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High Court Kicks Microsoft Back to Appellate Court

Microsoft Corp. had a pleasant surprise Tuesday morning when the U.S. Supreme Court declined to take up the federal government's antitrust case against the company.

The case will now go to the U.S. Court of Appeals for the District of Columbia, which agreed to take up the case on June 13 but waited for the Supreme Court to decide whether it would hear the case.

U.S. District Court Judge Thomas Penfield Jackson asked the high court to take up the case on June 20, citing the 1974 revision of the Expediting Act which permits cases of national significance to bypass the normal appellate process and be heard directly by the U.S. Supreme Court. Legal experts, who expressed doubts that Judge Jackson's invocation of the little-known law would pay off, were vindicated by the court's action Tuesday.

The decision is a victory for Microsoft, which has previously voiced confidence that the appeals court, which has sided with the company in earlier decisions, will rule in its favor. The government has argued that the case has significant implications for the U.S. economy and going directly to the Supreme Court could shave as much as a year off the appeals process. Microsoft countered that the Supreme Court should have the benefit of appellate court deliberations before judging the case's complex issues.

Justice Stephen Breyer was the only dissenting voice in the full court's action. Breyer said the case "significantly affects an important sector of the economy." But he found no support among the rest of the nine-member court. Even Chief Justice William Rehnquist, whose son -- a lawyer with a Boston law firm -- is working on a private antitrust case for Microsoft, declined to recuse himself and voted to send the case back to a lower court.

In an interview on CNBC Tuesday morning, Microsoft Chief Executive Officer Steve Ballmer lauded the high court's action, "We're glad to get this case in front of an appellate body." He added, "I think this is just another procedural step in the process. We continue to remain convinced in our legal position. We're glad to have a chance to present that to the appellate court. But I don't think too much should be read into it either way."

Microsoft is appealing Judge Jackson's decision that it should be split into two separate companies as a way to remedy antitrust allegations leveled by the U.S. Department of Justice and 19 states. Judge Jackson handed down his decision after he found the company had illegally attempted to stifle competition in the computer operating system and Internet browser markets.

Microsoft has maintained that the government's lawsuit against it was full of factual and legal errors.

Microsoft stock rose 3.5 percent by noon Tuesday in heavy trading.



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