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State v. Microsoft Corp.

January 29, 2008

STATE OF NEW YORK, ET AL., PLAINTIFFS,
v.
MICROSOFT CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Colleen Kollar-kotelly United States District Judge

MEMORANDUM OPINION*fn1

Currently pending before the Court are the motions to extend the Final Judgments in this action filed by the California Movants and the New York Movants (collectively, the "Moving States").*fn2 The Final Judgments arise out of a single civil complaint filed by a group of state plaintiffs on May 18, 1998, alleging antitrust violations by Defendant Microsoft Corporation and asserting claims pursuant to federal and state law.*fn3 The two Final Judgments are premised upon the same liability finding affirmed by the United States Court of Appeals for the District of Columbia Circuit, and are virtually identical in their substantive provisions. Nevertheless, the two Final Judgments were reached via different paths: the New York Movants' Final Judgment was the result of a negotiated consent decree settling the remedy portion of this case as to certain state plaintiffs, while the California Movants' Final Judgment was entered by the Court following a thirty-two day remedy-specific evidentiary hearing.

The Moving States' motions seek the same objective: the extension of the relevant Final Judgment until November 12, 2012. The Court has conducted a searching and dedicated review of the Moving States' motions, Microsoft's Opposition, the Moving States' Reply, and the exhibits attached to those memoranda. In addition, the Court has requested further targeted briefing from the Moving States and Microsoft, and has reviewed each party's filings carefully. The Court has also given due consideration to the amicus curiae brief filed by the United States of America, Plaintiff in the related action, United States v. Microsoft Corporation, Civil Action No. 98-1232.*fn4 Upon a thorough review of all of the foregoing, the relevant statutes and case law, and the entire record herein, the Court shall GRANT-IN-PART and DENY-IN-PART the Moving States' motions to extend the Final Judgments.

Overview of Court Findings

The Court's decision in this matter is based upon the extreme and unforeseen delay in the availability of complete, accurate, and useable technical documentation relating to the Communications Protocols that Microsoft is required to make available to licensees under Section III.E of the Final Judgments. The Court concludes that the Moving States have met their burden of establishing that this delay constitutes changed circumstances, which have prevented the Final Judgments from achieving their principal objectives. As such, the Court shall extend until November 12, 2009 those provisions of the Final Judgments that have not yet been extended until that date (collectively the "Expiring Provisions"),*fn5 thus making all provisions of the Final Judgments coterminous. The Court declines the Moving States' invitation to extend the entirety of the Final Judgments through 2012 at this point in time, concluding that it is premature to do so.

The Court's extension should not be viewed as a sanction against Microsoft; to the contrary, the Court commends Microsoft for its willingness to cooperate with the Plaintiffs in this action and in United States v. Microsoft in negotiating solutions to issues as they have arisen throughout the past five years. Indeed, because the parties have negotiated solutions to each of the myriad issues that have arisen regarding the technical documentation, the Court has never been asked to find Microsoft out of compliance with the Final Judgments, and has not deemed a sua sponte finding of non-compliance necessary or fruitful in achieving compliance. Nevertheless, the fact remains that more than five years after the Final Judgments were entered, the technical documentation required by Section III.E is still not available to licensees in a certifiably complete, accurate, and useable form. Further, as a result of the delay, the various provisions of the Final Judgments have not yet been given the opportunity to operate together as the comprehensive remedy the Court and the parties envisioned when the Final Judgments were entered. The Court's extension should thus be viewed as a means to allow the comprehensive remedial scheme embodied in the Final Judgments the chance to maximize Section III.E's procompetitive potential.

The Court cannot know what impact the technical documentation required by Section III.E will have on the market once it is finally available in a complete, accurate, and useable form. The Moving States, however, proffer realistic examples of ways in which the Expiring Provisions of the Final Judgments can yet play a significant role in helping Section III.E achieve its full potential. In the face of these examples, the Court concludes that allowing the Expiring Provisions of the Final Judgments to lapse before Section III.E has even been given a chance to succeed might threaten the ability of the Final Judgments to achieve their full procompetitive impact. The Court therefore concludes that the limited extension it is approving is consonant with the policies of encouraging consent decrees, as well as the Court's authority to modify court-ordered judgments.

I. BACKGROUND

A. Proceedings Leading to the Remedial Final Judgments

On May 18, 1998, simultaneous with the filing of the complaint in United States v. Microsoft, a group of state plaintiffs filed a civil complaint alleging antitrust violations by Microsoft and seeking preliminary and permanent injunctions barring the company's allegedly unlawful conduct. New York v. Microsoft Corporation, 224 F. Supp. 2d 76, 86 (D.D.C. 2002) (hereinafter "Remedy Opinion").*fn6 The instant action asserted claims pursuant to federal and state law, and was consolidated with the United States' action, which asserted only federal law claims. Id. Following a bench trial in the consolidated cases, Judge Thomas Penfield Jackson found Microsoft liable for violating §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, and ordered the division of Microsoft into two separate corporations to remedy those findings of liability. Id. (citing United States v. Microsoft Corp., 87 F. Supp. 2d 30, 35 (D.D.C. 2000) and United States v. Microsoft Corp., 97 F. Supp. 2d 59, 64 (D.D.C. 2000)).

On Microsoft's appeal of those rulings, the D.C. Circuit deferred to Judge Jackson's factual findings, affirmed-in-part and reversed-in-part his findings of liability, and vacated the remedy decree. Id. (citing United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001) (hereinafter "Microsoft")). Specifically, the D.C. Circuit affirmed only limited violations based on § 2 of the Sherman Act for illegal monopoly maintenance, and reversed all other grounds for liability. Soon thereafter, the consolidated cases were randomly reassigned to this Court, with instructions to hold a "'remedies-specific evidentiary hearing,' and to 'fashion an appropriate remedy' in light of the revised liability findings." Id. at 87 (citing Microsoft, 253 F.3d at 103, 105). As the remedies crafted on remand were thus cabined by the D.C. Circuit's findings and instructions in its liability opinion, the Court briefly discusses the key portions of that opinion.

1. Appellate Findings and Instructions

The D.C. Circuit's opinion began by affirming the district court's definition of the relevant market as "the licensing of all Intel-compatible PC operating systems worldwide."*fn7

Microsoft, 253 F.3d at 52. The D.C. Circuit also adopted the district court's determination that "circumstantial evidence proves that Microsoft possesses monopoly power," and noted that Microsoft's behavior "may well be sufficient to show the existence of monopoly power," if direct proof were required. Id. at 56-57. The D.C. Circuit's adoption of the market definition was premised on its simultaneous acceptance of Plaintiffs' theory of Microsoft's market dominance. The district court and appellate court both noted that Microsoft's lawfully-acquired monopoly was naturally protected by a "structural barrier" known as the "applications barrier to entry." Id. at 55. The applications barrier to entry arises because: "(1) most consumers prefer operating systems for which a large number of applications have already been written; and (2) most developers prefer to write for operating systems that already have a substantial consumer base." Id. The applications barrier to entry creates a network effects situation, which perpetuates Microsoft's operating system dominance. Remedy Opinion, 224 F. Supp. 2d at 89-90. This is because "[e]very operating system has different APIs," such that "applications written for one operating system will not function on another unless the developer undertakes the 'time consuming and expensive' process" of "porting" the application to an alternative operating system. Id. (quoting Microsoft, 253 F.3d at 53, 55).

During the liability phase of this case, Plaintiffs proceeded on the theory that certain kinds of software products, known as "middleware," could weaken the applications barrier to entry "by serving as platforms for applications, taking over some of the platform functions provided by Windows." Id. at 90. Middleware has the ability to expose its own APIs, and Plaintiffs posited that "[u]ltimately, by writing to the middleware API set, applications developers could write applications which would run on any operating system on which the middleware was preset." Id.*fn8 In accepting the district court's definition of the relevant market and Plaintiffs' theory of Microsoft's market dominance, the D.C. Circuit concluded that the district court had properly excluded middleware products from the relevant market. Id.

The majority of the D.C. Circuit's opinion focused on Microsoft's challenges to the district court's findings of liability under § 2 of the Sherman Act.*fn9 The D.C. Circuit addressed each in turn, and ultimately sustained the district court's findings of liability with respect to the following specific conduct: (1) the license restrictions Microsoft imposed upon manufacturers of PCs, known as OEMs, Microsoft, 253 F.3d at 59-64; (2) Microsoft's agreements with IAPs, by which Microsoft agreed "to provide easy access to IAPs' services from the Windows desktop in return for the IAPs' agreement to promote [Microsoft's Internet Explorer ("IE") web browser] exclusively and to keep shipments of internet access software using [the competing Navigator] browser under a specific percentage," id. at 67-71; (3) Microsoft's agreements with ISVs, which required ISVs "to distribute, promote, and rely on IE rather than Navigator," id. at 71-72; (4) Microsoft's exclusive agreement with Apple Computer, "both an OEM and a software developer," which required Apple to privilege IE over Navigator, id. at 71-74; (5) Microsoft's conduct with respect to the "Java" technologies,*fn10 including its agreements requiring major ISVs to promote Microsoft's Java Virtual Machine exclusively, and its deception of Java developers about the Windows-specific nature of the tools it distributed to them, id. at 74-77; and (6) Microsoft's "threat" to Intel regarding its efforts to develop a "high performance, Windows- compatible" and "Sun compliant" Java Virtual Machine, id. at 77-78.*fn11

The D.C. Circuit also imposed liability upon Microsoft for the "state law counterparts of" Plaintiffs' claims pursuant to § 2 of the Sherman Act. Id. at 46. Beyond these findings, however, the D.C. Circuit did not find Microsoft liable for any additional antitrust violations. In particular, the D.C. Circuit reversed the district court's conclusion that Microsoft's "course of conduct" as a whole constituted a separate violation of § 2 of the Sherman Act. Id. at 78. The D.C. Circuit also rejected the district court's finding of attempted monopolization and remanded Plaintiffs' § 1 tying claim for further proceedings at the district court level. Remedy Opinion, 224 F. Supp. 2d at 95.*fn12 Plaintiffs opted not to pursue their tying claim on remand. Id.

After reviewing the district court's conclusions with respect to liability, the D.C. Circuit turned to considering the district court's choice of remedy, which mandated the divestiture of Microsoft Corporation into two separate entities and included a number of "interim restrictions on Microsoft's conduct." Id. at 95-96 (quoting Microsoft, 253 F.3d at 100). The D.C. Circuit "found three fundamental flaws in the district court's order of remedy, each of which alone justified vacating the remedial decree." Id. at 96. First, the D.C. Circuit focused on the district court's failure to hold an evidentiary hearing in the face of disputed facts concerning the remedy.

Microsoft, 253 F.3d at 101-03. Next, the D.C. Circuit concluded that the district court "failed to provide an adequate explanation for the relief it ordered," by not "explain[ing] how its remedies decree would accomplish [the] objectives" of a remedial decree in an antitrust case. Id. at 103. The D.C. Circuit reiterated that "a remedies decree in an antitrust case must seek to 'unfetter a market from anticompetitive conduct,' to 'terminate the illegal monopoly,*fn13 deny to the defendant the fruits of its statutory violation, and ensure that there remain no practices likely to result in monopolization in the future.'" Id. (quoting Ford Motor Co. v. United States, 405 U.S. 562, 577 (1972) and United States v. United Shoe Mach. Corp., 391 U.S. 244, 250 (1968) (hereinafter "United Shoe")). Finally, the D.C. Circuit concluded that its substantial modifications to the liability imposed by the district court merited a new determination of the remedy for the surviving antitrust violations. Id. at 103-05.

The D.C. Circuit therefore remanded the case to this Court, with instructions to resolve any factual disputes surrounding a remedy and exercise the Court's "broad discretion" in imposing the "relief it calculates will best remedy the conduct . . . found to be unlawful." Id. at 105. In so doing, the D.C. Circuit "offered specific guidance to this Court regarding the inquiry to be undertaken following remand." Remedy Opinion, 224 F. Supp. 2d at 97. Of particular significance, the D.C. Circuit instructed this Court to consider the quantum of proof presented by Plaintiffs as to the "causal connection between Microsoft's anticompetitive conduct and its dominant position in the OS market" in determining what remedy to impose. Microsoft, 253 F.3d at 106. The D.C. Circuit specifically noted that it had "found a causal connection between Microsoft's exclusionary conduct and its continuing position in the operating systems market only through inference," and that the district court "expressly did not adopt the position that Microsoft would have lost its position in the OS market but for its anticompetitive behavior." Id. at 106-07. The D.C. Circuit also stressed that it had "drastically altered the scope of Microsoft's liability," and advised this Court to "consider which of the [original] decree's conduct restrictions remain viable in light of [the] modification of the original liability decision," id. at 105. While the D.C. Circuit did not "undertake to dictate to [this] Court the precise form that relief should take on remand," it noted that the relief "should be tailored to fit the wrong creating the occasion for the remedy." Id. at 107.

2. Remedy Proceedings Before This Court

"Following remand, pursuant to Court Order, the parties in the two consolidated cases entered into intensive settlement negotiations." Remedy Opinion, 224 F. Supp. 2d at 87. These negotiations resulted in the United States and Microsoft reaching a resolution in United States v. Microsoft, in the form of a proposed consent decree. Id. In the instant case, the settlement negotiations were partially successful; the New York Group joined the settlement between the United States and Microsoft, electing not to proceed to a remedies-specific hearing. Id.*fn14 The States that opted not to join the settlement--those in the California Group--proposed a remedy distinct from that presented in the proposed consent decree. Id.*fn15 Following expedited discovery, an evidentiary hearing on the issue of the remedy commenced on March 18, 2002. Id. The parties submitted direct testimony in written format, and cross-examination and re-direct testimony were offered in open court. Id. "Over thirty-two trial days, the Court reviewed the written direct testimony and heard the live testimony of fifteen witnesses proffered by Plaintiffs and nineteen witnesses proffered by Microsoft." Id.

On November 1, 2002, the Court issued three Memorandum Opinions and related Orders.*fn16 The first Memorandum Opinion and accompanying Order, issued in United States v. Microsoft, involved the Court's determination, pursuant to the Antitrust Procedures and Penalties Act ("Tunney Act"), 15 U.S.C. § 16(b)-(h), that, with the exception of the provisions relating to the Court's retention of jurisdiction--which the Court revised to be both more specific and more broadly drawn*fn17 --the consent decree proposed by the United States and Microsoft was in the public interest. See generally United States v. Microsoft Corp., 231 F. Supp. 2d 144 (D.D.C. 2002) (hereinafter "Tunney Act Opinion").*fn18 The second Memorandum Opinion and Order, issued in the instant case, similarly concluded that, with the exception of the retention of jurisdiction provision, the consent decree proposed by the Settling States and Microsoft resolved the controversy in a manner consistent with the public interest. See generally New York v. Microsoft Corp., 231 F. Supp. 2d 203 (D.D.C. 2002) (hereinafter "Settling States Opinion"). The Settling States Opinion incorporated by reference the Court's Tunney Act Opinion. The final Memorandum Opinion and accompanying Final Judgment addressed the dueling remedy proposals presented to this Court by Microsoft and the California Group, which formed the basis for the remedy-specific evidentiary hearing. See generally Remedy Opinion, 224 F. Supp. 2d 76.

The Final Judgments approved as to the Settling States and the Litigating States are substantively quite similar. This similarity is not surprising because both the Settling States' consent decree and the Court-ordered remedy followed upon, and were constrained by, the D.C. Circuit's specific liability findings, as well as its guidance as to the nature of an appropriate remedy in light of those findings. Each Final Judgment, in keeping with the goals of antitrust remedies described by the D.C. Circuit in its liability opinion and relevant Supreme Court precedent, addresses not only those specific acts for which the D.C. Circuit imposed liability, but also includes forward-looking remedies designed to "effectively pry open to competition a market that has been closed by defendants' illegal restraints." Remedy Opinion, 224 F. Supp. 2d at 100, 108 (quoting International Salt Co. v. United States, 332 U.S. 392, 401 (1947)). Significantly, in the Settling States Opinion, the Court noted that the Settling States' proposed consent decree "takes account of the theory of liability advanced by Plaintiffs, the actual liability imposed by the appellate court, the concerns of the Plaintiffs with regard to future technologies, and the relevant policy considerations." Settling States Opinion, 231 F. Supp. 2d at 259 (incorporating Tunney Act Opinion). These are the same factors that the Court weighed in the remedy proceeding. See generally Remedy Opinion, 224 F. Supp. 2d 76.

B. The Final Judgments

The following description highlights the key provisions that are common to both Final Judgments, and notes the few instances in which the Final Judgments differ. At the outset, the Court notes the following definitions, which are important to understanding the parameters of the Final Judgments:

* The term "Non-Microsoft Middleware" incorporates the middleware threats that were the focus of the liability phase, and includes "a non-Microsoft software product running on a Windows Operating System Product that exposes a range of functionality to ISVs through published APIs, and that could, if ported to or made interoperable with, a non-Microsoft Operating System, thereby make it easier for applications that rely in whole or in part on the functionality supplied by that software product to be ported to or run on that non-Microsoft Operating System." Final Judgments, § VI.M.

* A "Non-Microsoft Middleware Product" is similar to "Non-Microsoft Middleware," but adds the requirement that "at least one million copies" of the product "were distributed in the United States within the previous year." Id., § VI.N.

* The term "Microsoft Middleware Product" is defined according to a specific set of Microsoft functionalities existing at the time of the Final Judgments, as well as future Microsoft functionality. The existing set of functionalities are those 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." The future technologies include software included in Windows that provides the functionality of internet browsers, email client software, networked audio/video client software, or instant messaging software. Also included in the definition of "Microsoft Middleware Product" are future functionalities that are both distributed as part of Windows and separately from Windows by Microsoft, trademarked by Microsoft, and which compete with Non-Microsoft Middleware Products. Id., § VI.K.

* The term "Microsoft Middleware" is similar to "Microsoft Middleware Product," but is limited to the software code that is separately distributed and trademarked or marketed as a major version of a Microsoft Middleware Product. Id., § VI.J.

1. Substantive Provisions Contained in Section III

The substantive proscriptions of each Final Judgment are included within Section III, which is entitled "Prohibited Conduct." Subsections A through C of § III focus on Microsoft's dealing with OEMs. Section III.A bars Microsoft from retaliating against OEMs for (i) "developing, distributing, promoting, using, selling, or licensing" software or Non-Microsoft Middleware, (ii) shipping a Personal Computer that includes a non-Microsoft Operating System, or (iii) exercising options or alternatives provided by the Final Judgment. Id. at § III.A.*fn19

Section III.A also requires Microsoft to provide Covered OEMs with written notice before terminating their licenses for Windows Operating Systems Products. Id.*fn20 In the Remedy Opinion, the Court described § III.A as "provid[ing] substantial freedom to OEMs in their configuration of Microsoft's Windows operating system by lifting Microsoft's illegal license restrictions." 224 F. Supp. 2d at 152. Under § III.B, Microsoft is required to provide Windows Operating System Products to Covered OEMs "pursuant to uniform license agreements with uniform terms and conditions." Final Judgments, § III.B. To this end, § III.B requires the royalties Microsoft charges to be set forth in a uniform schedule published on a website accessible to the Plaintiffs and the Covered OEMs. Id.*fn21

Section III.C "secure[s] for OEMs the general ability to install and display icons, shortcuts and menu entries for middleware . . . on the Windows desktop or in the Start menu," while reflecting "the care with which the appellate court separated anticompetitive restrictions from legitimate license restrictions." Remedy Opinion, 224 F. Supp. 2d at 153. As such, § III.C generally prohibits Microsoft from restricting by agreement any OEM licensee from: (1) installing and displaying icons, shortcuts, or menu entries for any Non-Microsoft Middleware or any product or service that distributes, uses, promotes or supports any Non-Microsoft Middleware, where such applications are generally displayed; (2) distributing or promoting Non-Microsoft Middleware by installing and displaying on the desktop shortcuts of any size or shape so long as they do not interfere with the functionality of the user interface; (3) launching automatically any Non-Microsoft Middleware;*fn22 (4) offering users the option of launching other Operating Systems; (5) presenting in the initial boot sequence its own IAP offer;*fn23 or (6) exercising any of the options provided in § III.H of the Final Judgments. Final Judgments, § III.C.

The Court's Remedy Opinion described Sections III.D and III.E of the Final Judgments as "explicitly forward-looking remedies," which "reflect an agreement that effective interoperation between software running on two or more devices will play an integral role in the successful emergence of new software products and platforms." Remedy Opinion, 224 F. Supp. 2d at 171. Elsewhere in the Remedy Opinion, the Court acknowledged that the "interoperability disclosures" contained in §§ III.D and III.E were not "directly related to the imposition of liability," but rather "aimed at the broader goals of unfettering the market and restoring competition." Id. at 226; see also Settling States Opinion, 231 F. Supp. 2d at 244-45 (incorporating the Tunney Act Opinion, and stating that "while the rationale for this type of disclosure rests, in part, upon the finding of liability for conditioning the provision of technical information on illegal, exclusive agreements, it can be viewed more broadly to relate to the United States' theory of the case as a whole.").

Section III.D requires Microsoft to disclose to ISVs, IHVs, IAPs, ICPs, and OEMs the APIs and related documentation that are used by Microsoft Middleware to interoperate with a Windows Operating System Product. Final Judgments, § III.D. Section III.E requires Microsoft--starting nine months after the submission of the Settling States' Final Judgment to the Court and three months after the entry of the Litigating States' Final Judgment--to make available for use by third parties "on reasonable and non-discriminatory terms (consistent with Section III.I) any Communications Protocol that is, on or after the date [the] Final Judgment is submitted to the Court, (i) implemented in a Windows Operating System Product installed on a client computer, and (ii) used to interoperate, or communicate, natively . . . with a Microsoft server operating system product." Final Judgments, § III.E. Section III.E describes "native" communications as "without the addition of software code to the client operating system product." Id.

The Court's Remedy Opinion described § III.E as "[i]n all likelihood" "the most forward-looking provision in the Court's remedy." Remedy Opinion, 224 F. Supp. 2d at 173. Section III.E was included in the Settling States' consent decree based on the United States' belief that the Final Judgment's "effectiveness would be undercut unless it addressed the rapidly growing server segment of the market." Settling States Opinion, 231 F. Supp. 2d at 249 (incorporating the Tunney Act Opinion). Section III.E represented an effort to "obtain protection which is prospective in its focus" despite "the rapid pace of change in the software industry," so that the "core of the decree would [not] prove prematurely obsolete." Id. Similarly, § III.E was included in the Court-imposed Litigating States' remedy based on the Court's conclusions that: server operating systems can perform a function akin to that performed by traditional middleware because they provide a platform for applications running 'for' use on a PC. The mandatory disclosure of the communications protocols relied upon by Microsoft's PC operating system to interoperate with its server operating systems will advance the ability of non-Microsoft operating systems to interoperate, or communicate, with the ubiquitous Windows PC client.

Advancement of the communication between non-Microsoft server operating systems and Windows clients will further the ability of these non-Microsoft server operating systems to provide a platform which competes with Windows itself.

Remedy Opinion, 224 F. Supp. 2d at 172-73.

Sections III.F, III.G, and III.H of the Final Judgments relate to "other participants in the ecosystem," namely ISVs, IHVs, IAPs, ICPs, and end users. See Remedy Opinion, 224 F. Supp. 2d at 166. Section III.F bars Microsoft from retaliating against ISVs or IHVs for "developing, using, promoting or supporting any [competing software] or any software that runs on any [competing software]." Final Judgments, § III.F.*fn24 In addition, § III.F prohibits Microsoft from entering into any agreement relating to a Windows Operating System Product that conditions the grant of any consideration on an ISV's refraining from developing, using, distributing or promoting any competing software, unless the condition is related to a bona fide contractual obligation of the ISV regarding Microsoft software. Id. Section III.G, in turn, generally precludes Microsoft from entering into any agreement with any IAP, ICP, ISV, IHV or OEM that requires any such entity to distribute, promote, use or support, "exclusively or in a fixed percentage, any Microsoft Platform Software." Final Judgments, § III.G. Section III.G also prohibits Microsoft from entering agreements with IAPs or ICPs that grant placement in any Windows Operating System Product "on condition that the IAP or ICP refrain from distributing, promoting or using any software that competes with Microsoft Middleware." Id.

Section III.H requires Microsoft to allow end users and OEMs to enable or remove access to each Microsoft Middleware Product or Non-Microsoft Middleware Product, by designating a Non-Microsoft Middleware Product to be invoked in place of a Microsoft Middleware Product, i.e., as a default, in certain situations. Final Judgments, § III.H. Section III.H also prohibits Microsoft from designing its Windows Operating System Products so as to induce reconfiguration of an OEM's or consumer's formatting of icons, shortcuts, and menu items less than 14 days after the initial boot up of a new PC, or without first seeking confirmation from the user. Id.

Section III.I is closely related to the disclosures mandated by §§ III.D and III.E, see Settling States Opinion, 231 F. Supp. 2d at 249, and obligates Microsoft to "license to ISVs, IHVs, IAPs, ICPs, and OEMs any intellectual property rights owned or licensable by Microsoft that are required to exercise any of the options or alternatives expressly provided to them under [the Final Judgments]" on "reasonable and non-discriminatory terms" that are limited in scope so as to be "no broader than is necessary." Final Judgments, § III.I. Finally, § III.J limits Microsoft's disclosures under the Final Judgments to ensure that the mandated disclosures do not result in the release of information that "would compromise the security of a particular installation . . . of anti-piracy, anti-virus, software licensing, digital rights management, encryption or authentication systems," and limits Microsoft's disclosure obligations with respect to a specific subset of security-related APIs and communications protocols. Final Judgments, § III.J. Section III.J also provides that Microsoft is not required to disclose any API, interface, or other information if Microsoft is "lawfully directed not to do so by a governmental agency of competent jurisdiction." Id.

2. Compliance, Enforcement, and Termination While each Final Judgment Provides that the Relevant

"Plaintiffs shall have exclusive responsibility for enforcing this Final Judgment," Final Judgments, § IV.A, the Final Judgments differ significantly in their compliance and enforcement provisions. The Settling States' Final Judgment provides for the creation of "a three-person Technical Committee ("TC") to assist in enforcement of and compliance with" that Final Judgment. Settling States Final Judgment, § IV.B.1. The members of the TC are "experts in software design and programming," who meet requirements demonstrating their independence from Microsoft, and who are selected by a detailed procedure. Id., § IV.B.2. The TC is broadly empowered to "monitor Microsoft's compliance with its obligations under [the] Final Judgment," and is answerable to the United States and the Settling States, rather than to the public or to the Court. Id., § IV.B.8.a., § IV.B.8.e. Although the TC serves the United States and the Settling States, "Microsoft is responsible for the cost and expense of the service of the committee." Settling States Opinion, 231 F. Supp. 2d at 253-54 (incorporating Tunney Act Opinion).

The Settling States' Final Judgment also provides for a Microsoft Internal Compliance Officer, who "is far more closely aligned with Microsoft." Id. at 254. The Compliance Officer is a Microsoft employee responsible for administering Microsoft's antitrust compliance program and "helping to ensure compliance" with the Final Judgment. Settling States Final Judgment, § IV.C. The TC and the Compliance Officer both may receive complaints from the United States, the Settling States, and third parties, as well as each other, regarding Microsoft's compliance with the terms of the Final Judgment. Id., § IV.D. The Final Judgment includes specific provisions as to actions the TC and the Compliance Officer are obliged to take in conjunction with complaints received. Id.

As the Court explained in the Settling States Opinion, "ultimately the power to enforce the terms of the decree rests with the government," i.e., the United States and the Settling States, and the TC was "not intended as a substitute for the enforcement authority of the United States" and the Settling States. Settling States Opinion, 231 F. Supp. 2d at 255-56 (incorporating Tunney Act Opinion). Rather, the TC was intended as a "mechanism for ...


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