. P. 24(b),

because the settling states’ decree requires Microsoft to

conduct itself in the same manner as it must under the decree

it entered into with the Government. See New York v.

Microsoft Corp., 231 F. Supp. 2d 203, 205-06 (D.D.C. 2002).

Nor will the parties be otherwise prejudiced by the intervenors’ appeal. CCIA and SIIA had already participated extensively in the proceedings before the district court by submitting public comments in response to the proposed consent

decree, see Comments of CCIA (Jan. 28, 2002), 2 J.A. (I) at

455-598; Comments of SIIA (Jan. 28, 2002), 3 J.A. (I) at 990-

1057, and appearing as amici in the hearing on the proposed

decree, see 3/6/02 pm Tr. at 156-65, 3 J.A. (I) at 1536-45.

Because the district court already confronted CCIA’s and

SIIA’s arguments in rendering its decision, there is no reason

to fear ‘‘issue proliferation,’’ ‘‘confusion,’’ ‘‘extra cost,’’ or ‘‘an

increased risk of error,’’ see MSL, 118 F.3d at 782, if the

associations are allowed to appeal the district court’s publicinterest determination. Thus do the unusual procedural and

substantive circumstances in this case converge to obviate

any undue ‘‘delay or prejudice’’ that might otherwise have

attended CCIA’s and SIIA’s appeal. Accordingly, we reverse

the order of the district court denying intervention and

permit CCIA and SIIA to intervene for the purpose of

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appealing the district court’s public-interest determination.19

B. The Public Interest Finding

Under the Tunney Act, the district court’s ‘‘public interest’’

inquiry into the merits of the consent decree is a narrow one:

The district court should withhold its approval of the decree

‘‘only if any of the terms appear ambiguous, if the enforcement mechanism is inadequate, if third parties will be positively injured, or if the decree otherwise makes a ‘mockery of

judicial power.’ ’’ MSL, 118 F.3d at 783; see also United

States v. Microsoft, 56 F.3d 1448, 1462 (D.C. Cir. 1995)

(Microsoft I). Such limited review is obviously appropriate

for a consent decree entered into before a trial on the merits

because the ‘‘court’s authority to review the decree depends

entirely on the government’s exercising its prosecutorial discretion by bringing a case in the first place.’’ Microsoft I, at

1459-60.

In a footnote CCIA and SIIA claim that in Microsoft I this

court ‘‘suggested that the ‘mockery’ standard either does not

apply or is met where, as here, a post-trial decree fails to

comply with an existing ‘judicial mandate.’ ’’20 (Emphasis in

19 The Government and Microsoft claim CCIA and SIIA may

not intervene because they did not include with their motion to

intervene ‘‘a pleading setting forth the claim or defense for which

intervention is sought.’’ FED. R. CIV. P. 24(c). Neither the Government nor Microsoft explains what type of pleading the would-be

intervenors could have filed in a case such as this, where a

judgment had already been rendered. In any event, ‘‘procedural

defects in connection with intervention motions should generally be

excused by a court.’’ McCarthy v. Kleindienst, 741 F.2d 1406, 1416

(D.C. Cir. 1984). The Government acknowledged as much at oral

argument, stating, ‘‘this Court and other courts have not be[en]

hypertechnical, actually, in making sure that TTT potential intervenors do file a pleading.’’ The Government and Microsoft make no

claim they had inadequate notice of the intervenors’ appeal, and we

find no reason to bar intervention based solely upon this technical

defect, if defect it be.

20 We are at something of a loss to understand the appellants’

allusion; the phrase ‘‘judicial mandate’’ appears in Microsoft I only

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original.) Not surprisingly, however, we gave no consideration in Microsoft I to the standard we would apply to the

district court’s review of a consent decree entered into after a

trial on the merits because that case did not involve a posttrial consent decree. In any event, the Tunney Act does not

distinguish between pre- and post-trial consent decrees; the

Act simply requires the district court, ‘‘[b]efore entering any

consent judgment’’ in a Government antitrust case, to ‘‘determine that the entry of such judgment is in the public interest.’’ 15 U.S.C. § 16(e).

Moreover, if the district court approves a consent decree

that ‘‘fails to comply’’ with our mandate, then the resulting

consent decree surely does make a ‘‘mockery of judicial

power’’; hence, the ‘‘mockery’’ standard is no less appropriate

merely because a consent decree is entered into after a trial

on the merits. Finally, although the district court may not

ignore the grounds upon which the defendant was held liable,

neither should it reject a consent decree simply because it

believes the Government could have negotiated a more exacting decree. Any settlement, even one negotiated after a trial

on the merits, may reflect ‘‘a concession the government

made in bargaining,’’ Microsoft I, at 1461, and yet be ‘‘within

the reaches of the public interest.’’ Id. at 1458.

In the unusual posture of this case, we review the district

court’s public-interest determination not against the untested

allegations of a complaint but rather against the findings of

in some legislative history quoted in support of this court’s statement that there were no cases prior to the Tunney Act in which ‘‘an

appellate court had approved a trial court’s rejection of a consent

decree as outside the public interest.’’ 56 F.3d at 1458 (citing

Antitrust Procedures and Penalties Act: Hearings on S.782 and

S.1088 Before the Subcomm. on Antitrust and Monopolies of the

Senate Comm. on the Judiciary, 93d Cong., 1st Sess. 92 (1973)

(Statement of Thomas E. Kauper, Assistant Attorney General,

Antitrust Div., Dep’t of Justice) (‘‘Except in cases where a previous

judicial mandate is involved and the consent decree fails to comply

with that mandate, or where there is a showing of bad faith or

malfeasance, the courts have allowed a wide range of prosecutorial

discretion’’)).

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fact and conclusions of law entered by the district court and

left undisturbed by our review in Microsoft III. This we do

pursuant to the deferential standard we set out in MSL, 118

F.3d at 783.

1. Issues overlapping Massachusetts’ case

CCIA and SIIA raise several objections to the district

court’s determination the consent decree is in the public

interest. We addressed most of these issues in our disposition of Massachusetts’ appeal, and we shall avoid, to the

extent possible, duplicating here the analysis in Part II.

Some repetition is necessary, however, because the overlap

between the cases is neither complete nor exact. Most

important, the district court in the Commonwealth’s case was

required to determine, in its broad discretion, the form of

relief that would ‘‘best remedy the conduct TTT found to be

unlawful.’’ Microsoft III, at 105. For that purpose the

district court had the benefit of the extensive factual record

compiled on remand per the instruction of this court. Id. at

103. In this Tunney Act case the court was charged not with

fashioning its own remedy but with determining whether the

consent decree agreed to by the Government and Microsoft is

in the public interest. The district court’s decision was to be

based not upon the record of an evidentiary hearing but

rather upon the information generated by the settling parties

in compliance with the Tunney Act, as well as the submissions

of other interested parties and of the public.

Despite the differences between the two proceedings, there

was substantial overlap in both the legal and the factual

issues presented. For instance, the public comments received in the Tunney Act proceedings raised several of the

same issues the district court addressed in the States’ litigation over the remedy in their case.21 The overlap is further

21 See, e.g., Comments of CCIA, 2 J.A. (I) at 455-598; Comments of SIIA, 3 J.A. (I) at 990-1057; see also Comments of Robert

Litan, Roger Noll & William Nordhaus (Jan. 17, 2002), 1 J.A. (I) at

208-84; Comments of Am. Antitrust Inst. (Jan. 24, 2002), id. at 285-

328; Comments of AOL Time Warner (Jan. 28, 2002), id. at 329-

426; Comments of Project to Promote Competition & Innovation in

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reflected in the similarity of the issues raised in CCIA’s and

SIIA’s amicus brief in No. 02-7155 and the issues they raise

in their briefs as intervenors in this case. With these similarities and differences in mind, we turn to the substance of

CCIA’s and SIIA’s claims.

a. Commingling

CCIA and SIIA first object to the consent decree on the

ground it does not address our having held Microsoft’s commingling of IE and Windows code was anticompetitive and

unlawful. They argue in this case, as they did as amici in

No. 02-7155, that securing the ‘‘user’s ability to remove IE

icons’’ is not an adequate remedy for Microsoft’s unlawful

integration of IE and Windows because, from a software

developer’s perspective, ‘‘the existence (or not) of a particular

icon on a user’s desktop is immaterial.’’ They also disparage

end-user access as an appropriate provision to address the

applications barrier to entry.

The Government and Microsoft argue the provisions of the

decree permitting end-user access to non-Microsoft middleware, namely, §§ III.C and III.H, effectively address our

concern about Microsoft’s integration of IE and Windows.

Section III.C allows OEMs, among other things, to alter the

configuration of the desktop, including ‘‘[i]nstalling[ ] and

displaying icons’’ of non-Microsoft middleware, and § III.H

permits OEMs and end users to invoke non-Microsoft middleware in place of Microsoft middleware.

The district court accepted the view the Government espoused during the Tunney Act proceedings that the proper

goal of the remedy is to avoid the anticompetitive effect, not

necessarily to prohibit further instances, of commingling.

U.S. Consent Decree, at 180-81. Indeed, the district court

agreed with the Government that ‘‘it is not at all clear that

the practice of commingling would be of antitrust concern’’ in

the future. Id. at 180. In the past Microsoft’s commingling

had prevented OEMs from removing IE, thereby deterring

the Digital Age (Jan. 28, 2002), 2 J.A. (I) at 650-813; Comments of

SBC Communications Inc. (Jan. 28, 2002), id. at 814-989.

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them ‘‘from installing a second browser because doing so

increase[d] [their] product testing and support costs.’’ Microsoft III, at 66. Going forward, however, the decree allows

OEMs to disable end-user access to IE, and thereby to avoid

the costs of having to support both IE and a rival browser.

As a result, OEMs are more likely to install a rival browser

based upon market determinants, such as consumer demand.

In this way, the decree removes the disincentive facing

software developers otherwise interested in writing programs

to APIs exposed by rival middleware. See Part II.A.1.

The Government reasonably predicted that OEMs’ new

freedom to respond to market demand would enhance competition between Microsoft and other manufacturers of middleware. See U.S. Consent Decree, at 181; see also CIS at 29-

33, 45-48, 1 J.A. (I) at 163-67, 179-82. Whether CCIA’s and

SIIA’s proposed alternative, prohibiting any commingling of

code, would strengthen further the ability of rival platforms

to attract software developers is irrelevant; the question

before us is whether the remedy approved by the district

court is within the reaches of the public interest. A consent

decree that addresses the disincentive software developers

faced but does not altogether prohibit commingling — which

would not be without its costs — surely qualifies.

b. Java

CCIA and SIIA next argue the consent decree is not in the

public interest because it does not address Microsoft’s efforts

to prevent the emergence of Java as a competitor to Windows. Those efforts included the use of exclusive (so-called

First Wave) agreements with ISVs; threatening Intel for its

cooperation with Sun and Netscape in developing a Java

runtime environment; and the deception of Java software

developers discussed in Part II.A.2 above. See Microsoft III,

at 74-78.

The Government and Microsoft respond that §§ III.F and

III.G of the consent decree address Microsoft’s attempts to

exclude Sun’s Java technology from the market. Section

III.F provides that Microsoft shall ‘‘not retaliate against any

ISV or [Independent Hardware Vendor (IHV)] TTT [for]

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distributing, promoting or supporting any software that competes with Microsoft Platform Software[.]’’ Final Consent

Decree, at *3. Section III.G prohibits Microsoft from entering into any agreement with an IAP, Internet Content Provider, ISV, IHV, or OEM to distribute, promote, use, or

support Windows or Microsoft middleware exclusively. Id. at

*4. The district court concluded that ‘‘§§ III.F and III.G not

only prohibit the anticompetitive conduct identified by the

appellate court with regard to ISVs, IAPs, and IHVs, but

these provisions extend further, to address Microsoft’s conduct with other participants in the industry even though

Microsoft’s dealings with these entities did not give rise to

liability in this case.’’ U.S. Consent Decree, at 186.

Despite their failure to offer more than conclusory assertions that the provisions of the consent decree addressing

Microsoft’s exclusionary agreements and its retaliatory conduct are inadequate, CCIA and SIIA argue the absence of a

requirement that Windows carry a Sun-compliant Java platform or, indeed, of any Java-specific remedy, ‘‘alone renders

the settlement insufficient to satisfy the public interest.’’

CCIA and SIIA misapprehend the district court’s limited role

under the Tunney Act in determining whether a consent

decree is in the public interest. That court’s ‘‘function is not

to determine whether the resulting array of rights and liabilities is the one that will best serve society, but only to confirm

that the resulting settlement is within the reaches of the

public interest.’’ Microsoft I, at 1460 (emphases in original).

Although the district court cannot ignore this court’s liability

holding in making its public-interest determination, neither

can it be faulted for not insisting upon a provision that clearly

is not required by our holding. See Part II.A.7.

Nor did the Government ignore our liability holding in

negotiating the decree. In its response to public comments

the Department of Justice explained its decision not to pursue

the States’ proposed Java must-carry provision: ‘‘[I]t is not

the proper role of the government to bless one competitor

over others, or one potential middleware platform over others.’’ Response of the United States to Public Comments on

the Revised Proposed Final Judgment (U.S. Response to

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Public Comments) ¶ 431, at 215 (Feb. 27, 2002), 3 J.A. (I) at

1349. The Government instead negotiated provisions —

§§ III.F and III.G — that prohibit use of the First Wave

Agreements and the various tactics Microsoft had used

against Java and Intel. The district court therefore reasonably deferred to the Government’s rejection of the Java mustcarry provision.

c. Disclosure of APIs

CCIA and SIIA argue the consent decree will not prevent

Microsoft from driving new middleware threats from the

market. Because Microsoft is required to disclose only APIs

used by Microsoft Middleware to interoperate with Windows,

they claim Microsoft’s competitors can ‘‘never offer middleware for use on Windows that does more than comparable

Microsoft middleware.’’22 The Government responds that

such disclosure nonetheless prevents rival middleware ‘‘from

being ‘disadvantaged by comparison to Microsoft’s middleware technology’ TTT by insuring that non-Microsoft middleware can use the same APIs as the Microsoft middleware

with which it competes,’’ quoting U.S. Consent Decree, at 187.

According to the Government, that disadvantage, which had

prevented rival middleware from posing a platform threat to

Windows, was the focus of its case for liability.

Like Massachusetts, CCIA and SIIA would have us overlook the district court’s findings of fact — crucial to holding

Microsoft had stifled competition — documenting the threat

posed by Netscape and Java, both of which relied only upon

the more limited set of APIs Microsoft then disclosed. See

Findings of Fact, at 28-30; see also U.S. Response to Public

Comments ¶ 280, at 141, 3 J.A. (I) at 1275 (1994 development

of Mosaic, a non-Microsoft Web browser, did not rely upon

APIs used by IE because IE did not then exist). Moreover,

the district court correctly recognized Microsoft’s financial

incentive — noted during the settlement proceedings both by

22 They also point to provisions allowing Microsoft to prohibit

certain modifications of the user interface, a matter we take up in

Part III.B.2.b, below.

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Microsoft and by the Government — to make its APIs

available to software developers. U.S. Consent Decree, at

189; see also Part II.A.3.a above. It was therefore appropriate for the district court to approve the decree without

requiring the expansive disclosure sought by CCIA and SIIA.

CCIA and SIIA also note (actually, they footnote) that the

decree, particularly the API disclosure provision, focuses only

upon interoperability with Windows and ‘‘does not make

Windows API specifications available to direct TTT competitors’’ in the market for operating systems, nor does it require

Microsoft to disclose ‘‘API specifications’’ for Microsoft middleware that exposes APIs. The intervenors argue the lack

of such disclosure ‘‘will only increase the applications barrier

and reinforce the Windows monopoly by remaining Microsoftcentric.’’ The Government responds that the disclosure of

API specifications demanded by CCIA and SIIA is unrelated

to the theory of liability in this case. Microsoft echoes the

Government in claiming its violation of the antitrust laws did

not involve practices directed at the developers of rival operating systems but rather conduct directed at rival middleware, such as Netscape Navigator.

Although CCIA’s and SIIA’s argument is insufficiently

developed to constitute a serious challenge to the district

court’s approval of the consent decree, see Hutchins v. District of Columbia, 188 F.3d 531, 539 n.3 (D.C. Cir. 1999) (‘‘We

need not consider cursory arguments made only in a footnote’’), we note the Government considered concerns similar

to those raised by CCIA and SIIA and rejected the sort of

broad disclosure they seek. See, e.g., U.S. Response to Public

Comments, at 142-43, 148, 3 J.A. (I) at 1276-77, 1282. The

district court likewise considered various criticisms of the

extent of disclosure required by § III.D and reasonably

concluded they did not require it to disapprove that provision.

See U.S. Consent Decree, at 187-89.

In sum, CCIA and SIIA neither point to any defects in the

district court’s reasons for approving the disclosure required

by the consent decree, nor do they raise any other concern

not already addressed above in Part II.A.3. We conclude,

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therefore, the district court reasonably held the degree of

API disclosure required by the consent decree is consonant

with the public interest.

d. Adequacy of definitions

CCIA and SIIA argue the consent decree is not in the

public interest because it fails to define terms ‘‘critical to its

enforceability.’’ Specifically, they complain the definitions of

‘‘Windows Operating System Product’’ and ‘‘Microsoft Middleware’’ are vague, and they object to the absence of a

definition of ‘‘server operating system product’’ and of ‘‘interoperate.’’ Here they remind us the district court, in considering a proposed consent decree, ‘‘should pay special attention

to the decree’s clarity,’’ Microsoft I, at 1461, and should

withhold its approval ‘‘if any of the terms appear ambiguous.’’

MSL, 118 F.3d at 783. The intervenors seek a greater

degree of precision lest Microsoft itself be able to dictate

which middleware is covered by the decree. Ultimately they

are concerned with the disclosure of APIs required by

§ III.D, the extent to which communications protocols are

covered by § III.E, and interoperability.

The district court specifically addressed various criticisms

of the precision with which the consent decree was drafted.

For instance, it rejected as unfounded the concern that

Microsoft could falsely identify as part of Windows the software code of a separate middleware product and thereby

avoid disclosing the APIs exposed by that product. That

concern appears to have arisen out of the last sentence of the

definition of ‘‘Windows Operating System Product,’’ which

states, ‘‘The software code that comprises a Windows Operating System Product shall be determined by Microsoft in its

sole discretion.’’ Final Consent Decree § VI.U, at *15. The

district court explained that the terms Windows Operating

System Product and Microsoft Middleware Product — the

latter of which is nested in the definition of Microsoft Middleware, and where it helps define Microsoft’s obligation to

disclose APIs — are not mutually exclusive: ‘‘Software code

can simultaneously fall within both.’’ U.S. Consent Decree, at

166. Therefore, Microsoft cannot avoid its disclosure obliUSCA Case #03-5030 Document #833270 Filed: 06/30/2004 Page 67 of 83
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gation merely by deeming particular software code a part of

Windows; if that code likewise has the functionality of a

Microsoft Middleware Product, then it will be treated as such

for the purpose of disclosure under § III.D. Therefore,

Microsoft’s obligation under that section is unaffected by its

ability to determine which software code is part of Windows.

Accord U.S. Response to Public Comments ¶¶ 121, 122, at 65-

66, 3 J.A. (I) at 1199-1200.

CCIA’s and SIIA’s complaint that the decree leaves undefined the terms ‘‘interoperate’’ and ‘‘server operating system

product’’ is not a source of concern to the court. The

intervenors suggest Microsoft may determine unilaterally

what the former term means, but this, of course, overlooks

the district court’s retention of jurisdiction to interpret and to

enforce the decree. Final Consent Decree, at *16. Moreover, the district court explained how the undefined term

‘‘interoperate’’ is used in §§ III.D and III.E. See U.S.

Consent Decree, at 190-92, see also Part II.A.3 above. We

find nothing in CCIA’s and SIIA’s arguments that requires

additional comment upon that term or, more broadly, upon

the adequacy of the disclosures required by the consent

decree.

As for the term ‘‘server operating system product,’’ which

is found in § III.E of the decree, CCIA and SIIA argue the

absence of a definition leaves Microsoft’s disclosure obligation

indeterminate. As Microsoft correctly points out, however,

the Government addressed this same concern in its response

to public comments, stating the coverage of Microsoft servers

was ‘‘broaden[ed]’’ in the decree to include not only the

‘‘Windows 2000 Server’’ but also other server products such

as the ‘‘Windows 2000 Datacenter Server’’ and the ‘‘Windows

2000 Advanced Server.’’ U.S. Response to Public Comments

¶ 318, at 159-60, 3 J.A. (I) at 1293-94. Not only did the

Government insist upon expanding the range of servers covered under the decree by including a term left intentionally

undefined, but the district court viewed § III.E as ‘‘forwardlooking’’ and capable of addressing the ‘‘rapidly growing

server segment of the market.’’ U.S. Consent Decree, at 189.

CCIA and SIIA offer no reason to think the district court

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would construe the term ‘‘server operating system product’’

narrowly, and thus narrow the disclosure required under

§ III.E. Rather, in this instance the absence of a definition

is more likely to broaden than to narrow the range of server

operating systems to which the decree applies.

The district court has a continuing responsibility for interpretation of the consent decree, and it is ‘‘entitled to insist on

that degree of precision concerning the resolution of known

issues as to make [its] task, in resolving disputes, reasonably

manageable.’’ Microsoft I, at 1461-62. The consent decree is

not ambiguous in the sense disallowed in MSL merely because it contains words that are not defined therein, or

because the intervenors think certain words could be defined

differently or with greater specificity. We do not find in the

decree the kind of glaring ambiguities that might call into

question the wisdom of the district court’s having affixed its

imprimatur. In sum, CCIA and SIIA offer no convincing

reason the decree will not be construed so as to serve the

public interest. We therefore hold the district court did not

err in approving it.

e. ‘‘Fruits’’

CCIA and SIIA lodge several broad objections to the

district court’s approval of a consent decree they claim fails to

‘‘terminate the illegal monopoly’’ or deprive Microsoft of the

fruits of its violations. In their view the decree should

include several of the remedies the district court rejected in

the States’ case, such as requiring Microsoft to ‘‘disentangle’’

its browser from its operating system code and imposing

‘‘more robust API and disclosure obligations requiring the

‘open source’ distribution of IE code.’’ CCIA and SIIA do

not make any arguments with respect to these proposals that

we have not already addressed in connection with the district

court’s decision in the States’ litigation. The intervenors also

make a passing reference to the desirability of requiring

Microsoft to sell the right to ‘‘port’’ Microsoft Office to other

operating system platforms. But they do not discuss the

merits of such a provision, wherefore neither do we.

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Finally, we pause to mention that CCIA’s and SIIA’s

discussion of the ‘‘fruits’’ of Microsoft’s unlawful conduct is

misdirected (as was that of Massachusetts): As we explained

in Part II.B.1, depriving an antitrust violator of the fruits of

its violation does not entail conferring a correlative benefit

upon the particular competitor harmed by the violation.

Rather, as the Government explained in its response to public

comments:

[T]he key to the proper remedy in this case is to end

Microsoft’s restrictions on potentially threatening middleware, prevent it from hampering similar nascent

threats in the future, and restore the competitive conditions created by similar middleware threats. In this

context, the fruit of Microsoft’s unlawful conduct was

Microsoft’s elimination of the ability of potentially threatening middleware to undermine the applications barrier

to entryTTTT The [proposed judgment] addresses and

remedies precisely this issue.

U.S. Response to Public Comments ¶ 17, at 9, 3 J.A. (I) at

1143. Just so.

2. Non-overlapping issues

CCIA and SIIA also raise issues that are either specific to

the consent decree or that Massachusetts did not raise.

a. Enforcement

Section IV of the consent decree deals with compliance and

enforcement. The Government and the settling states ‘‘have

exclusive responsibility for enforcing the decree.’’ Final

Consent Decree § IV.A.1, at *7. They have broad investigative powers, including, among other things, assured ‘‘access

TTT to inspect any and all source code’’ and to interview

Microsoft’s employees and officers about matters contained in

the decree. Id. § IV.A.2. Section IV also sets up a threemember ‘‘Technical Committee’’ of ‘‘experts in software design and programming’’ to assist in enforcement of and

compliance with the decree. Id. § IV.B.1, at *8. The Committee has ‘‘the power and authority to monitor Microsoft’s

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compliance with its obligations’’ under the decree. Id.

§ IV.B.8.a, at *9. As the district court explained, ‘‘the committee is answerable to the government,’’ U.S. Consent Decree, at 197; for instance, it must report in writing every six

months ‘‘the actions it has undertaken in performing its

duties pursuant to [the decree], including the identification of

each business practice reviewed and any recommendations

made by the [Committee].’’ Final Consent Decree

§ IV.B.8.e, at *10. The Committee also has an independent

reporting obligation ‘‘when [it] has reason to believe that

there may have been a failure by Microsoft to comply with

any term’’ of the decree. Id. § IV.B.8.f. As the district court

pointed out, however, ‘‘Nothwithstanding all of the procedures in place with regard to the Technical Committee,

ultimately the power to enforce the terms of the decree rests

with the government.’’ U.S. Consent Decree, at 198.

CCIA and SIIA object to the role of the ‘‘Technical Committee’’ and the adequacy of the enforcement provisions.

They argue the Committee’s enforcement role is illusory

because the decree gives Microsoft and the Government

‘‘equal say in the Committee’s membership’’; the members

lack legal expertise; its means for collecting and processing

third-party complaints are inadequate; and the Committee’s

findings or recommendations may not be used in proceedings

before the district court.

Although the district court must withhold approval of a

consent decree if ‘‘the enforcement mechanism is inadequate,’’

MSL, 118 F.3d at 783, CCIA’s and SIIA’s arguments to that

effect are unpersuasive. The Government addressed similar

criticisms in its response to public comments. It explained

there that a primary purpose of the Committee is to

facilitate the resolution of potentially complex and technologically nuanced disputes between Microsoft and others over the practical workings of the [decree]. The

[Committee] is not intended to have independent enforcement authority; that authority remains with the Plaintiffs and the Court.

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U.S. Response to Comments ¶ 386, at 190, 3 J.A. (I) at 1324.

This was the district court’s understanding as well: ‘‘[T]he

Technical Committee is not intended as a substitute for the

enforcement authority of the United States.’’ U.S. Consent

Decree, at 199.

The intervenors do not explain why they think the design

of the Committee is ill-suited to its structural purpose. The

Committee is to play a leading role in providing technical

competence to the Government in its enforcement of the

decree — a perfectly sensible division of labor — and, we

note, nothing in the decree precludes the Committee from

enlisting expertise beyond its own membership. See, e.g.,

U.S. Response to Public Comments ¶ 387, at 191, 3 J.A. (I) at

1325 (the Committee ‘‘can and should have available to it

expertise broader than purely technical matters’’). In sum,

CCIA and SIIA offer no basis for doubting the ability of the

Committee to inform and assist the Government in its enforcement efforts.

CCIA’s and SIIA’s criticisms of the process for collecting

third-party complaints and of the inadmissibility of the Committee’s findings in proceedings before the court seem entirely misconceived. They complain that ‘‘the most that can

happen’’ when a meritorious third-party complaint is received

by the Committee is that the Committee ‘‘shall advise Microsoft and the Plaintiffs of its conclusion and its proposal for

cure.’’ See Final Consent Decree § IV.D.4.c, at *12. Having

no reason to believe the plaintiffs will not pursue Microsoft on

a valid complaint, into court if necessary, we agree with the

district court that the decree provides for an appropriate

method of receiving and of acting upon third-party complaints. Moreover, as the district court correctly noted,

‘‘third-party concerns cannot supplant the ultimate enforcement role of the government, nor should third-party complaints burden mechanisms established for the government’s

and ultimately the Court’s benefit.’’ U.S. Consent Decree, at

199.

The limitation the decree places upon the use of the

Committee’s findings is also appropriate considering its purUSCA Case #03-5030 Document #833270 Filed: 06/30/2004 Page 72 of 83
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pose: ‘‘[B]y ensuring that Microsoft’s and third parties’ communications will not be used directly against Microsoft, the

[Committee] will benefit from heightened candor and information disclosure by Microsoft employees and others.’’ U.S.

Response to Public Comments ¶ 385, at 190, 3 J.A. (I) at 1324.

In addition, as the district court explained:

The limitation on the use of Technical Committee work

product does not preclude the government from ‘‘utilizing, relying on, or making derivative use of the [Technical Committee’s] work product’’ in conjunction with its

own enforcement activities, TTT nor does the provision

preclude Plaintiffs from obtaining Microsoft documents

from the committee for use in TTT enforcement proceedings.

U.S. Consent Decree, at 200.

Thus, viewed in context, the Government’s ability to enforce the decree is clearly strengthened, not diminished, by

the existence and composition of the Technical Committee.

b. User interface

CCIA and SIIA next object to two provisions in the consent

decree they claim ‘‘limit what competitor products [can] do,’’

namely: § III.C.3, which provides that rival middleware may

be launched automatically at the conclusion of the initial boot

sequence or upon connection to or disconnection from the

internet, but only if a Microsoft Middleware Product provides

similar functionality and the rival middleware displays either

no user interface or a user interface similar in size and shape

to that of the corresponding Microsoft Middleware Product;

and § III.C.5, which allows an OEM to ‘‘[p]resent[ ] in the

initial boot sequence its own IAP offer provided that the

OEM complies with reasonable technical specifications established by Microsoft.’’ The intervenors express concern that

Microsoft may attempt to ‘‘limit middleware competition only

to the circumstances in which its own products launch,’’ and

that it may establish technical specifications that limit the

capabilities of competing software and thus inhibit competition from non-Microsoft middleware.

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These objections are moot because the limitations on the

relief provided in §§ III.C.3 and III.C.5 of the consent decree

are not included in the States’ remedial decree; therefore,

Microsoft may not implement or enforce them. The States’

remedial decree allows Microsoft to restrict the launch of

non-Microsoft middleware only if it would ‘‘drastically alter’’

the user interface; it does not limit automatic launches to

situations in which a Microsoft Middleware Product provides

similar functionality. Compare States’ Remedy § III.C.3, at

268, with Final Consent Decree § III.C.3, at *2. Nor does

the remedial decree require an OEM to comply with Microsoft’s ‘‘reasonable technical specifications’’ in order to present

an IAP offer in the initial boot sequence. Compare States’

Remedy § III.C.5, at 268, with Final Consent Decree

§ III.C.5, at *3.

At oral argument when the court suggested the intervenors’ challenge to §§ III.C.3 and III.C.5 had been rendered

moot by the judgment in States’ Remedy, counsel demurred

only to the extent of stating that, ‘‘if a state settled with

Microsoft, the only thing that would be available would be the

decree in this case.’’ But that is not correct. If CCIA and

SIIA cannot convince even one of the states that is a party to

that case to take up their cause, then the complainant may

itself bring the alleged violation to the attention of the district

court, which retained jurisdiction specifically so it ‘‘may act

sua sponte to issue further orders or directions’’ to enforce

the judgment or to punish violations thereof. States’ Remedy, at 277. In any event, it is speculative at best to suggest

the States will not be vigilant and energetic in the pursuit of

anything Microsoft may do in violation of the remedial decree.23

23 Indeed, the plaintiff states have set up a web site ‘‘established for coordinated state enforcement of federal court judgments

against the Microsoft Corporation for Microsoft’s unlawful monopoly conduct.’’ Coordinated State Enforcement of Microsoft Antitrust

Judgments, at http://www.microsoft-antitrust.gov. The site includes ‘‘an on-line complaint form that may be used by the public to

report suspected violations of the judgments.’’ Id.

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We therefore conclude the intervenors’ complaint that Microsoft might attempt to manipulate the user interface has

been mooted by the judgment in States’ Remedy.

c. Anti-retaliation

CCIA and SIIA also argue (again in a footnote) the decree

is inadequate to prevent Microsoft from improperly terminating an OEM’s license. Section III.A forbids Microsoft from

retaliating against an OEM for developing, distributing, promoting, using, selling, or licensing software that competes

with Windows or with Microsoft middleware; shipping a

personal computer with both Windows and a non-Microsoft

operating system installed; or exercising any other option

available to it under the consent decree. Final Consent

Decree § III.A, at *1. If Microsoft moves for any legitimate

reason to terminate an OEM’s license for Windows, then it

must first give the OEM an opportunity to ‘‘cure’’ the reason

for the proposed termination. Id. Microsoft may terminate

an OEM’s license without giving it the opportunity to cure

only if Microsoft has previously given the OEM two or more

notices of proposed termination.

The intervenors object only to the last-mentioned part of

§ III.A, on the ground it may serve as a way for Microsoft

still to retaliate against OEMs, apparently because the terms

of a Windows license are ‘‘inherently complex.’’ They claim

‘‘it would not be difficult to find an OEM in breach of multiple

technical requirements,’’ thereby giving Microsoft a pretext

for terminating the OEM’s license in apparent compliance

with § III.A. They offer no details, however, and no example

of how the ‘‘inherent[ ] complex[ity]’’ of the license may be

used unfairly against a licensee that, by hypothesis, is ‘‘in

breach of multiple technical requirements.’’ Their narrow

focus also ignores both the overall effectiveness of § III.A

and the severity of other prohibitions intended to prevent

Microsoft’s manipulation of the decree. We conclude the

district court therefore did not err in approving § III.A.

C. Procedural Claims

CCIA and SIIA also claim both the Government and Microsoft have failed to comply with various of the procedural

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requirements of the Tunney Act: (1) the Government failed

to identify and explain ‘‘any unusual circumstances giving rise

to [the decree],’’ as required by 15 U.S.C. § 16(b)(3); (2) the

CIS does not provide a ‘‘description and evaluation of alternatives’’ to the decree, as required by 15 U.S.C. § 16(b)(6); (3)

the CIS does not adequately disclose the documents the

Government considered to be ‘‘determinative’’ in formulating

its proposal, see id. § 16(b); and (4) Microsoft failed to satisfy

its obligation under § 16(g) to disclose all communications it

had with the ‘‘United States,’’ as that term is used in the

Tunney Act. According to the intervenors, these alleged

procedural defects ‘‘preclude a determination that the District

Court engaged in the requisite ‘independent’ and ‘informed’

review of the consent decree.’’

Compliance with the procedural requirements of the Tunney Act ensures the district court has before it the information it needs in order to make an informed determination

whether the decree is in the public interest. According to the

Government, the district court should evaluate the parties’

discharge of their procedural obligations for substantial rather than for strict compliance, see United States v. Bechtel

Corp., 648 F.2d 660, 664 (9th Cir. 1981). As the Government

correctly states, the district court’s evaluation ‘‘inherently

involves judgment and discretion.’’ Therefore, the Government urges us to review the district court’s evaluation of the

parties’ compliance only for abuse of discretion. Meanwhile,

CCIA and SIIA argue for a less deferential standard, claiming the Government’s approach ‘‘assumes away the entire

purpose of the disclosures.’’ We need not decide which

standard to apply, however, because the district court was

clearly correct in determining both parties met the requirements of the Act.

1. Government’s disclosure

CCIA and SIIA preface their objections to the Government’s disclosures in this case with the claim that even

‘‘technical and formalistic failures to comply’’ with the procedural requirements of the Tunney Act are grounds for denying entry of a proposed judgment. For this counter-intuitive

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proposition they cite United States v. Central Contracting

Co., 527 F. Supp. 1101 (E.D. Va. 1981), but not surprisingly

the procedural facts of that case bear no resemblance to those

of the present case: The defects in the Government’s compliance with the Act in Central Contracting were neither ‘‘technical’’ nor ‘‘formalistic’’; rather, they frustrated the whole

purpose of the Act. Indeed, the record was ‘‘devoid of any

indication that any of the procedures [of the Tunney Act]

other than the original filing had been complied with.’’ Id. at

1102. It appeared the Government had not even published

the CIS and the proposed consent decree in the Federal

Register and newspapers of general circulation, as specifically

required by § 16(b). Id. at 1104. As seen below, no similarly

material defects mar the Government’s disclosure here; Central Contracting is therefore no help to CCIA and SIIA in

this case.

The intervenors’ first objection to the Government’s disclosure is that the CIS does not provide ‘‘an explanation of any

unusual circumstances giving rise’’ to the proposed judgment,

as required by § 16(b)(3). Specifically, they complain the

CIS failed to satisfy § 16(b)(3) because it did not include a

discussion of the ‘‘unusual and perhaps unprecedented’’ circumstance that the consent decree was entered after a full

trial on the merits and appellate review. The Government

simply denies the alleged shortcoming.

As an initial matter we acknowledge, as did the district

court, the Government’s thorough discussion in the CIS of the

substance of the consent decree. That document clearly

reflects the Government’s extensive study of the likely effects

of the consent decree, and its consideration of the more than

32,000 comments submitted by the public.

CCIA’s and SIIA’s criticism of the Government’s disclosure

is narrowly focused upon the ‘‘unusual circumstances’’ requirement of § 16(b)(3). Although the Government nowhere

in the CIS characterized the proceedings in this case as

‘‘unusual,’’ it did explain fully the circumstances from which

the consent decree arose, pointing out specifically that the

parties settled only after this court had held that Microsoft

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violated § 2 of the Sherman Act. The Government also

explained in the CIS that our holding in Microsoft III substantially narrowed the grounds upon which Microsoft had

been held liable by the district court, see CIS at 7-8, 1 J.A. (I)

at 142-43, wherefore:

[The] provisions in the Proposed Final Judgment are

modeled after [the interim conduct provisions of the final

judgment entered in June 2000, see Remedy I], with

modifications, additions and deletions that take into account the current and anticipated changes in the computer industry, as well as the decision of the Court of

Appeals, which reversed certain of the District Court’s

liability findings.

Id. at 61-62, 1 J.A. (I) at 195-96. The Government’s discussion of this procedural context fully conveyed the ‘‘unusual’’

nature of the circumstances giving rise to the consent decree,

as required by § 16(b)(3).

CCIA and SIIA next argue ‘‘the CIS fails to provide a

complete description of the settlement’s conduct remedies or

the requisite ‘evaluation of alternatives’ to the proposal submitted for approval.’’ See 15 U.S.C. § 16(b)(6). They also

argue the Government’s ‘‘failure to explain its decision to

adopt conduct remedies less stringent than the interim conduct relief entered by the previous district judge evidences an

even greater statutory breach.’’ The Government defends

the sufficiency of its disclosure and suggests the intervenors

‘‘misconceive the nature of the CIS, treating it as if it were an

end in itself.’’ According to the Government, the ‘‘CIS begins

a public dialog [sic], and as the [district] court pointed out,

the volume and quality of the public comments it stimulated

shows it accomplished its purpose,’’ citing Tunney Act Proceedings, at 13.

The intervenors clearly do attribute to the Tunney Act

more than the statute requires. Section 16(b)(6) calls only for

‘‘a description and evaluation of alternatives to such proposal

actually considered by the United States.’’ It does not call

for a ‘‘complete’’ description of all the Government’s options,

as CCIA and SIIA claim, nor for any discussion of an

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alternative not ‘‘actually considered’’ by the Government. In

this case the CIS set out the Government’s contemplation

(and rejection) of its obvious alternative, namely, litigating to

judgment the tying claim and the question of the remedy.

The Government explained its decision to forego further

litigation based upon ‘‘the need for prompt relief in a case in

which illegal conduct has long gone unremedied; the strength

of the parties’ respective positions in a remedies hearing and

the uncertainties inherent in litigation; and the time and

expense required for litigation of the remedy.’’ CIS at 60-61,

1 J.A. (I) at 194-95. The CIS also addresses the Government’s decision not to pursue a ‘‘structural break-up of Microsoft into separate operating system and applications businesses,’’ id. at 61, 1 J.A. (I) at 195, based upon both our

decision narrowing Microsoft’s liability and the Government’s

desire ‘‘to obtain prompt, certain and effective relief,’’ id.

The CIS did set out the various proposals made by industry

participants and other interested individuals. These include

requirements that Microsoft ‘‘license the Windows source

code to OEMs’’ and allow them to modify it and distribute the

modified versions; ‘‘disclose the entire source code’’ for Windows and Microsoft middleware; include certain nonMicrosoft middleware, such as the Java Virtual Machine, with

its distribution of Windows; manufacture and distribute Windows without Microsoft middleware; continue to support

industry standards upon adopting them or ‘‘extend[ing] or

modif[ying] their implementation’’; and waive its rights to

intellectual property ‘‘in related APIs, communication interfaces and technical information’’ if the court finds Microsoft

exercised such rights in order ‘‘to prevent, hinder, impair, or

inhibit middleware from interoperating with the operating

system or other middleware.’’ Id. at 62-63, 1 J.A. (I) at 196-

97. The Government rejected these proposals in part because, like the others contemplated in the CIS, they did not,

in the Government’s estimation, provide the effective, certain,

and timely relief afforded by the consent decree.

The Government set out in the CIS all the realistic options

it had in determining whether to enter into the consent

decree with Microsoft. Even if the Government did not set

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out for each option the ‘‘complete evaluation’’ desired by

CCIA and SIIA, it did fairly describe its options in a manner

that informed public comment. That is what the Act requires

and all that it requires. We therefore hold the district court

did not err in approving the Government’s disclosure in the

CIS.

Finally, CCIA and SIIA argue the Government failed to

make available all ‘‘materials and documents which [it] considered determinative in formulating [the settlement] proposal.’’

See 15 U.S.C. § 16(b). In the CIS, the Government stated,

‘‘No materials and documents of the type described in

[§ 16(b) of the Tunney Act] were considered in formulating

the Proposed Final Judgment.’’ CIS at 68, 1 J.A. (I) at 202.

The district court, relying upon our decision in MSL, concluded ‘‘[t]he record of this case supports the government’s

position that there exists no document so significant that it

could be considered alone, or in combination with other

documents, to be a ‘smoking gun.’ ’’ Tunney Act Proceedings, at 12.

The intervenors claim the Government’s statement that no

documents were determinative cannot be accurate: ‘‘Even in

antitrust cases that are not nearly as complex as this one,

courts have found similar disclaimers ‘to be almost incredible,’ ’’ they say, quoting Central Contracting, 527 F. Supp. at

1104. As mentioned above, however, the record in Central

Contracting was nearly ‘‘devoid’’ of any indication that either

the Government or the defendant had complied with the

procedures required by the Act. Id. at 1102. In that context

it is not surprising the district court viewed a ‘‘silent record’’

as raising the ‘‘specter’’ of questionable practices the Tunney

Act was intended to expose. Id. (citing 119 Cong. Rec. 24,598

(1973)). At any rate, this court has no basis for doubting the

Government’s characterization of what ‘‘[it] considered determinative’’ in this case, particularly when one recalls that we

have previously held § 16(b) reaches ‘‘at the most to documents that are either ‘smoking guns’ or the exculpatory

opposite.’’ MSL, 118 F.3d at 784. On the contrary, given the

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ments, it is not at all surprising that the Government considered no particular ‘‘materials [or] documents’’ determinative.

In sum, we are not persuaded by any of CCIA’s and SIIA’s

objections to the Government’s compliance with the procedural requirements of the Tunney Act. We hold, therefore, the

district court did not err in approving the Government’s

compliance with § 16(b).

2. Microsoft’s disclosure

The Tunney Act requires the defendant to file with the

district court ‘‘all written or oral communications by or on

behalf of such defendant TTT with any officer or employee of

the United States concerning or relevant’’ to a proposed

consent decree. 15 U.S.C. § 16(g). Microsoft first made the

required disclosure under § 16(g) on December 10, 2001; it

included communications from September 28, 2001 forward.

At a hearing held in March 2002 the district court questioned

whether § 16(g) required disclosure of contacts only as of the

date the court ordered the parties to engage in settlement

discussions — September 28, 2001 — or whether it extended

back to the date this court remanded the case, namely,

August 24, 2001. In response to the court’s concern, Microsoft disclosed one additional communication, a September 27

meeting of counsel for the parties, which was also attended by

an employee of Microsoft in order ‘‘to provide a demonstration of Windows XP and to answer questions about its

functionality.’’

Asserting ‘‘[i]t is widely known that since 1998 Microsoft

has comprehensively lobbied both the legislative and executive branches of the federal government to end this case,’’

CCIA and SIIA first claim the Tunney Act requires that

Microsoft disclose all those contacts. The district court,

however, limited Microsoft’s obligation to disclosure of contacts the company had with the Executive Branch, starting at

the time this court remanded the case to the district court for

further proceedings. Tunney Act Proceedings, at 20-21. We

agree with that interpretation and application of the Act.

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Section 16(g), as mentioned above, required Microsoft to

disclose its communications with ‘‘any officer or employee of

the United States.’’ The question is whether that includes

members or employees of the Legislative Branch. Reference

is made to ‘‘United States’’ 18 times in the Tunney Act. See

§§ 15 U.S.C. 16(b)-(h). In all 17 references other than the

disputed one in § 16(g) the term plainly denotes only the

Executive Branch. See, e.g., id. § 16(b) (‘‘Any proposal for a

consent judgment submitted by the United States for entry in

any civil proceeding brought by or on behalf of the United

States under the antitrust laws shall be filed with the district

court TTT and published by the United States in the Federal

Register’’). It is a commonplace of statutory construction

that ‘‘identical words used in different parts of the same act

are intended to have the same meaning.’’ See Comm’r of

Internal Revenue v. Lundy, 516 U.S. 235, 250 (1996). CCIA

and SIIA offer no reason to believe the reference in § 16(g)

to communications between Microsoft and ‘‘any officer or

employee of the United States’’ uniquely extends the latter

term beyond the Executive Branch. Moreover, because only

the Executive Branch can settle an antitrust case, only contacts with the Executive Branch are relevant to the purpose

of the Tunney Act — namely, to block settlements that are

not in the public interest. We therefore conclude, as did the

district court, the term ‘‘United States’’ as used in § 16(g)

refers only to the Executive Branch.

The intervenors also object to Microsoft’s having disclosed

‘‘only meetings that occurred during the last round of settlement negotiations ordered by the Court.’’ Microsoft responds:

[T]he Consent Decree was a direct outgrowth of the

intense settlement discussions ordered by the District

Court [on remand]. Any [settlement] discussions occurring prior to that time period did not concern and were

not relevant to the Consent Decree ultimately agreed to

by the partiesTTTT Previous failed settlement discussions are irrelevant to the Consent Decree, which focuses

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on remedying the liability determinations affirmed on

appeal.

We agree. The parties’ relative positions were considerably

changed by our decision in Microsoft III. Therefore the only

communications ‘‘concerning or relevant’’ to the consent decree are those that took place after our remand to the district

court. See 15 U.S.C. § 16(g).

CCIA and SIIA offer no persuasive reason to believe

Microsoft’s disclosures do not comply with § 16(g). Those

disclosures fully informed the district court of the communications relevant to the district court’s public-interest determination, and that court did not err in approving them.

IV. Conclusion

The remedial order of the district court in No. 02-7155 is

affirmed. In No. 03-5030, the order denying intervention is

reversed and the order approving the consent decree in the

public interest is affirmed.

So ordered.

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