Commonwealth of MASSACHUSETTS, Ex Rel., Appellant, V. MICROSOFT
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MASSACHUSETTS v. MICROSOFT CORP. 1199 Cite as 373 F.3d 1199 (D.C. Cir. 2004) 1. Federal Courts O776, 850.1 Commonwealth of MASSACHUSETTS, Appellate court reviews district ex rel., Appellant, court’s findings of fact for clear error, but v. resolves issues of law de novo. MICROSOFT CORPORATION, 2. Federal Courts O813 Appellee. District court’s decision whether to United States of America, Appellee, grant equitable relief is reviewed only for v. abuse of discretion. Microsoft Corporation, et al., Appellees. 3. Monopolies O24(7.1) The Computer and Communications In- Determination in government’s anti- dustry Association and The Software trust action that software manufacturer’s and Information Industry Association, commingling of its browsing and operating Appellants. system code in same file violated Sherman Act’s anti-monopolization provision did not Nos. 02-7155 and 03-5030. necessitate remedy that required manufac- United States Court of Appeals, turer to ‘‘uncommingle’’ its code; rather, District of Columbia Circuit. given potentially adverse effects of code removal, remedy which instead alleviated Argued Nov. 4, 2003. anticompetitive effect of manufacturer’s Decided June 30, 2004. conduct by allowing original equipment Background: United States and individu- manufacturers (OEMs) and end users to al states brought antitrust action against replace manufacturer’s browser with com- software manufacturer. On remand, 253 peting browser was not abuse of discre- F.3d 34, the United States District Court tion. Sherman Act, § 2, as amended, 15 for the District of Columbia, Colleen Kol- U.S.C.A. § 2. lar-Kotelly, J., conditionally approved con- sent decree, 231 F.Supp.2d 144, and en- 4. Monopolies O24(7.1) tered comparable remedial decree covering Failure to include provision, in reme- claims of those states that had refused to dial decree entered in antitrust action settle. Appeals were taken by one litigat- against software manufacturer, prohibiting ing state and industry associations whose manufacturer from engaging in unlawful intervention motions had been denied. conduct which it had ceased in accordance Holdings: The Court of Appeals, Gins- with consent decree entered in another burg, Chief Judge, held that: case, was not abuse of discretion absent (1) remedial decree adequately addressed showing of significant threat that conduct manufacturer’s violations; would be resumed. Sherman Act, § 2, as amended, 15 U.S.C.A. § 2. (2) associations should have been allowed to intervene; 5. Monopolies O24(7.1) (3) consent decree was in public interest; Although district court is empowered and to fashion appropriate restraints on anti- (4) government and manufacturer satisfied trust defendant’s future activities both to Tunney Act’s procedural requirements. avoid recurrence of violation and to elimi- Affirmed in part and reversed in part. nate its consequences, resulting relief must 1200 373 FEDERAL REPORTER, 3d SERIES represent reasonable method of eliminat- turer from offering incentives in discrimi- ing consequences of illegal conduct. natory manner. Sherman Act, § 2, as amended, 15 U.S.C.A. § 2. 6. Monopolies O24(7.1) Application program interface (API) 10. Monopolies O24(7.1) disclosures, required in remedial decree Failure of remedial decree, entered entered against software manufacturer against software manufacturer found to found to have engaged in monopolistic have engaged in monopolistic practices by practices, were sufficiently broad; neither tying its web-browsing software to its op- limitation of requirement to certain of erating system, to require manufacturer to manufacturer’s middleware products nor disclose and license all source code for its limitation as to amount of information dis- browser was not abuse of discretion. closed constituted abuse of discretion. Sherman Act, § 2, as amended, 15 Sherman Act, § 2, as amended, 15 U.S.C.A. § 2. U.S.C.A. § 2. 11. Monopolies O24(7.1) 7. Monopolies O24(7.1) Failure of remedial decree, entered Communications protocol disclosures, against software manufacturer found to required in remedial decree entered have engaged in monopolistic practices by against software manufacturer found to tying its web-browsing software to its op- have engaged in monopolistic practices, erating system, to require manufacturer to were sufficiently broad; limitation of re- distribute copies of competitor’s ‘‘Java’’ quirement to protocols for native commu- software was not abuse of discretion. nications was not abuse of discretion. Sherman Act, § 2, as amended, 15 Sherman Act, § 2, as amended, 15 U.S.C.A. § 2. U.S.C.A. § 2. 12. Monopolies O24(7.1) 8. Monopolies O24(7.1) Focus of remedial decree, entered Failure of remedial decree, entered against software manufacturer found to against software manufacturer found to have engaged in monopolistic practices by have engaged in monopolistic practices by tying its web-browsing software to its op- tying its web-browsing software to its op- erating system, on denying manufacturer’s erating system, to regulate manufacturer’s ability to take same or similar actions to conduct in relation to web services was not limit competition in future, rather than on abuse of discretion. Sherman Act, § 2, as redressing harm suffered by specific com- amended, 15 U.S.C.A. § 2. petitors in past, was not abuse of discre- tion. Sherman Act, § 2, as amended, 15 9. Monopolies O24(7.1) U.S.C.A. § 2. Failure of remedial decree, entered against software manufacturer found to 13. Federal Courts O546 have engaged in monopolistic practices by Software industry associations’ claim tying its web-browsing software to its op- had question of law or fact in common with erating system, to preclude manufacturer underlying action, for purpose of determin- from offering financial incentives to origi- ing whether they were entitled to inter- nal equipment manufacturers (OEMs) was vene for purpose of appealing district not abuse of discretion; there was evi- court’s determination that consent decree dence such incentives had pro-competitive resolving government’s antitrust claims effect, and decree did preclude manufac- against software manufacturer satisfied MASSACHUSETTS v. MICROSOFT CORP. 1201 Cite as 373 F.3d 1199 (D.C. Cir. 2004) statutory requirement of being in ‘‘public 18. Federal Civil Procedure O2397.2 interest’’; private antitrust claims of asso- Failure of consent decree, resolving ciations’ members overlapped substantially government’s antitrust claims against soft- with government’s claims. Clayton Act, ware manufacturer that had commingled § 5(e), 15 U.S.C.A. § 16(e); Fed.Rules its browsing and operating system code in Civ.Proc.Rule 24, 28 U.S.C.A. same file, to require separation of codes did not preclude approval of decree as 14. Federal Courts O546 being in public interest; decree adequately Denial of software industry associa- addressed anticompetitive effect of com- tions’ motions to intervene, for purpose of mingling by requiring manufacturer to al- appealing district court’s approval of con- low original equipment manufacturers sent decree resolving government’s anti- (OEMs) and end users to replace manufac- trust claims against software manufactur- turer’s browser with competing browser. Sherman Act, § 2, as amended, 15 er, on ground of undue prejudice and delay U.S.C.A. § 2; Clayton Act, § 5(e), 15 was abuse of discretion; consent decree U.S.C.A. § 16(e). was already in place, and associations had already extensively participated in pro- 19. Federal Civil Procedure O2397.2 ceedings. Clayton Act, § 5(e), 15 U.S.C.A. Failure of consent decree, resolving § 16(e); Fed.Rules Civ.Proc.Rule 24(b), 28 government’s antitrust claims against soft- U.S.C.A. ware manufacturer, to require manufactur- er to distribute copies of competitor’s 15. Federal Civil Procedure O321 ‘‘Java’’ software did not preclude approval Procedural defects in connection with of decree as being in public interest; de- intervention motions should generally be cree adequately addressed anticompetitive excused by court. Fed.Rules Civ.Proc. effect of manufacturer’s prior exclusionary Rule 24, 28 U.S.C.A. activity by prohibiting future exclusionary conduct. Sherman Act, § 2, as amended, 16. Federal Civil Procedure O2397.2 15 U.S.C.A. § 2; Clayton Act, § 5(e), 15 U.S.C.A. § 16(e). District court should withhold its ap- proval of consent decree in antitrust ac- 20. Federal Civil Procedure O2397.2 tion, for failure to satisfy Tunney Act’s Limitations on application program in- ‘‘public interest’’ requirement, only if any terface (API) disclosure requirements, decree terms appear ambiguous, if en- contained in consent decree resolving gov- forcement mechanism is inadequate, if ernment’s antitrust claims against soft- third parties will be positively injured, or if ware manufacturer, did not preclude ap- decree otherwise makes mockery of judi- proval of decree as being in public interest; cial power. Clayton Act, § 5(e), 15 disclosures were tailored to remedy assert- U.S.C.A. § 16(e). ed antitrust violations. Sherman Act, § 2, as amended, 15 U.S.C.A. § 2; Clayton Act, 17. Federal Civil Procedure O2397.2 § 5(e), 15 U.S.C.A. § 16(e). Tunney Act’s requirement, that con- 21. Federal Civil Procedure O2397.2 sent decrees in antitrust cases be in public Consent decree resolving govern- interest, does not distinguish between pre- ment’s antitrust claims against software and post-trial consent decrees. Clayton manufacturer sufficiently defined its terms Act, § 5(e), 15 U.S.C.A. § 16(e). to avoid court rejection on ground it was 1202 373 FEDERAL REPORTER, 3d SERIES not in public interest; economic consider- lobbying efforts. Clayton Act, § 5(b, g), ations precluded manufacturer from taking 15 U.S.C.A. § 16(b, g). advantage of some ambiguities, and others imposed greater restrictions on manufac- turer than would have been imposed by Appeal from the United States District more specifically defined terms. Sherman Court for the District of Columbia (Nos. Act, § 2, as amended, 15 U.S.C.A.