The Appeals Court ruled that the actions of Judge Thomas Penfield Jackson in the district court “seriously tainted the proceedings.” The Court ordered that a new judge be appointed to rule on the alternative penalties for Microsoft’s actions.
In June 2000, Judge Jackson ordered that Microsoft be split in two, with one company running the Windows operating system business and another company dealing with the rest of Microsoft’s products, including its Internet Explorer browser software.
The Appeals Court found that Judge Jackson demonstrated bias against Microsoft in both his ruling and in his comments to the press at the time of the initial trial. Accordingly, Judge Jackson’s judgment has been set aside.
The Appeals Court stated in its 125 page ruling:
"We vacate the judgment on remedies, because the trial judge engaged in impermissible ex parte contacts by holding secret interviews with members of the media and made numerous offensive comments about Microsoft officials in public statements outside of the courtroom, giving rise to an appearance of partiality".
The Appeals Court reversed the ruling that Microsoft had illegally tried to monopolise the market for browser software. However, it upheld the finding that Microsoft had employed anti-competitive means to protect its monopoly in the Windows operating system. It has ordered a lower court to reconsider Judge Jackson’s finding that Microsoft’s bundling of Internet Explorer with Windows was illegal.
Chairman Bill Gates said he was “pleased with the reversal,” adding that this decision will be used to strengthen Microsoft’s hand at the negotiating table as it pursues a settlement with the US government over the case.
Although many see the decision as a victory for Microsoft, Charles James, a Justice Department anti-trust enforcer told news agency Reuters: “Today’s decision represents a very significant victory for the anti-trust division on the core claim in the Microsoft case that Microsoft engaged in anti-competitive conduct to preserve its monopoly position in computer operating systems.”
The Attorney Generals of the 19 US states that were party to the lawsuit have also made positive statements. At a press conference, Connecticut Attorney General Richard Blumenthal said “the essential result today is that the core claim has been upheld unanimously”.
The stock market seems to have viewed the ruling as having been a positive one for Microsoft. Trading in Microsoft stock was suspended prior to the judgment, but when it resumed, Microsoft shares rose 2.21% at $72.71 with analysts predicting another increase in today’s trading.
Bill Gates said that the decision will now allow Microsoft to push ahead with its plans for new products, adding: “With this ruling, there is a new framework and so it would be a good time for all parties to sit down together and see what kind of resolution can be worked out.”