As you know, the extension was ordered because Microsoft was unable to provide -- or didn't provide -- usable documentation. So, I have a question. What was it that it turned over to SAMBA under the pressure from the EU Commission? Is it unusable too? Time will tell. If not, why couldn't Microsoft turn it over to the US court?

The Memorandum and Order reflects that the judge felt that Microsoft's willingness to make adjustments and negotiate settlements and compromises made it impossible to find them willfully out of compliance, but yet the judge found that there is no doubt that "more than five years after the entry of the Final Judgments, Section III.E still has yet to be fully implemented." And the court then recounts what it calls the "tortured history" that has led to "this point".

That history seems to be that the court kept accepting Microsoft's alibi that it was just too hard to provide the documentation. Since it managed to do so when the EU Commission made them, that may have been a wakeup call. Microsoft handed over pages and pages of documentation, just like in the EU Commission case, that didn't work. But in the case of Europe, they didn't buy the alibi and insisted on documentation that actually worked. We'll see if they did.

I wanted to present them both, though, because one of the issues in the upcoming vote on Microsoft's OOXML is interoperability. Can folks using ODF interoperate fully with MSOOXML? I think not, from what I've seen.

Now, Microsoft has been promising the court that it would comply with the requirement to provide documentation to make interoperability possible in that context. And as I understand the upcoming Ballot Resolution Meeting process, Microsoft will be apparently making similar promises to fix problems after the vote, in order to get yes votes. But, how reliable are those promises, if they've been unable to comply with a US court for five years? The extension was ordered because after all this time, it still has not done so.

Reading the court's summary of how things happened, it's a story of Microsoft time after time telling the court that it needed to try a new system to try to comply, after studying why the previous one didn't work. And the court would go along. In short, Microsoft, from my reading, tried to look like it was in compliance, while in fact not complying, hoping the clock would run out.

Even if you join in the court's willingness to accept their every excuse as being truthful, one has to ask not only if Microsoft is interested in being interoperable in real life, or even if it is willing, whether it is able to. It doesn't really matter which is true. If you want interoperability, I think you have to get it before you accept anything from Microsoft. Promises clearly don't mean they will be fulfilled.

And that impacts on MSOOXML. If something is going to be a standard, shouldn't it be usable by everyone equally? But it isn't that way yet. I also wanted to draw your attention to footnote 32 of the Memorandum:

To the extent that the Moving States suggest that the key to protecting emerging web-based middleware threats is to ensure that Microsoft "maintains IE as a standards-compliant browser," see CA Mem. at 20-21, that argument is foreclosed by this Court's Remedy Opinion. As Microsoft correctly notes, the Court considered and rejected a "requirement that Microsoft maintain support for industry standards where it has made proprietary modifications to the standards," because that conduct "was found . . . to have competitive benefits which outweigh the anticompetitive effect of the conduct," because the proposed requirement was "likely to have only a modest effect on competition, if at all," and because it "impose[d] unworkable conditions." Remedy Opinion, 224 F. Supp. 2d at 190-91. Significantly, the D.C. Circuit specifically affirmed this Court's conclusion in that respect, holding that "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 v. Microsoft, 373 F.3d at 1215.

So we have a conflict here potentially at least with the EU Commission, which has agreed to investigate this very issue. As I was working on the text of the Memorandum, one of the annoying things I had to do was remove and replace the Microsoft style of single quotes, because they have their own way of doing them, and they don't render properly in some browsers that aren't IE. That's what Microsoft always does -- take a standard and then extend it so it throws tacks in everyone else's path. That is precisely what it insists it will do with MSOOXML, which is just another way of saying that it won't be possible to use MSOOXML well unless you use Microsoft's products. That is all well and good for a proprietary company to do with its own products, annoying though the results may be, but it's surely not acceptable in a proposed standard.

Note why the judge extended the court's supervision for another two years, in this article in the Washington Post:

As part of the settlement, Microsoft is required to document information on communication protocols, making it easier for other software manufacturers to create products that work well with the Windows OS.

The documentation has been a sticking point between the company and the government. Microsoft has been ordered to rewrite the documentation, which was supposed to have been complete by February 2003, to make it clearer.

In her ruling, Kollar-Kotelly blamed Microsoft. "Although the technical documentation project is complex and novel, it is clear, at least to the Court, that Microsoft is culpable for this inexcusable delay," she wrote.

February of 2003, folks. It's almost five years of delay. Ask yourself, then, if Microsoft promises to deliver interoperability with ODF, will they? When? Should a promise be enough? Or should MSOOXML not be made a standard until *after* it really does deliver true interoperability?

The court concluded:

Based on the foregoing history, it is abundantly clear that more than five years after the Communications Protocols and related technical documentation were required to be available to licensees under § III.E, the documentation envisioned by that Section is still not available to licensees in a complete, useable, and certifiably accurate form....

In addition, there is no reason why the type of documentation finally being created under the RESET plan could not have been created from the outset if the necessary resources had been devoted. Clearly, the documentation finally emerging from the RESET plan is not the result of any changes in the relevant market or technological advances over the past five years; rather, it might have been developed earlier with the right resources and approach. Microsoft essentially admitted as much during the May 17, 2006 status conference when it acknowledged that it "didn't have the exact right resources [or] the right process in place" prior to the RESET plan.

If you are interested in looking at all the filings leading up to this ruling, the US Department of Justice, which opposed the extension, has them available. Here's the document for the public as text, followed by the Memorandum and Order:

*************************

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

STATE OF NEW YORK, et al.,

Plaintiffs,

v.

MICROSOFT CORPORATION,

Defendant.

_____________________

Civil Action No. 98-1233 (CKK)

EXECUTIVE SUMMARY
(January 29, 2008)

Introduction

The Court has prepared this brief summary to assist the public in understanding the Court's ruling on certain plaintiff states' (the "Moving States") motions to extend the Final Judgments in the case State of New York, et al. v. Microsoft Corp., Civil Action No. 98-1233. This document is not the opinion of the Court and should not be considered a substitute for the full Memorandum Opinion. Given the demonstrated public interest in this case and the length of the Court's Memorandum Opinion, the Court provides the following synopsis of some of the key legal and discretionary conclusions. In so doing, however, the Court emphasizes that this is a very complex and unprecedented case and that this summary, by necessity, simplifies the issues.

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 are not already extended until that date, thus making all provisions of the Final Judgments coterminous. The Court's extension should not be viewed as a sanction against Microsoft, but rather as a means to allow the respective provisions of the Final Judgments the opportunity to operate together towards maximizing Section III.E's procompetitive potential.¹In addition, the Court reiterates that an

The Nature of the Moving States' Request

· The Final Judgments at issue were entered in November 2002, and were originally set to expire on November 12, 2007, unless the Court granted an extension.

· Certain provisions of the Final Judgments have already been extended until November 12, 2009, at the joint request of the parties in this action and the related action, United States v. Microsoft Corp., Civil Action No. 98-1232. The extended provisions include § III.E (requiring licensing of Communications Protocol and related technical documentation), and § III.F.1, (prohibiting retaliation against ISVs and IHVs).

· In contrast, the following provisions (collectively, the "Expiring Provisions") were not extended by agreement of the parties: § III.A (prohibiting retaliation against OEMs); § III.B (requiring uniform license terms for Covered OEMs); § III.C (allowing OEMs to install Non-Microsoft Middleware); § III.D (requiring disclosure of APIs used by Microsoft Middleware); § III.G (prohibiting exclusive agreements with IAPs, ICPs, ISVs, IHVs, or OEMs); and § III.H (allowing end users and OEMs to disable access to middleware and designate Non-Microsoft Middleware Products as defaults). On October 30, 2007, the Court granted a Joint Motion to extend the Expiring Provisions through January 31, 2008, in order to allow the Court to properly consider the Moving States' motions to extend.

· The Moving States now seek to extend all of the provisions of the Final Judgments until November 12, 2012, five years beyond their original expiration date.

The Final Judgments At Issue

· The Final Judgments are premised upon the same liability finding affirmed by the United States Court of Appeals for the District of Columbia Circuit in United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001). The New York Movants' Final Judgment was the result of a negotiated consent decree settling the remedy portion of this case as to the "Settling States" or "New York Group," while the Court entered the California Movants' Final Judgment after a thirty-two day remedy-specific evidentiary hearing involving the "Litigating States" or "California Group."

· The Final Judgments are substantively quite similar because both 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.

· The Settling States' Final Judgment created a three-person Technical Committee ("TC")

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to assist in enforcement of the Settling States' Final Judgment. Although the Litigating States initially opposed the creation of a technical committee, over time they recognized the beneficial role of the TC, and retained their own expert, Mr. Craig Hunt, who has assisted and participated in the TC's activities on behalf of the Litigating States.

· The Court commends the members of the TC, as well as Mr. Hunt, because the TC has truly become one of the most successful aspects of the Final Judgments. The TC has gone far beyond the simple "monitoring" with which it was tasked in the Settling States' Final Judgment, to providing testing, feedback, and critiques that have proved critical to all Plaintiffs' efforts to maximize the full potential of the Final Judgments' remedies.

Applicable Legal Standard

· The Court concludes that its authority to modify the Final Judgments derives from two independent sources: (1) the Court's retained jurisdiction under the Final Judgments; and (2) the Court's authority to modify the terms of a decree, which is largely embodied in Federal Rule of Civil Procedure 60(b).

· The Court specifically retained "clearly articulated" and "broadly drawn" jurisdiction over this action, embodied in two paragraphs of the Final Judgments, which provide: (1) that the Court may act sua sponte to issue orders or directions relating to the construction or carrying out of the Final Judgments, "the enforcement of compliance therewith, the modification thereof, and the punishment of any violation thereof;" and (2) that any of the parties to the Final Judgments may apply to the Court "at any time for further orders and directions as may be necessary or appropriate to carry out or construe th[e] Final Judgment, to modify or terminate any of its provisions, to enforce compliance, and to punish violations of its provisions." Final Judgments, § VII.

· The Moving States and Microsoft disagree over the appropriate legal standard to apply to the Moving States' motions to extend. The Moving States argue that the Court is granted broad discretion to modify a decree in order to accomplish its intended result, based on the Supreme Court's decision in United States v. United Shoe Mach. Corp., 391 U.S. 244, 250 (1968) and the D.C. Circuit's opinion in United States v. Western Electric Co., 46 F.3d 1198, 1202 (D.C. Cir. 1995). In contrast, Microsoft argues that the proper standard derived from Rufo v. Inmates of the Suffolk County Jail, 502 U.S. 367, 383 (1992)is that "a party seeking modification of a consent decree bears the burden of establishing that a significant change in circumstances warrants revision of the decree," id. at 383. The Court concludes that the Moving States have met their burden under either test.

Extension of the Expiring Provisions Through 2009 is Appropriate Due to the Unforeseen Delay in the Implementation of Section III.E

· At the time that the Court entered the Final Judgments, all parties involved anticipated

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that the technical documentation required under § III.E would be released, at the latest, by February 2003. More than five years later, the technical documentation envisioned by that Section is still not available to licensees in a complete, useable, and certifiably accurate form, despite the fact that § III.E was intended to be the "most forward-looking provision" in the Court's remedy. Nor has the enforcement road been altogether smooth with respect to the other provisions of the Final Judgments.

· Although the technical documentation project is complex and novel, it is clear, at least to the Court, that Microsoft is culpable for this inexcusable delay. To be sure, the delay has developed in stages, and at each step Microsoft commendably has been willing to work with the Plaintiffs and the TC to address issues and identify a means of resolving them. The parties' negotiations, in turn, have achieved a worthy goal by obviating the need for compliance-related litigation. Quite simply, because the parties have negotiated solutions to each of the myriad issues arising under § III.E, the Court has never been asked to find Microsoft out of compliance with § III.E, and has not deemed a sua sponte finding of non-compliance necessary or fruitful in achieving compliance.

· Nevertheless, practically speaking, Microsoft has never complied with § III.E. While Microsoft eventually proposed a plan that now appears to be producing the type of quality technical documentation required by § III.E, it did so in the face of mounting pressure from all Plaintiffs and the Court. In addition, there is no reason why the type of documentation finally being created could not have been created from the outset if the necessary resources had been devoted to the project.

· As a result of the delay in § III.E's implementation, the provisions of the Final Judgments have not yet had the chance to operate together as the comprehensive remedy the Court and the parties envisioned when the Final Judgments were entered.

· The Court concludes that the § III.E delay, with its ramifications for the Final Judgments' overall implementation, is entirely incongruous with the original expectations of the parties and the Court, and thus constitutes a "significant change in circumstances" that warrants modification under Rufo.

· The Court also concludes that an extension is warranted under United Shoe because the § III.E delay has impeded the Final Judgments from accomplishing their intended result and achieving their principal objects.

· The Court cannot know what impact the technical documentation required by § III.E will have on the market once it is finally available in a certifiably 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 maximizing § III.E's potential. In the face of these examples, the Court concludes that allowing the Expiring Provisions of the Final Judgments to lapse before § III.E has even

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been given a chance to succeed might threaten the ability of the Final Judgments to achieve their full procompetitive impact.

Microsoft's Additional Arguments Against Extension

· Microsoft asserts that the New York Movants should not be able to escape the five-year term included in their negotiated consent decree. The Court agrees that modification of a consent decree is an "extraordinary remedy;" however, the consent decree in this instance is unusual in that it was not reached as an alternative to a finding of liability, but rather was negotiated based on the D.C. Circuit's findings of liability and guidance as to the parameters of an appropriate remedy. Further, the Court concludes that the New York Movants have yet to realize the benefit of the bargain embodied in the consent decree because Microsoft still has not fulfilled its technical documentation obligations under § III.E.

· Microsoft also highlights its overall compliance with the Expiring Provisions and its cooperation with the Plaintiffs and TC, and argues that allowing the New York Movants to extend the Expiring Provisions will deter parties from negotiating consent decrees. The Court is sensitive to this policy argument, and stresses that its decision to extend the Expiring Provisions of the Final Judgment must be viewed in the proper, highly unique, context: this case involves an extremely complex and rapidly evolving market; the remedy phase of this case was uniquely constrained by the D.C. Circuit's guidance as to the parameters of an appropriate remedy; the actual remedy encompassed in the Final Judgments includes highly novel approaches; and within that unique remedy, § III.E represented the "most forward-looking" and most innovative provision.

· The Court does not dispute that Microsoft has been overwhelmingly cooperative with the Plaintiffs and the TC over the past five years. To the contrary, the Court commends Microsoft for its willingness to address issues as they arose and to negotiate solutions rather than force litigation. In many respects, Microsoft's conduct has been a model for parties engaged in complex and protracted litigation. As such, the Court's extension of the Expiring Provisions should not be viewed as a sanction against Microsoft. Rather, the extension is based upon the Court's conclusion that the delay in producing technical documentation that is certifiably complete, accurate, and useable has prevented the Final Judgments from achieving their intended result, under United Shoe, and also constitutes changed circumstances under Rufo.

Arguments Regarding the Appropriate Length of the Extension

· The Moving States present a compelling argument that continued oversight by Plaintiffs, the TC, and the Court, is essential to give prospective licensees confidence that the technical documentation they will get when they execute a license is complete, accurate and useable. This argument, however, is based on speculation that the § III.E delay will

5

persist. From all reports, it appears that Microsoft has finally committed the resources necessary, and adopted an approach likely to produce technical documentation that is complete, accurate, and usable to licensees.

· Moreover, parties considering licenses should take comfort in the fact that the oversight of the TC, the Plaintiffs, and the Court is currently assured until November 2009, and will thus continue while the technical documentation is tested and finalized. The Court is unaware of any reason that the technical documentation required by § III.E should not be complete, accurate, and usable to licensees long before November 2009.

· The Moving States also offer an appealing argument that a five-year extension of the existing decree does no more than was originally intended by the parties and by the Court, by allowing the provisions of the Final Judgments to operate together for five years. The United Shoe standard indeed suggests that the Court would be justified in extending the entire Final Judgments until November 12, 2012, in order to accomplish their intended result. Rufo, however, counsels a more measured approach, requiring that a modification to a consent decree be "suitably tailored to the changed circumstances" that warrant the modification. Rufo, 502 U.S. at 383.

· The Court concludes that the most appropriate approach is to assess the need for continued Court oversight in reasonable incremental periods. The extension of the Expiring Provisions is only warranted due to the change in circumstances brought about by the extreme delay in the implementation of § III.E, and that provision currently remains in effect until November 12, 2009. Rather than speculate as to the possible state of the technical documentation at that point in time, the Court shall make the Expiring Provisions coterminous with § III.E.

· Ultimately, the Court's decision not to extend the Final Judgments beyond November 12, 2009 now does not foreclose the possibility of doing so in the future. Indeed, the mechanisms are already in place to reexamine § III.E's implementation and the Final Judgments' termination in the Fall of 2009. At present, the Final Judgments give Plaintiffs the right "in their sole discretion" to request an additional three-year extension of certain provisions of the Final Judgment until November 12, 2012, and the door likewise remains open for the Court to reassess the need for continued oversight as the expiration of the Final Judgments in November 2009 approaches. At that point, certifiably complete, accurate, and useable documentation will, presumably, be available to licensees, and the Court will be in a far better position to evaluate § III.E's implementation, as well as the role that the other provisions of the Final Judgments play in supporting § III.E.

¹ The Court's extension of the Expiring Provisions does not include Section III.B of the Final Judgments, which the Moving States do not seek to extend.

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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

______________________________

STATE OF NEW YORK, et al.,

Plaintiffs,

v.

MICROSOFT CORPORATION,

Defendant.

_____________________________

Civil Action No. 98-1233 (CKK)

MEMORANDUM OPINION ¹
(January 29, 2008)

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"). ² 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.³The two Final Judgments are premised upon

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. 98-1232.⁴ 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.

Utah take no position on the decree extension. Plaintiff State Wisconsin does not join in the motion." NY Mem. at 1 n.2.

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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"),⁵ 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,

3

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

4

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

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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."⁷ 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

6

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.⁸ 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

7

8

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 95.¹²Plaintiffs 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.

9

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

10

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. ¹⁴ The

11

On November 1, 2002, the Court issued three Memorandum Opinions and related Orders.¹⁶ 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 drawn¹⁷ -- the consent decree proposed by the United States and Microsoft was in the

12

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

deem[ed] necessary to ensure effective implementation of the final judgment in this case." Id.

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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

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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.¹⁹ Section III.A also requires Microsoft to provide Covered OEMs with written notice before terminating their licenses for Windows Operating Systems Products. Id. ²⁰ 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

15

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;²² (4) offering users the option of launching other

16

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 Judgmentto make available

17

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.

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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

19

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

20

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

21

Unlike the Settling States, during the remedy hearing before this Court, the Litigating States were "unwaveringly critical of Microsoft's proposal for a technical committee," and the Court therefore declined to impose a technical committee upon the Litigating States in their remedy. Remedy Opinion, 224 F. Supp. 2d at 182. Instead, the Litigating States' Final Judgment provides for the creation of a Compliance Committee made up of at least three non-employee members of the Microsoft Board of Directors. Litigating States Final Judgment, § IV.B.1. The Compliance Committee, in turn, hires a Compliance Officer, who is "responsible for development and supervision of Microsoft's internal programs to ensure compliance with the antitrust law and [the] Final Judgment." Id,, § IV.B.2.

In addition to vesting the respective plaintiff states with enforcement authority and creating mechanisms to support those efforts, the Final Judgments include two paragraphs regarding the Court's retention of jurisdiction. First, the Final Judgments provide:

Jurisdiction is retained by this Court over this action such that the Court may act sua sponte to issue further orders or directions, including but not limited to orders or directions relating to the construction or carrying out of this Final Judgment, the enforcement of compliance therewith, the modification thereof, and the punishment of any violation thereof.

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In addition to providing for the retention of sua sponte jurisdiction, the Final Judgments provide that:

Jurisdiction is retained by this Court over this action and the parties thereto for the purpose of enabling either of the parties thereto to apply to this Court at any time for further orders and directions as may be necessary or appropriate to carry out or construe this Final Judgment, to modify or terminate any of its provisions, to enforce compliance, and to punish violations of its provisions.

As to the term of the Final Judgments, each provides "[u]nless [the] Court grants an extension, this Final Judgment will expire on the fifth anniversary of the date it is entered by the Court." Final Judgments, § VI.A. In discussing the appropriate term for the Final Judgment in the remedy proceeding, the Court noted that there was "little dispute that many of the acts which gave rise to the imposition of liability in [the] case ha[d] long since ceased." 224 F. Supp. 2d at 184. The Court further observed that there was "no dispute that the industry at issue in [the] case is remarkable for its constant and rapid change," and noted the D.C. Circuit's concern in its liability opinion as to the difficulties inherent in crafting conduct remedies in quickly shifting

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Finally, each Final Judgment describes one specific scenario in which the Final Judgments might be extended by the Court, allowing the Plaintiffs to "apply to the Court for a one-time extension of this Final Judgment of up to two years . . . [i]n any enforcement proceeding in which the Court has found that Microsoft has engaged in a pattern of willful and systematic violations." Id., § VI.B. The Final Judgments do not, however, indicate that § VI.B represents the sole scenario in which the Final Judgments might be extended, and the Moving States do not purport to invoke that provision in their motions.

The Commonwealth of Massachusetts alone appealed the Litigating States' Final Judgment, challenging many of the substantive provisions described above. The D.C. Circuit's opinion on appeal addressed each challenged provision and "affirm[ed] [this Court's] remedial decree in its entirety," finding that the Court's "reasoning was based upon evidence in the record, was sound, and involved no abuse of discretion." Massachusetts v. Microsoft Corp., 373 F.3d

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C. Implementation of the Final Judgments

The Court entered the Litigating States' Final Judgment on November 1, 2002, and entered the Settling States' Final Judgment Pursuant to Rule 54(b) on November 12, 2002. On May 14, 2003, the Court issued an Order requiring the parties to file joint status reports with the Court every six months regarding Microsoft's compliance with the Final Judgments and Plaintiffs' enforcement efforts. That Order provided that status conferences would be scheduled within one month of the Court's receipt of each status report. Over time, however, in response to various issues, the Court's practice evolved to include a Joint Status Report (hereinafter "JSR") filed jointly by the United States, the New York Group, the California Group, and Microsoft, in both this action and United States v. Microsoft and a corresponding status conference approximately every three months. In addition, for reasons described below, in January 2006 Microsoft began filing monthly Supplemental Status Reports regarding its compliance efforts in connection with § III.E of the Final Judgments.

The Court has kept abreast of the Plaintiffs' enforcement efforts and Microsoft's

25

At the outset, the Court commends the members of the TC as well as the California Group's technical expert, Mr. Craig Hunt, who has worked alongside the TC in many of its compliance efforts related to Section III.E. In the Court's view, the TC has truly become one of the most successful aspects of the Final Judgments, because it has been invaluable in facilitating the Plaintiffs' enforcement efforts.²⁵ As the Court noted when the Final Judgments were entered, the instant case is an "unusually complex" one, Settling States Opinion, 231 F. Supp. 2d at 258 (incorporating Tunney Act Opinion), and the TC has provided the Plaintiffs with crucial technical expertise by providing advice and evaluating Microsoft's compliance with the Final Judgments. The TC has gone far beyond the simple "monitoring" with which it was tasked in the Settling States' Final Judgment, see Settling States' Final Judgment, § IV.B.8.a, to providing testing,

26

The TC's expertise has allowed Plaintiffs to reap another, undoubtedly significant benefit from the Final Judgments: beginning in the Summer of 2004, "Plaintiffs, with the assistance of the TC, [began] discussions with Microsoft concerning the successor operating system to Windows XP," which was eventually released as Windows Vista. 7/9/04 JSR at 7. Plaintiffs focused on changes in Vista that might implicate Sections III.C and III.H of the Final Judgments, reviewed materials supplied by Microsoft, discussed their concerns with Microsoft, and were actually able to effect changes to Vista in advance of its release, particularly with respect to the methods for setting default middleware. See generally id.; 10/8/04 JSR; 10/19/05 JSR at 8-9. Throughout that process, the TC developed a number of testing tools that middleware ISVs used to ensure "Vista-readiness" prior to the shipment of Windows Vista. 10/19/05 JSR at 9-10; 11/21/06 JSR at 5-6; 3/6/07 JSR at 6-7. In addition to their oversight efforts related to Vista, Plaintiffs were also able to "stud[y] the new search feature in Internet Explorer 7 and discuss[] its implications with Microsoft months before it was included in the beta versions released to consumers." 5/12/06 JSR at 13.

The Court also notes that the enforcement and voluntary dispute resolution mechanisms of the Final Judgments have been a resounding success. Over the past five years, a variety of complaints have been brought to the parties' attention by third parties, and the parties themselves have also identified areas of concern. Through discussions with Microsoft and the TC, the Plaintiffs have determined which issues fall within the scope of the Final Judgments and whether those issues raise concerns as to Microsoft's compliance. Where Plaintiffs have identified a

27

Nevertheless, the Court would be remiss in suggesting that the compliance and enforcement road has been altogether smooth, even outside the context of Section III.E's implementation. It is certainly true that, as Microsoft stresses, it has never been found to be out of compliance with the Expiring Provisions of the Final Judgments. See Memorandum of Points and Authorities of Microsoft Corporation in Opposition to Certain Plaintiff States' Motions to Extend the Final Judgments (hereinafter "MS Opp'n") at 11. However, it is also true that, over the years, compliance-related issues have arisen regarding virtually every aspect of Section III that the Plaintiffs have determined merited further investigation and warranted concern with Microsoft's compliance efforts. See 7/3/03 JSR at 4-6 (describing ongoing questions related to § III.B compliance); 2/8/06 JSR at 10 (describing complaint under § III.C regarding OEM ability to customize first-boot experience); 6/19/07 JSR at 7-8 (describing reports alleging failure to disclose APIs as required by § III.D); 10/8/04 JSR at 7-8, 11 (describing concern pursuant to § III.F regarding Microsoft contracts for .NET Framework); 10/19/05 JSR (describing issue under § III.G regarding draft specification for promotional CD that included exclusivity requirement);

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D. The Section III.E Saga

By far, the most significant focus of attention and criticism by the parties and the Court over the past five years has been Section III.E of the Final Judgments, which the Court once described as "the most forward-looking provision in [its] remedy." Remedy Opinion, 224 F. Supp. 2d at 173. Despite its originally forward-looking nature, no one involved -- including the United States -- disputes that more than five years after the entry of the Final Judgments, Section III.E still has yet to be fully implemented. The Court briefly recounts the tortured history that has led to this point.

Section III.E of the Final Judgments requires Microsoft to license "on reasonable and non-discriminatory terms (consistent with Section III.I) any Communications Protocol" that is "(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. As the California Movants stress, Microsoft was aware that it would be required to produce Communications Protocols and corresponding technical documentation at least as early as November 2001, when it entered into the consent decree with the United States and the Settling States. CA Mem. at 6. That consent decree obligated Microsoft to make Communications Protocols available starting nine months after the consent

29

When the Court held its first compliance-related Status Conference in this case on July 24, 2003, Microsoft represented that it had "identified more than 100 Communications Protocols encompassed by Section III.E" and developed a program, known as the Microsoft Communications Protocol Program ("MCPP"), under which third parties could license all of the Communications Protocols or a subset thereof. 7/3/03 JSR at 21. Microsoft also advised the Court that it had developed more than 5,000 pages of technical documentation, "produced by approximately ten technical writers working full-time for nine months." Id. Microsoft began offering licenses under the MCPP in August 2002 and, as of July 2003, four ISVs had signed license agreements with Microsoft. Id. at 22.

Plaintiffs' initial § III.E enforcement efforts focused on ensuring that MCPP licenses were offered on reasonable and non-discriminatory terms, as required by §§ III.E and III.I of the Final Judgments. See id. at 6-10. Plaintiffs continued to investigate issues relating to the terms, royalty rates, and structure of the licenses offered under the MCPP into early 2004. See generally 10/17/03 JSR. Throughout that period, Plaintiffs -- including the United States, the New York Group, and the California Group -- stressed that the delay in Section III.E's implementation might undermine its "forward-looking" nature. See 7/3/03 JSR at 9. In response, in October 2003 Microsoft reported that it had decided to allow licensees to extend the term of their licenses for an additional five years at any point during the license period. 10/17/03 JSR at 8-9. Still, in January 2004, Plaintiffs jointly advised the Court that, after conducting interviews with most of

30

Also in January 2004, Plaintiffs reported to the Court that they had received a complaint regarding the sufficiency and completeness of the technical documentation provided by Microsoft to MCPP licensees, which the TC was investigating. Id. at 9. Plaintiffs reported a second complaint in this vein in April 2004, and informed the Court that the TC had "begun an investigation into this issue." 4/14/04 JSR at 4-5. "As a result of this investigation and other work performed by the Plaintiffs, [Plaintiffs] concluded that the technical documentation nee[ded] substantial revision in order to ensure that it [would be] usable by licensees across a broad range of implementations as envisioned by Section III.E." Id. at 5. Thus began the saga of the technical documentation, which continues unresolved to this day.

During the rest of 2004, the parties worked towards collectively developing a standard for completeness to which the technical documentation would be held, with the expectation that the project would be completed by the fall of 2004. 7/9/04 JSR at 5-6. All Plaintiffs -- the state plaintiffs as well as the United States -- continued to voice their concern that the delayed implementation of Section III.E should not be allowed to "reduce the useful life of the licensed technology to current and potential licensees." 4/14/04 JSR at 5. In response, Microsoft revised the MCPP license to provide for a two-year extension for the availability of the MCPP (until November 2009), and committed to allowing licensees to use the licensed protocols to develop products in perpetuity. 7/9/04 JSR at 4-5.

Microsoft released its first major revision of the technical documentation in early

31

As the Troika-related problems emerged, the Plaintiffs -- particularly those within the California Group -- began to question whether Microsoft was devoting the resources necessary to ensure that Section III.E resulted in complete, accurate, and useable technical documentation. See 10/26/05 Status Hrg. Tr. at 20:7-26:19 (expressing the California Group's opinion that "[e]ssentially, Microsoft hasn't done what it promised to do" and stressing the significance of the technical documentation within the Final Judgments' overall remedial scheme). The Court likewise stressed the significance of accurate and complete technical documentation during various status conferences, admonishing Microsoft that "if there is an issue of resources, then put them in, whatever it takes to make this work." Id. at 33:11-14.

32

Based on all Plaintiffs' sharp criticism of Microsoft, "the frequent delays with the Troika project, [and] Microsoft's newfound disregard for the [TDI guidelines]," during its opening comments at the February 8, 2006 status conference, the Court voiced its "concern[] that Microsoft was neglecting a portion of its compliance obligations and promises." 2/8/06 Status Conf. Tr. at 6:5-10. Throughout that status conference, the Court stressed the need "to make sure that . . . Microsoft [was] still carrying their end . . . in terms of making sure this actually works," particularly given the TC's continued assumption of responsibilities originally undertaken by Microsoft. 2/14/06 Status Hrg. Tr. at 17:11-18 (noting that "if [the TC's] been able to do it, I don't understand why Microsoft hasn't been able to"). In addition, the Plaintiffs -- again led by the

33

Unfortunately, what had seemed so promising in February 2006 again proved ineffective. Rather than declining, the number of outstanding TDIs continued to rise, and Microsoft remained unable to promptly resolve open TDIs identified by the TC. 5/12/06 JSR at 3-5. By May 2006, the parties' efforts towards implementing Section III.E reached a crisis point, as the delays stretched on and it became increasingly obvious that the available technical documentation was far from the type of quality product envisioned by Section III.E. Id. In response to mounting pressure from the Court and all of the Plaintiffs, Microsoft finally acknowledged that a new approach to the technical documentation was necessary, along with more resources. Id. at 4. As a result, Microsoft brought in a high-level executive, Robert Muglia, Senior Vice President of Microsoft's Server and Tools Business, to analyze the lack of success in implementing Section III.E and to "determine the most efficient method for producing technical documentation that is of a sufficiently high quality to assure Plaintiffs and the TC that Microsoft is meeting its obligations to licensees." Id. at 6. Mr. Muglia "and his team ultimately concluded that the

34

Microsoft therefore determined that "a broader 'reset' would be much more effective and efficient, meaning that Microsoft [would] rewrite substantial portions of the documentation," id., in order to "describe the protocols in a context in which they [would] be implemented by people [with] limited knowledge of Windows," 5/17/06 Status Hrg. Tr. at 39:9-18. At the May 17, 2006 status conference, which focused on the RESET plan, Microsoft admitted that prior to the RESET plan, it "didn't have the exact right resources, [and] didn't have the right process in place." Id at 39:3-8. Microsoft also acknowledged that it added significant resources to the technical documentation project in early 2006. Id. Indeed, while Microsoft originally devoted only ten employees to the technical documentation project, see 7/3/03 JSR at 22, by May 2006, over 210 employees were involved in Microsoft's technical documentation efforts, including 150 product team engineers and program managers. 5/12/06 JSR at 19-20.²⁶

The RESET plan undertaken in May 2006 was accompanied by the parties' joint request that the Court extend Section III.E of the Final Judgment and certain related sections until November 12, 2009 to "ensure that all necessary work on the documentation [could] be completed and that current and future MCPP licensees [would] have a substantial period of time

35

Since May 2006, the parties have diligently worked toward implementing the RESET plan. The TC has found the rewritten documentation emerging as a result of the RESET plan to be a vast improvement over the previous two forms of technical documentation created by Microsoft, and the Plaintiffs have reported that they are encouraged by this progress. See generally 8/30/06 JSR and 11/21/06 JSR. In addition, as of the parties' last Joint Status Report, a total of 41 companies were licensing Communications Protocols pursuant to § III.E of the Final Judgments and 13 licensees were shipping products under the MCPP. 8/31/07 JSR at 6. However, even the RESET plan's path has not been completely without pitfalls. Most significantly, in February 2007, Microsoft reported that it had conducted an internal audit and "determined that there [were] a number of protocols that [had to] be documented in addition to

36

Again, Plaintiffs -- the United States along with the state plaintiffs -- voiced their concern about the delay in Section III.E's full implementation. At the March 12, 2007 Status Conference, the parties reported another agreement designed to address Plaintiffs' continuing problems with the delay. See generally id.; 3/12/07 Status Hrg. Tr. This plan involved two "audits" of Microsoft's internal audit: one third-party consulting firm would review Microsoft's audit process, while a second consulting firm would attempt to develop programmatic methods for searching the Windows source code to identify additional communications protocols that should have been considered for inclusion in the MCPP. See generally 3/5/07 JSR; 3/12/07 Status Hrg. Tr. Finally, the parties negotiated a possible extension of the royalty holiday in place for MCPP licenses until the Plaintiffs deemed the technical documentation "substantially complete." See generally 3/5/07 JSR; 3/12/07 Status Hrg. Tr.

As of the last status conference held in this case on September 11, 2007, Microsoft had released all initial versions of the rewritten technical documentation to the TC for testing, but the TC and Plaintiffs were far from concluding that the documentation was "substantially complete." 8/31/07 JSR. The parties and the TC continue to conduct intensive testing of the technical documentation, and to review the corresponding overview/reference materials that Microsoft makes available to licensees. Id. In addition, while the first consulting firm's audit of Microsoft's internal audit is complete, the second consulting firm's efforts are ongoing. Id. at 4. Further, in its January 15, 2008 Supplemental Status Report, Microsoft reported that it is still in

37

Based on the foregoing history, it is abundantly clear that more than five years after the Communications Protocols and related technical documentation were required to be available to licensees under § III.E, the documentation envisioned by that Section is still not available to licensees in a complete, useable, and certifiably accurate form. Although the technical documentation project is complex and novel, it is clear, at least to the Court, that Microsoft is culpable for this inexcusable delay. To be sure, the delay has developed in stages, and at each step Microsoft commendably has been willing to work with the Plaintiffs and the TC to address their issues and identify a means of resolving them. The parties' negotiations, in turn, have achieved a worthy goal by obviating the need for compliance-related litigation.²⁷ Quite simply, because the parties have negotiated solutions to each of the myriad issues arising under Section III.E, the Court has never been asked to find Microsoft out of compliance with Section III.E, and has not deemed a sua sponte finding of non-compliance necessary or fruitful in achieving compliance.

Nevertheless, practically speaking, Microsoft has never complied with Section III.E. Furthermore, Microsoft did not proactively bring the problems with its technical documentation

38

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resources towards creating the necessary documentation.

In considering the Moving States' motions to extend the Final Judgments, the Court must evaluate the facts as they are at this point in time. To that end, while the Court certainly commends Microsoft for its willingness to cooperate with Plaintiffs and negotiate solutions throughout the past five years, the fact remains that when the Final Judgments were entered, the parties and the Court anticipated that the documentation required under Section III.E would be available, at the latest, by February 2003. Instead, almost five years later, Section III.E, which was meant to be "the most forward-looking provision" of the Final Judgment, Remedy Opinion, 224 F. Supp. 2d at 173, has yet to be fully implemented. At least as significantly, because of the delay, the various provisions of the Final Judgments have never been given an opportunity to operate together as the Court and the parties envisioned when the Final Judgments were entered. See Settling States Opinion, 231 F. Supp. 2d at 259 ("Far from an amalgam of scattered rules and regulations pieced and patched together to restrict Microsoft's anticompetitive business conduct, the [Final Judgment] adopts a clear and consistent philosophy such that the provisions form a tightly woven fabric.") (incorporating Tunney Act Opinion); see also United States' Resp. to Public Comments, Docket No. [699], at 205 ¶ 413 ("it is the overall impact of the various decree provisions working together over the course of the five-year term that will restore competitive conditions in the market.").

E. The Moving States' Motions

At the March 13, 2007 status conference in the consolidated cases, the California Group reported to the Court that it intended to undertake an effort to survey MCPP licensees regarding their experiences with, and the impact of, the Final Judgments. 3/13/07 Status Hrg. Tr. at 31:3-

40

During the September 11, 2007 status conference, the California Group announced its intent to file a motion asking the Court to extend all provisions of its Final Judgment, other than § III.B, through November 2012. See generally 9/11/07 Status Hrg. Tr. at 27:3-29:10; 36:22-56:13. At that same status conference, the Court indicated that it was reserving all comments on the effectiveness of the Final Judgments until the expected November 2007 expiration of many provisions, but made some observations regarding the "background against which the final judgment was entered," and indicated that any request to extend the Final Judgments would have to be "for an identifiable purpose." Id. at 31:5-36:21.

The California Movants filed their Motion to Extend on October 16, 2007, and on October 18, 2007, the New York Movants filed their Motion to Alter Judgment, joining the California Movants' request for an extension. On October 19, 2007, the United States filed a Report indicating that they would not move to extend the Final Judgment in United States v.

41

Having reviewed all of the foregoing filings, on December 10, 2007, the Court issued an Order directing the Moving States and Microsoft to file additional briefing on a "very targeted" issue regarding the relation between Section III.E and the other provisions of the Final Judgments. As ordered, the Moving States filed their additional Memorandum on December 18, 2007, and Microsoft filed its Opposition thereto on December 28, 2007. Finally, on January 8, 2008, the Court ordered the Moving States to file a Reply to Microsoft's Opposition, addressing a list of pointed questions. The Moving States did so on January 11, 2008. As such, the Moving States' motions to extend finally are fully ripe for review.

II: LEGAL STANDARD

The Moving States and Microsoft disagree over the appropriate legal standard to apply to the Moving States' motions to extend. Before turning to that issue, however, the Court addresses a more fundamental one: the source of the Court's authority to modify the Final Judgments as the

42

As this Court noted in the Settling States Opinion:

The D.C. Circuit [has] made clear that "district courts enjoy no free-ranging 'ancillary' jurisdiction to enforce consent decrees, but are instead constrained by the terms of the decree and related order." Pigford v. Veneman, 292 F.3d 918, 924 (D.C. Cir. 2002). The Pigford [v. Veneman] court further explained that the district court's power over a consent decree, reflecting the hybrid between judicial order and contract, is limited to two sources. A district court may interpret and enforce a decree to the extent authorized by the decree itself or by the related order. Id. at 923. Additionally, a district court may modify a decree pursuant to Rule 60(b)(5) of the Federal Rules of Civil Procedure. Id.

Settling States Opinion, 231 F. Supp. 2d at 257-58 (incorporating Tunney Act Opinion). It was for precisely this reason that the Court conditioned its approval of the consent decrees upon the "Court's retention of jurisdiction [being] clearly articulated and broadly drawn." Id. at 258.

The resulting "broadly drawn" retention of jurisdiction clause vests the Court with authority to modify any provision of the Final Judgments upon application by any party. Final Judgments, § VII.²⁹ Indeed, the retention of jurisdiction provisions of the Final Judgments are strikingly different from the provision in Pigford v. Veneman, which was "limited by its plain

43

Furthermore, the Court notes Microsoft's implicit suggestion that the Court's authority to extend the Final Judgments arises exclusively from § V.B, which allows the Plaintiffs to apply to the Court for a one-time extension of up to two years "[i]n any enforcement proceeding in which the Court has found that Microsoft has engaged in a pattern of willful and systematic violations." Id., § V.B. Plaintiffs do not invoke § V.B in seeking to extend the Final Judgments, nor does the Court. Nevertheless, Microsoft proffers no evidence that § V.B represents the sole avenue for an extension of the Final Judgments, and the Court finds no such limitation in the broad retention of jurisdiction and termination provisions of the Final Judgments. The Court thus concludes that it has the power to modify the Final Judgments pursuant to its express authority retained under the Final Judgments.

The Court may also modify the Final Judgments under its power in "equity to modify a decree of injunctive relief," which the D.C. Circuit has described as "long-established, broad, and

44

The Moving States argue that the Court "is granted broad discretion to modify a decree in order to accomplish its intended result." CA Mem. at 7. In so arguing, they rely upon Western Electric, in which the D.C. Circuit stated that "[a]t the request of the party who sought the equitable relief, a court may tighten the decree in order to accomplish its intended result," 46 F.3d at 1202 (citing United Shoe, 391 U.S. at 252), as well as United Shoe itself, in which the Supreme Court concluded that an antitrust decree could be modified at the request of a government enforcer where it had not "after 10 years, achieved its 'principal objects,'" 391 U.S. at 251-52. The Moving States also cite to Chrysler Corporation v. United States, 316 U.S. 556 (1942), in which the Supreme Court affirmed the extension of an antitrust consent decree and stated that the relevant "test to be applied . . . is whether the change served to effectuate or to thwart the basic purpose of the original consent decree." Id. at 562. According to the Moving

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For its part, Microsoft asserts that the "relevant standard for modifying decrees was articulated by the United States Supreme Court in Rufo v. Inmates of the Suffolk County Jail, 502 U.S. 367, 383 (1992), and subsequently applied by the D.C. Circuit in Pigford v. Veneman." MS Opp'n at 6. Under that standard, "a party seeking modification of a consent decree bears the burden of establishing that a significant change in circumstances warrants revision of the decree." Rufo, 502 U.S. at 383. "Modification of a consent decree may be warranted when changed factual conditions make compliance with the decree substantially more onerous," "when a decree proves to be unworkable because of unforeseen obstacles," "or when enforcement of the decree without modification would be detrimental to the public interest." Id. at 384-85 (citations omitted). For purposes of determining whether "unforeseen obstacles" amount to "changed circumstances," "Rufo's modification standard does not require absolute unforseeability. It is enough that the parties did not actually contemplate the changed circumstances." Evans v. Williams, 206 F.3d 1292, 1298 (D.C. Cir. 2000). Furthermore, "[i]f the moving party meets [the changed circumstances] standard, the court should consider whether the proposed modification is suitably tailored to the changed circumstances." Rufo, 502 U.S. at 383.

To be sure, Rufo is binding law, which the D.C. Circuit applied to motions to modify

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The Moving States are correct that the instant situation is qualitatively different from one in which an enjoined party seeks relief from a judgment, and that the Supreme Court cases discussed above suggest that a government enforcer may move to modify a consent decree in

47

Nevertheless, the Court is cognizant of the Western Electric court's acknowledgment that Rule 60(b)(5) "has been described as 'little more than a codification of the universally recognized principle that a court has continuing power to modify or vacate a final decree.'" 46 F.3d at 1202 (quoting 11 Charles A. Wright, et al., Federal Practice and Procedure § 2961 (1994)). Similarly, in Pigford v. Johanns, the D.C. Circuit explained that "[a]s a practical matter, it makes little difference whether the district court [resolves a motion to modify a consent order] under Rule 60 or under its equitable authority as the standard for each is substantially the same." Pigford v. Johanns, 416 F.3d 12, 16 (D.C. Cir. 2005). Significantly, although Rufo involved institutional reform litigation, the D.C. Circuit extended its application to antitrust actions in Western Electric. See 46 F.3d at 1202-03; see also United States v. Eastman Kodak Co., 63 F.3d 95, 101-02 (2d Cir. 1995) (concluding that Rufo and United Shoe both bear upon a motion to terminate an antitrust decree). And, subsequent to Western Electric, the D.C. Circuit applied the Rufo standard in affirming a district court's ability to extend consent decree deadlines upon a plaintiff's request. See Pigford v. Veneman, 292 F.3d at 925; see also Cook, 2003 WL 24868169, at *2.

In addition, courts in other circuits have recently applied Rufo to cases in which the beneficiary of a consent decree sought to extend the decree's term or sought other modifications

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In light of the foregoing, Microsoft may well be correct in arguing that Rufo applies to the instant case. Ultimately, however, the Court need not resolve this "thorny issue," Cook, 2003 WL 24868169, at *3, because the Court concludes below that the Moving States have met their burden under either United Shoe or Rufo. In this regard, the Court notes Microsoft's emphasis that "[m]odification of a decree or judicial order is an 'extraordinary' remedy that is appropriate only 'in very specific circumstances.'" MS Opp'n at 5 (quoting Cook, 2003 WL 2486869, at *3 and Stewart, 225 F. Supp. 2d at 9). Microsoft is certainly correct that modification requests must be approached "with caution." Id. (quoting NLRB v. Harris Teeter Supermarkets, 215 F.3d 32, 35 (D.C. Cir. 2000)). Microsoft is likewise correct -- and the Court is aware --that modification of

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III: DISCUSSION

The Moving States' motions seek to extend the Final Judgments until November 12, 2012 -- five years beyond their original terms -- and proffer a variety of arguments that such a lengthy extension is warranted pursuant to either United Shoe or Rufo. Having carefully reviewed each of the Moving States' arguments in favor of extension, as well as Microsoft's Opposition thereto and the United States' amicus brief, the Court concludes that it is appropriate to extend the Expiring Provisions of the Final Judgments until November 12, 2009 due to the unforeseen delay in the implementation of Section III.E of the Final Judgments.

The Court therefore addresses the parties' arguments regarding the Section III.E delay first, before turning to the Moving States' other arguments in favor of extension. Ultimately, the Court rejects the Moving States' other grounds, finding that their arguments are either foreclosed by the previous opinions of the trial court and the appellate court, or that they require premature speculation that does not meet the Moving States' burden under United Shoe and/or Rufo.

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As detailed above, at the time that the Court entered the Final Judgments, all parties involved anticipated that the technical documentation required under Section III.E would be released, at the latest, by February 2003. Instead, five years later, the rewrite of the technical documentation has only recently been completed, the corresponding overview/reference materials are not available to licensees, and the testing of the revised technical documentation is far from finished. As such, no one can deny that licensees do not yet have access to a set of usable, accurate, and certifiably complete technical documentation, as contemplated by Section III.E and by the Court's various remedy-related opinions.

Nor can it be denied that, as a result of the delay in Section III.E's implementation, the provisions of the Final Judgments have not yet had the chance to operate together as a comprehensive remedy. As the Moving States repeatedly stress, the Final Judgments were constructed as a unitary framework, with the various provisions intended to complement and reinforce each other. See CA Mem. at 13-15; NY Mem. at 6 (quoting United States' Resp. to Public Comments ¶ 413 ("it is the overall impact of the various decree provisions working together over the course of the five-year term that will restore competitive conditions in the market.")). Indeed, the Court's Settling States Opinion described the proposed consent decree as "[f]ar from an amalgam of scattered rules and regulations pieced and patched together to restrict Microsoft's anticompetitive business conduct," but rather a judgment that "adopts a clear and consistent philosophy such that the provisions form a tightly woven fabric." Settling States Opinion, 231 F. Supp. 2d at 259 (incorporating Tunney Act Opinion). The Court also clearly

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The delay in Section III.E's implementation, which has deprived the provisions of the Final Judgments the chance to operate together as intended, is entirely incongruous with the original expectations of the parties and the Court. As such, the delay, and the resulting impact on the Final Judgments' operation, constitute a "significant change in circumstances" that warrants extending the Expiring Provisions under the Rufo standard. Rufo, 502 U.S. at 383; see also Thompson, 404 F.3d at 827-29 (affirming extension of consent decree because "[g]iven that the [defendants] are so far behind in fulfilling their obligations under the Consent Decree and that many of the obligations of the parties are interrelated, the district court properly recognized the utility of retaining jurisdiction over [a defendant], so as to ensure that the Decree can be efficiently enforced."); David C., 242 F.3d at 1211-12 (granting relief from termination provision of consent decree in order to allow defendant "to fulfill the very obligations it voluntarily undertook when it entered into the [decree]"); Vanguards of Cleveland, 23 F.3d at 1019-20 (affirming extension of consent decree where the expectations underlying the decree had failed to materialize).

Rufo explains that "[m]odification is [] appropriate when a decree proves to be unworkable because of unforeseen obstacles," id. at 384, and it is clear that the dramatic delay in the implementation of § III.E was entirely unforeseen by either the Court or the parties when the Final Judgments were entered. Cf. Sierra Club v. Meiburg, 296 F.3d 1021, 1033-34 (11th Cir.

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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. Nevertheless, the Moving States highlight scenarios in which the Expiring Provisions of the Final Judgments might yet play a significant role in helping § III.E achieve its full potential. The Moving States focus on the possibility that an MCPP licensee who writes an application using software hosted on a server will also wish to add "software to the client to take advantage of the functionality that the server provides." Moving States' Resp. to the Court's December 10, 2007 Order (hereinafter "Moving States' Dec. 10 Resp.") at 2-3. The Moving States note, and

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The Moving States specifically suggest that in the future an MCPP licensee could "creat[e] a media server that uses the [MCPP] media protocols to support Microsoft media formats, while also supporting competing formats." Moving States' Dec. 10 Resp. at 4. However, because the "licensee cannot rely on Microsoft's media player to read all of the formats," it "must develop its own player for the Windows client, or find third parties to develop compatible players." Id The Moving States continue to explain how, in that scenario, the Expiring Provisions would support each other in maximizing the procompetitive impact of the server-side application developed using MCPP protocols: § III.A would prevent Microsoft from retaliating against an OEM for distributing the licensee's media player; § III.C would guarantee OEMs the freedom to place the media player on the Windows desktop and in menus; § III.D would give the licensee access to the APIs needed to create the media player; § III.F would protect the licensee if it sought to have a third-party ISV create the media player; § III.G would prevent Microsoft from entering into agreements aimed at excluding the competing media player; and § III.H would allow the end user to set the competing media player as a default. Id at 4-5.

Microsoft correctly points out that the development of the client-side product in the Moving States' examples is "well beyond the scope of Section III.E, . . . [and] beyond the scope of the MCPP license itself" because "[o]nce software is added to the client, the server and the application can communicate directly without the need for the proprietary protocols supported in

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The foregoing discussion also demonstrates that the Section III.E delay has impeded the Final Judgments from "accomplish[ing their] intended result" and "achiev[ing their] principal objects." United Shoe, 391 U.S. at 251-52. The D.C. Circuit identified the objectives of the Final Judgments as, inter alia, "unfetter[ing] a market from anticompetitive conduct," and "ensur[ing] that there remain no practices likely to result in monopolization in the future." Microsoft, 253 F.3d at 103 (quoting Ford Motor Co., 405 U.S. at 577 (1972) and United Shoe, 391 U.S. at 250). To that list, this Court's Remedy Opinion added "eliminat[ing] the consequences of Microsoft's illegal conduct." 224 F. Supp. 2d at 173 (quoting Nat'l Soc'y of Prof'l Eng'rs v. United States, 435 U.S. 679, 698 (1978)). This Court further explained that it expected Section III.E would serve the Final Judgments' forward-looking goals by "advancing

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Furthermore, the Court's Remedy Opinion makes clear that § III.E represents only one avenue towards achieving the Final Judgments' overall goals. Microsoft attempts to obscure this fact, arguing that the § III.E delay does not warrant an extension of the other provisions of Section III because "whereas Sections III.A, C, D, F, G, and H all deal with the treatment of middleware products running on Windows, Section III.E was designed to encourage development of platform alternatives running on servers (i.e., not running on Windows)." MS Opp'n at 16. While Microsoft is correct that Section III.E focused on servers while the other provisions of Section III focused on client-side applications, its argument demonstrates only that Section III.E took a different approach to achieving the Final Judgments' overall goals. Microsoft's argument thus does not negate the fact that the parties and the Court have always viewed Section III.E as just one means to the Final Judgments' overall ends. See Settling States Opinion, 231 F. Supp. 2d at 249 ("the protections in § III.E . . . not only redress[] the specific conduct found to violate the antitrust laws, but [] obtain protection which is prospective in its focus . . . In the absence of [§ III.E] and the other prospective provisions in the [Final Judgment], it is quite possible the core of the decree would prove prematurely obsolete.") (emphasis added); see also Remedy Opinion, 224 F. Supp. 2d at 173 ("the Court's remedy extends to the most apparent frontier in `platform' threats to Microsoft's PC operating system monopoly . . . [§ III.E] contributes to the elimination

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To the extent that Microsoft's argument suggests that Section III.E was forward-looking in nature, while the other provisions of Section III were solely retroactive, that inference is unsupported by either the text of the Court's remedy-related opinions, or the realities of the Final Judgments. It is certainly the case that the other provisions of Section III aimed to "end Microsoft's restrictions on potentially threatening middleware," but those provisions also sought to "prevent it from hampering similar nascent threats in the future, and restore the competitive conditions created by similar middleware threats." Massachusetts v. Microsoft, 373 F.3d at 1243. As such, they were intended to provide necessary protection to programs developed as a result of Section III.E, in the event that such protections became necessary. With the technical documentation still not fully complete, accurate, and usable, it is too early to say whether the other provisions of Section III will yet prove necessary in maximizing the potential of products developed under Section III.E. Based on the Moving States' examples, however, the Court is convinced that this option needs to be preserved.

Microsoft also argues that the Moving States have not carried their burden of demonstrating that the Section III.E delay necessitates an extension of the other provisions of Section III because they "make no effort to prove why the success of each specific provision of the Final Judgments is contingent on the continued operation of every other provision." MS Opp'n at 14. According to Microsoft, the Moving States cannot make such a showing because they agreed in the fall of 2006 to extend only Sections I, II, III.F.1, III.F.3, III.I, III.J, IV, V, VI, VII, and VII of the Final Judgments along with Section III.E. Id at 14-15. The United States

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In any event, the Court rejects Microsoft's suggestion that the other provisions of Section III should not be extended unless Section III.E would be doomed to fail in their absence. MS Opp'n at 14. The Moving States' Response to the Court's December 10, 2007 Order concedes that the provisions of Section III are "complementary, not interdependent," but nevertheless argues that "the Final Judgment would be much less likely to achieve the as yet unfulfilled remedial goals . . . if the only provision that remains in effect is § III.E." Moving States' Resp. to Dec. 10 Order at 10. For its part, Microsoft does not point to language in any of the Court's

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Finally, Microsoft suggests that it is not necessary to extend the Expiring Provisions of the Final Judgments in order to support Section III.E because the "proliferation of Web-based computing has, in effect, accomplished what Section III.E was designed to do, although not exactly in the way that was anticipated in 2001 when Section III.E was created." MS Opp'n at 16-17. Without drawing conclusions as to the accuracy of Microsoft's statement, the Court notes only that it does not establish that Section III.E has become irrelevant. The Court recognizes that the goals have been thwarted by the time that has been lost as a result of the delays, attributed solely to Microsoft, in Section III.E's implementation, and understands that it cannot recreate the opportunities that existed when the Final Judgments were entered. Nevertheless, the Court shares the Moving States' expectation that the MCPP will continue to attract licensees, see CA Mem. at 12, and that once certifiably complete, accurate, and useable technical documentation is available to those licensees they will develop products that "further the ability of [] non- Microsoft server operating systems to provide a platform which competes with Windows itself," Remedy Opinion, 224 F. Supp. 2d at 173. When such development occurs, it will presumably amplify whatever progress the proliferation of Web-based computing has made towards "eliminat[ing] the consequences of Microsoft's illegal conduct." Id at 173.

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B. The Moving States' Other Arguments In Favor of Extension Lack Merit

In light of the Court's conclusion that the Section III.E delay and its repercussions on the Final Judgments' implementation warrant an extension of the Expiring Provisions under either Rufo or United Shoe, the Court need not tarry long over the Moving States' remaining, meritless, arguments for extensions. The Court therefore addresses each very briefly below, albeit not in the order presented by the Moving States.

First, the Moving States highlight the fact that no licensee has, as of yet, developed a

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The Moving States similarly find a "changed circumstance" in the fact that no major OEM has pre-installed a rival browser to Microsoft's IE on its new PC systems. CA Mem. at 16-

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The Moving States' focus on the web browser market is also inappropriate for the even more fundamental reason that the web browser market was not the relevant market for purposes of the liability findings. To the contrary, the D.C. Circuit concluded that the Plaintiffs failed, in the liability phase, to establish the existence of a properly defined market for web browsers.

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The Moving States attempt to gloss over the fact that neither web browsers nor servers were the relevant market for purposes of the liability findings in this case by asserting that Microsoft's alleged dominance of those markets nevertheless matters because emerging web-centric technologies are "dependent on web browsers and servers for access to consumers," and "require computer equipment running a client or server operating system." CA Mem. at 6, 20- 22. According to the Moving States, the continuing dominance of IE and Windows offers Microsoft the ability "to use the browser as a chokepoint," id. at 5, so as "to impede the development of emerging middleware threats with the potential to erode the applications barrier to entry protecting its Windows monopoly," Moving States' Reply at 25. The Court notes that the Moving States' claims in this respect are not undisputed, as one of the expert reports submitted in support of Microsoft's Opposition argues that Microsoft would have neither the

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In any event, the Court need not resolve this largely hypothetical factual dispute. As Microsoft acknowledges, if it were to use its alleged dominance in the web browser market in order to stifle competing middleware, "such conduct would [likely] violate § 2 of the Sherman Act, and Microsoft would remain subject to penalty under that statute." MS Opp'n at 19.³¹ This Court's Remedy Opinion previously recognized as much when it stated that "although Plaintiffs assume that Microsoft will engage in anticompetitive conduct in the future in conjunction with its participation in this emerging area of technology, this case cannot be used as a vehicle by which to fight every potential future violation of the antitrust laws by Microsoft. . . . " Remedy Opinion, 224 F. Supp. 2d at 133. Instead, the specters of hypothetical threats that the Moving States raise "are more appropriately addressed as separate claims, in a separate suit, should Microsoft engage in such conduct and should Plaintiffs deem it appropriate to file one." Id at

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134.³² Finally, the Court addresses the Moving States' claim that the Expiring Provisions should be extended because "in the relevant market, Intel-compatible PC operating systems, the rapid pace of change [anticipated by the Court during the remedy phase] has clearly not manifested itself." Moving States' Reply at 12, 28-31; CA Mem. at 19-20; NY Mem. at 2-4. Microsoft vehemently disputes this assertion, insisting that "major developments and innovation [have] taken place in connection with Windows," and that, more importantly, "[a] proper examination of the [software] industry since the Final Judgments reveals that innovation has been widespread, competition has been dynamic, and growth and innovation have outpaced the rest of the economy by a wide margin." MS Opp'n at 25, 27.

Again, the Court concludes that resolution of this factual dispute is unnecessary, and indeed inappropriate. As an initial matter, insofar as the Moving States' argument is premised on their assertion that "Microsoft's share of the PC operating system market has been greater than 90% for at least the past 15 years," CA Mem. at 4, it is entirely misplaced. The Court's Remedy Opinion reiterated that "the monopoly in this case was not found to have been illegally acquired,

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The Moving States' focus on the "pace of change" in the relevant market likewise cannot support an extension of the Expiring Provisions of the Final Judgments. It is correct that this Court's selection of a five-year term for the Litigating States' remedy and approval of the same term in the Settling States' consent decree turned on an understanding that "the industry at issue in this case is remarkable for its constant and rapid change." Remedy Opinion, 224 F. Supp. 2d at 184; Settling States Opinion, 231 F. Supp. 2d at 252-53. However, the Court did not set any benchmark expectations for the industry and, to the contrary, noted the "substantial uncertainty as to the future demands of the software industry." Remedy Opinion, 224 F. Supp. 2d at 183. The Court thus did not predicate the success of the Final Judgments on the anticipated developments in the relevant market. Nor should such changes provide the measure for determining whether an extension is appropriate, as that measuring stick is subject to unpredictable pressures and influences that would open the door to potentially endless extensions. Such an outcome would indeed be contrary to the policy favoring eventual finality in court oversight of judgments.

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C. Microsoft's Additional Arguments Against Extension

Having addressed the Moving States' main arguments for extending the Expiring Provisions, the Court now considers the arguments raised by Microsoft against that outcome, to the extent they are not addressed above.

Microsoft asserts that its "compliance with the expiring provisions of the Final Judgment, its history of going beyond its obligations to resolve issues raised by the Plaintiffs and the [TC], and its commitment to adhere to Final Judgment principles on a going-forward basis" are grounds for denying the Moving States' motions and relieving Microsoft of the burden of "operating under the shadow of a judicial decree." MS Opp'n at 11 (citing Windows Principles: Empowering Choice, Opportunity, and Interoperablity, available at http://www.microsoft.com /about/corporatecitizenship/ citizenship/businesspractices/windowsprinciples.mspx (published Aug. 24, 2007)). The Moving States attempt to downplay Microsoft's claim by asserting that "Microsoft itself should hardly be heard to object to extending the decree" because it "professes to be 'committed to running its Windows business in accordance' with [the Windows Principles]" and because it "conceded, in the case brought by the European Commission, that the settlement in this litigation has not 'had any negative impact on its incentives to innovate.'" NY Mem. at 7; CA Mem. at 22 & n.22.

The Moving States arguments in this regard are not well-taken. Microsoft's commitment to the Windows Principles is admirable, and certainly should not be held against Microsoft. Furthermore, the Court is well aware that operating under a judicial decree has negative connotations. See MS Opp'n at 11. The Court nevertheless concludes, for the reasons detailed above, that an extension of the Expiring Provisions is warranted due to the delay in Section

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III.E's implementation and the impact of that delay on the Final Judgments' operation.

Microsoft next argues that the New York Movants are on shaky ground because their August 30, 2007 Review of the Final Judgments, filed jointly with the United States, concluded that the Final Judgments had achieved their goals. US Amicus Br. at 5-7; MS Opp'n at 8. The New York Movants address any apparent inconsistency by explaining that their earlier filing was not a "mission accomplished" pronouncement. Moving States' Reply at 23. According to the New York Movants, while they believe the Final Judgments are "accomplishing their stated goal of fostering competitive conditions . . . [t]here is still much work for the Court's Final Judgments to do." Id (quoting NY Group Review of Final Judgments at 6, 8). The Court agrees with the New York Movants that their positions are not inherently inconsistent and that, in any event, their Review of the Final Judgments in no way waived their right under their Final Judgment to seek the additional relief they now believe is warranted.

Microsoft further asserts that, as a party to a negotiated consent decree, the New York Movants should not be able to escape the five-year term of that decree, because the decree should be accorded the weight of a binding contract. MS Opp'n at 8. The United States echoes Microsoft's argument in its amicus brief. US Amicus Br. at 5-7. The Court certainly recognizes that modification of a consent decree is an "extraordinary remedy." See Harris Teeter Supermarkets, 215 F.3d at 35). However, it must also be acknowledged that the consent decree in this instance is unusual in that it was not reached as an alternative to a finding of liability. Rather, the consent decree addressed only the remedy phase of this case, and was negotiated based on the D.C. Circuit's findings of liability and guidance as to the parameters of an appropriate remedy. Further, the consent decree shared the same purpose, and reflects the same goals, as the court-

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Just as the consent decree and court-ordered remedy had the same goals, so did their identical Sections III.E play the same role within the two Final Judgments. And, as noted above, the Court's power to modify an injunction or grant relief from a judgment is the same regardless of whether a consent decree or litigated decree is at issue. Agostini, 521 U.S. at 215; Swift, 286 U.S. at 114; Western Electric, 46 F.3d at 1205. As a result, the Court's conclusions regarding the unforeseen nature of the Section III.E delay and its impact on the implementation of the Final Judgments are of equal import with respect to each Final Judgment. Moreover, the New York Movants convincingly argue that, even if the Court regards their consent decree as a binding contract, they "have yet to realize the benefit of their `bargain' because Microsoft still has not fulfilled its § III.E disclosure obligations, an important inducement to settle the litigation." Moving States' Reply at 26.

Finally, continuing with its argument that the New York consent decree is a binding contract, Microsoft argues that it "should not be forced to endure more than [it] bargained for," given its overall compliance with the Expiring Provisions and its cooperation with the Plaintiffs and TC over the past five years. MS Opp'n at 11. According to Microsoft, if the New York Movants are allowed to unilaterally extend the expiring provisions, it will deter parties from negotiating consent decrees and from going "beyond the letter of their decree obligations." Id at

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The Court is nevertheless sensitive to the policy argument made by Microsoft and amici, and therefore stresses that its decision to extend the Expiring Provisions of the Final Judgment must be viewed in the proper, extremely unique, context. Not only is this case unique, in that it involves a highly complex and rapidly evolving market, but the posture in which this Court undertook the remedy phase (and the Settling States negotiated their consent decree) was also unique because the D.C. Circuit's liability opinion strictly cabined the parameters of an appropriate remedy. The actual remedy encompassed by the Settling States' consent decree and the Litigating States' judgment was similarly unique, including innovative approaches such as the TC and the technical documentation requirements. Even within that unique remedy, Section III.E represented the "most forward-looking" and most innovative provision. Remedy Opinion, 224 F. Supp. 2d at 173. The Court's conclusion that the Expiring Provisions of the Final Judgments should be extended is thus based on Section III.E's paramount significance in the Final

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The Court does not dispute that Microsoft has been overwhelmingly cooperative with the Plaintiffs and the TC over the past five years. To the contrary, the Court commends Microsoft for its willingness to address issues as they arose and to negotiate solutions rather than force litigation. In many respects, Microsoft's conduct has been a model for parties engaged in complex and protracted litigation. But Microsoft's good citizenship does not erase the fact that, more than five years after the Final Judgments called for the Section III.E Communications Protocols to be available, licensees do not yet have the benefit of a certifiably complete, accurate, and useable set of technical documentation. Nor can the fact that Microsoft has never been found to be out of compliance with the Final Judgments obscure the obvious conclusions that, practically speaking, Microsoft has failed to comply with Section III.E, and that its non-compliance is highly material. Indeed, Microsoft admitted as much when, in May of 2006, it admitted that it "didn't have the exact right resources [or] the right process in place," and suggested a massive overhauling of the previous attempts at generating the technical documentation required under Section III.E. 5/17/06 Status Hrg. Tr. at 39:3-8.

As discussed above, neither the parties nor the Court will ever know how the relevant market might have developed if the Section III.E technical documentation had been available five years ago. Nor can the Court project what use may be made of the technical documentation in the future. But the Moving States have proffered realistic examples of ways in which the Expiring Provisions of the Final Judgments can yet play a role in maximizing the impact of products to be

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D. The Appropriate Length of the Extension

The sole remaining issue, then, is the length of time for which the California Group and New York Group Final Judgments should be extended. The Moving States seek to extend the entire Final Judgments the Expiring Provisions as well as Section III.E until November 12, 2012. Although the Moving States raise a number of arguments in support of this request, the Court ultimately agrees with Microsoft and the United States that it is premature at this time to consider extending Section III.E, and the Expiring Provisions, beyond November 12, 2009, given that Section III.E has already been extended until that date.

The Moving States first attempt to rehash the Litigating States' argument that "ten years is the standard term for antitrust consent decrees entered into by the Antitrust Division of the United States Department of Justice." Remedy Opinion, 224 F. Supp. 2d at 184; CA Mem. at 18. According to the Moving States, it is now appropriate for the Court to revert to the "standard" term, by adding another five years to the Final Judgments' current five-year terms, because the pace of change in the relevant market has not materialized as the Court envisioned during the remedy proceedings. The Court is no more convinced by this argument now than it was then, and declines to accept the Moving States' disputed representations as to the "pace of change." As discussed above, because the Court's expectations of change in the relevant market were not tied to any particular benchmarks, but rather recognized the "substantial uncertainty as to the future demands of the software industry," Remedy Opinion, 224 F. Supp. 2d at 183, the Court cannot

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The Moving States present a far more compelling argument when they assert that "continued oversight by plaintiffs, the TC, and the Court, is essential to assure the integrity of the MCPP," as well as "to give prospective licensees the confidence that the [technical documentation] they will get, if they take a license, is complete and accurate." CA Mem. at 12.³³ The Court is certainly concerned with maximizing the procompetitive impact of the Final Judgments and encouraging continued innovation that serves to eliminate the applications barrier to entry. The Court also recognizes that developing a product under an MCPP license "requires considerable advance planning, capital investment and other expenditure[s]," id., and appreciates the significant role the TC plays in ensuring that the technical documentation produced pursuant to Section III.E is of a nature and quality that is attractive and useful to current and prospective licensees. Nevertheless, the Court agrees with Microsoft and the United States that it is premature

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Moreover, for the time being at least, the oversight of the TC, the Plaintiffs, and the Court is assured, because Section III.E and the other extended provisions do not expire until November 2009. Parties considering licenses should therefore take comfort in the fact that the TC, the Plaintiffs, and the Court's oversight will continue while the technical documentation is tested and finalized. In addition, as the Moving States note, because "present and future client/server [Communications Protocols] are available for license through November 11, 2012," Microsoft "will be required to document" any "new [Communications Protocols] in its next major Windows client and server releases." CA Mem. at 11. Thus, the current oversight period of the Plaintiffs, the TC, and the Court also encompasses the launch of Microsoft's Windows Server 2008, which is reportedly scheduled for release in February 2008. Id

Finally, the Moving States argue that "a five-year extension of the existing decree does no more than was originally intended by the parties and by the Court. . . [but rather allows] the decree

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The Court thus concludes that the most appropriate approach is to assess the need for continued Court oversight in reasonable incremental periods. Section III.E and the other extended provisions are currently set to expire on November 12, 2009. See Modified Final Judgments, Section V.A. That extension was sought jointly by the Plaintiffs and Microsoft in order to ensure that Section III.E be given a full opportunity to succeed. See NY/MS Joint Mot. to Modify the Final Judgment at 2. As discussed extensively above, the Final Judgments were always intended to operate as a comprehensive remedy, and the Moving States have presented realistic examples

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Nevertheless, the Court's decision not to extend the Final Judgments beyond November 12, 2009 now does not foreclose the possibility of doing so in the future. Indeed, the mechanisms are already in place to reexamine Section III.E's implementation and the Final Judgments' termination in the Fall of 2009. At present, the Final Judgments give Plaintiffs the right "in their sole discretion to request an additional three-year extension of [Sections I, II, III.F.1, III.F.3, III.E, III.I, III.J, IV, V, VI, VII, and VIII] of the decree until November 12, 2012," with the understanding that "Microsoft will not oppose any such request." NY/MS Joint Mot. to Modify the Final Judgment at 2-3.³⁵ Similarly, the door remains open for the Court to reassess the need

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Based on the showing made by Moving States,³⁶the Court concludes that they have met their burden of establishing that the unforeseen delay in Section III.E's implementation constitutes changed circumstances. The Moving States have further established that the repercussions from the delay have impacted the Final Judgments' procompetitive potential and prevented them from achieving their principal objectives. As such, the Court shall extend the Expiring Provisions until November 12, 2009, to coincide with the current termination of the provisions that have already been extended, and to allow the Expiring Provisions the opportunity to help maximize Section III.E's potential. In so doing, however, the Court reiterates that, as stated in its Remedy Opinion, "[a]n antitrust decree should endure only so long as necessary to ensure competition." Remedy Opinion, 224 F. Supp. 2d at 184. The Court certainly anticipates that there will, and must, be

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finality to its oversight of the Final Judgments.

IV: CONCLUSION

For the foregoing reasons, the Court shall GRANT-IN-PART and DENY-IN-PART the Moving States' motions to extend the Final Judgments, and shall extend the Expiring Provisions of the Final Judgments, with the exception of Section III.B, until November 12, 2009.

Date: January 29, 2008

/s/
COLLEEN KOLLAR-KOTELLY
United States District Judge

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¹ An Executive Summary of this Memorandum Opinion, which does not represent the official and complete Court findings of fact or conclusions of law, is available on the public docket for this case.

² The California Movants include the States of California, Connecticut, Iowa, Kansas, Minnesota, the Commonwealth of Massachusetts, and the District of Columbia. See Plaintiff States' Memorandum of Points and Authorities in Support of their Motion to Extend the Final Judgment Until November 12, 2012 (hereinafter "CA Mem.") at 1. The New York Movants include the States of New York, Maryland, Louisiana and Florida. See Joinder of Plaintiff States of New York, Maryland, Louisiana and Florida in Moving to Extend the Final Judgments (hereinafter "NY Mem.") at 1. As detailed below, the California Movants and New York Movants each belong to larger groups of state plaintiffs in this action, respectively the "California Group" or "Litigating States" and "New York Group" or "Settling States."

³ A number of states who were Plaintiffs in this action have not moved to extend the Final Judgments. According to the New York Movants, "Plaintiff States Illinois, Kentucky, and Ohio do not object to extending the Final Judgments. Plaintiff States Michigan, North Carolina, and

⁴ By separate Order, the Court shall grant the Motion of the United States for Leave to Participate as Amicus Curiae. The Court shall also grant the Motion of Visa, Inc. and Weyerhaeuser Company for Leave to File Brief as Amici Curiae. The Court has reviewed the Visa/Weyerhaeuser amicus brief and notes that it raises an argument also asserted by Microsoft and the United States, which is thoroughly considered below.

⁵ The Court's extension of the Expiring Provisions does not include § III.B, which neither the California Movants nor the New York Movants seek to extend. See CA Mem. at 1; NY Mem. at 8 n.14.

⁶ The "Plaintiffs" for purposes of the Court's Remedy Opinion included the States of California, Connecticut, Florida, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, New York, North Carolina, Ohio, Utah, West Virginia, and Wisconsin, the Commonwealth of Massachusetts, and the District of Columbia. See 224 F. Supp. 2d at 86 n.3. As discussed below, a number of states (the "Settling States" or the "New York Group") litigated their claims through liability and settled as to the issue of remedy, while other states and the District of Columbia (the "Litigating States" or the "California Group") participated in the remedy-specific evidentiary hearing. Id at n.3, n.4.

⁷ "PC" is short for "personal computer." Remedy Opinion, 224 F. Supp. 2d at 89 n.10 (citing United States v. Microsoft, 84 F. Supp. 2d 9, ¶ 1 (D.D.C. 1999) (hereinafter "Findings of Fact")). The D.C. Circuit explained the functions of a PC operating system ("OS"):

Operating systems perform many functions, including allocating computer memory and controlling peripherals such as printers and keyboards. Operating systems also function as platforms for software applications. They do this by "exposing" -- i.e., making available to software developers -- routines or protocols that perform certain widely-used functions. These are known as Application Programming Interfaces, or "APIs."

⁸ Plaintiffs focused their attention on "two such middleware threats to Microsoft's operating system dominance -- Netscape Navigator and the Java technologies." Remedy Opinion, 224 F. Supp. 2d at 90 (citing Microsoft, 253 F.3d at 53).

⁹ For the sake of clarity, the Court defines a number of acronyms that are used throughout the previous opinions of this Court and the D.C. Circuit, as well as in the Final Judgments: "OEMs" are "original equipment manufacturers;" "IAPs" are Internet access providers; "ISVs" are independent software vendors; "IHVs" are independent hardware vendors; and "ICPs" are internet content providers. See Final Judgments, §§ VI.F-I; VI.O.

¹⁰ The "Java" technologies are "a set of technologies developed by Sun Microsystems," which the D.C. Circuit described as "another type of middleware posing a potential threat to Windows' platforms." Microsoft, 253 F.3d at 74.

¹¹ "Intel is a firm engaged principally in the design and manufacture of microprocessors," and a "segment of Intel's business develops software." Remedy Opinion, 224 F. Supp. 2d at 95 (quoting Findings of Fact ¶ 95).

¹² In addition to the claims described above, Plaintiffs' complaint originally included a separate claim for "monopoly leveraging" under § 2 of the Sherman Act, on which Judge Jackson granted summary judgment in favor of Microsoft because the claim ran "contrary to both economic theory and the Sherman Act's plain language." Remedy Opinion, 224 F. Supp. 2d at 95 n.21 (quoting United States v. Microsoft, Civil Action No. 98-1233, 1998 WL 614485, at *27 (D.D.C. Sept. 14, 1998)).

¹³ As noted in this Court's various remedy-related opinions, "the objective of 'terminating the illegal monopoly,' is incompatible with the facts of this case [because] [n]either the district court, nor the appellate court concluded that Microsoft had illegally obtained its monopoly," but only found that Microsoft had illegally maintained its monopoly. New York v. Microsoft Corp., 231 F. Supp. 2d 203, 211 n.4 (2002) (hereinafter "Settling States Opinion") (internal citations omitted). As a result, the Court's remedy focused on terminating Microsoft's illegal maintenance of its monopoly, rather than on terminating the monopoly itself. Id.; see also Remedy Opinion, 224 F. Supp. 2d at 101 (stating that "the proper objective of the remedy in this case is termination of the exclusionary acts and practices related thereto which served to illegally maintain [Microsoft's] monopoly.").

¹⁴ The Settling States, or New York Group, include the States of New York, Ohio, Illinois, Kentucky, Louisiana, Maryland, Michigan, North Carolina, and Wisconsin. Remedy Opinion, 224 F. Supp. 2d at 87 n.5.

¹⁵ The Litigating States, or California Group, include the States of California, Connecticut, Florida, Iowa, Kansas, Minnesota, Utah, and West Virginia, the Commonwealth of Massachusetts, and the District of Columbia. Remedy Opinion, 224 F. Supp. 2d at 86 n.3.

¹⁶ The Court entered three Final Judgments in November 2002; two in the instant case, and one in United States v. Microsoft. Because the United States does not seek to extend the Final Judgment in United States v. Microsoft, however, this opinion addresses only the two "Final Judgments" entered in this case.

¹⁷ As discussed in greater detail below, the Court deemed it "imperative, in this unusually complex case, for the Court's retention of jurisdiction to be clearly articulated and broadly drawn," and therefore suggested that the parties amend the proposed consent decree to reserve for the Court "the power to sua sponte issue orders or directions regarding [] the final judgment, including, but not limited to orders regarding the construction or carrying out of the final judgment, the enforcement of compliance therewith, and the punishment of any violation thereof." Tunney Act Opinion, 231 F. Supp. 2d at 201. The Court concluded such a provision would "ensure that the Court retain[] the power intended by the parties and which the Court deeme[d] necessary to ensure effective implementation of the final judgment in this case. Id.

¹⁸ In a previous Memorandum Opinion, the Court had reviewed the pertinent procedural history and determined that the parties had satisfied the other requirements of the Tunney Act. See generally United States v. Microsoft Corp., 215 F. Supp. 2d 1 (D.D.C. 2002).

¹⁹ Section III.A of the Litigating States' Final Judgment also prohibits Microsoft from threatening retaliation against OEMs for the same conduct. Litigating States Final Judgment, § III.A.

²⁰ "Covered OEMs" are "the 20 OEMs with the highest worldwide volume of licenses of Windows Operating System Products reported to Microsoft in Microsoft's fiscal year preceding the effective date of the Final Judgment[s]." Final Judgments, § VI.D.

²¹ As noted above, the Moving States do not seek to extend § III.B.

²² The Settling States' Final Judgment provides that Microsoft may not impede an OEM's ability to automatically launch Non-Microsoft Middleware "if a Microsoft Middleware Product that provides similar functionality would otherwise be launched automatically." Settling States Final Judgment, § III.C.3. In contrast, the Litigating States' Final Judgment narrows further the situations in which Microsoft may impede an OEM's ability to automatically launch Non-Microsoft Middleware, limiting Microsoft's ability to do so to those circumstances where the Non-Microsoft Middleware "replaces or drastically alters the Windows Operating System Product user interface." Litigating States Final Judgment, § III.C.3.

²³ The Settling States' Final Judgment prevents Microsoft from impeding by agreement an OEM's ability to present its own IAP offer during the initial boot sequence, "provided that the OEM complies with reasonable technical specifications established by Microsoft." Settling States Final Judgment, § III.C.5. In contrast, the Litigating States' Final Judgment contains no such requirement or restriction, Litigating States Final Judgment, § III.C.5.

²⁴ Like § III.A, § III.F of the Litigating States' Final Judgment also prohibits Microsoft from threatening retaliation against ISVs and IHVs. Settling States Final Judgment, § III.F.

²⁵ As noted above, because the Litigating States opposed the creation of a technical committee, their Final Judgment included only a Compliance Officer. Over time, however, the Litigating States recognized the beneficial role the TC played in the Settling States' enforcement efforts. See 9/11/07 Status Conference Hrg. Tr. at 38:14-39:7. In addition, as Section III.E emerged as the main area of compliance-related issues, the Litigating States retained their own expert on communications protocols and technical documentation standards, Mr. Craig Hunt. See 7/9/04 Joint Status Report. Mr. Hunt has since worked alongside the TC, and participated in its activities on behalf of the Litigating States. Practically speaking, then, the TC's activities have redounded to the benefit of all of the Plaintiffs, not only the Settling States. Moreover, when the Court refers to the TC henceforth, it intends that term to include Mr. Hunt.

²⁶ The insufficiency of the resources Microsoft originally devoted to technical documentation project is clear from Microsoft's latest Supplemental Status Report, which states that "[a]pproximately 630 Microsoft employees and contingent staff are involved in work on the MCPP technical documentation," along with Microsoft's protocol documentation efforts for the European Commission, and that "approximately 320 product team engineers and program managers are actively involved in the creation and review of the technical content of the [MCPP] documentation." 1/15/08 MS Suppl. Report at 6.

²⁷ Of course, if the parties had not been able to negotiate the RESET plan when the Section III.E issues reached a crisis point, Plaintiffs would have been entitled -- pursuant to Section V.B of the Final Judgments -- to commence an enforcement proceeding and, in the event that "the Court found that Microsoft ha[d] engaged in a pattern of willful and systematic violations," to "apply to the Court for a one-time extension of th[e] Final Judgment[s] of up to two years," i.e., until November 12, 2009. See Final Judgments, § V.B.

²⁸ Again, the Court notes that while Microsoft now reports that "[a]pproximately 630 Microsoft employees and contingent staff are involved in work on the MCPP technical documentation," with "approximately 320 product team engineers and program managers [] actively involved in the creation and review of the technical content of the documentation," 1/15/08 MS Suppl. Report at 6, it originally devoted only ten employees to the project of creating the necessary technical documentation. See 7/3/03 JSR at 22. Even as of Microsoft's March 15, 2006 Supplemental Status Reportfiled more than three years after the technical documentation was originally anticipated to be releaseda total of approximately 83 Microsoft employees worked either full- or part-time on the documentation effort. 3/15/06 MS Suppl. Report at 9-10.

²⁹ Each Final Judgment states that it will expire five years after being entered by the Court "[u]nless this Court grants an extension," Final Judgments, § V.A., and provides that the Court retains jurisdiction to "act sua sponte to issue further orders or directions, including but not limited to orders or directions relating to the construction or carrying out of this Final Judgment, the enforcement of compliance therewith, the modification thereof, and the punishment of any violation thereof," as well as "for the purpose of enabling either of the parties . . . to apply to this Court at any time for further orders and directions as may be necessary or appropriate to carry out or construe [the] Final Judgment, to modify or terminate any of its provisions, to enforce compliance, and to punish violations of its provisions," id., § VII.

³⁰ In addition, as the United States points out, the Moving States "make no showing . . . that any conduct by Microsoft (either in violation of the decree or otherwise) has foreclosed the OEM channel to third-party browsers." US Amicus Br. at 4.

³¹ The Moving States' argument that Microsoft may threaten emerging technologies through its alleged dominance of the web browser market also appears quite similar to an argument raised during the remedy proceeding that certain protections should be included in the remedy to "ensure that Microsoft does not use its control over the browser market to control other technology markets." Remedy Opinion, 224 F. Supp. 2d at 241, n. 118. That argument was rejected in the Remedy Opinion, however, because it "reflect[ed] an attempt to argue either a new attempted monopolization claim or the previously court-rejected 'monopoly leveraging' theory of liability by extending that 'leveraging' argument to emerging areas of technology." Id. (quoting United States v. Microsoft Corp., 1998 WL 614485, *26-28 (D.D.C. Sept. 14, 1998)). Furthermore, in affirming this Court's remedy, the D.C. Circuit rejected an argument that "Microsoft 'advantage[d] its own middleware by using the browser to limit the functionality of competing products,'" concluding that this Court's remedy "properly focused . . . upon opening the channels of distribution to . . . rivals," rather than eliminating "harm to specific competitors." Massachusetts v. Microsoft, 373 F.3d at 1229.

³² To the extent that the Moving States suggest that the key to protecting emerging web-based middleware threats is to ensure that Microsoft "maintains IE as a standards-compliant browser," see CA Mem. at 20-21, that argument is foreclosed by this Court's Remedy Opinion. As Microsoft correctly notes, the Court considered and rejected a "requirement that Microsoft maintain support for industry standards where it has made proprietary modifications to the standards," because that conduct "was found . . . to have competitive benefits which outweigh the anticompetitive effect of the conduct," because the proposed requirement was "likely to have only a modest effect on competition, if at all," and because it "impose[d] unworkable conditions." Remedy Opinion, 224 F. Supp. 2d at 190-91. Significantly, the D.C. Circuit specifically affirmed this Court's conclusion in that respect, holding that "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 v. Microsoft, 373 F.3d at 1215.

³³ To this end, the Moving States assert that "there are continuing questions not just about the accuracy of the [technical documentation], but whether the [technical documentation] is complete," citing the results of the first audit triggered by Microsoft's conclusion in early 2007 that additional protocols should be added to the MCPP. CA Mem. at 10-11. As Microsoft notes, however, "Microsoft and the TC recently adopted a set of modest recommendations following the TC's analysis of the [consulting firm's report] that were substantially different from the [firm's] recommendations." MS Opp'n at 14 n.7. Microsoft further asserts that, to the best of its knowledge, "the agreement between Microsoft and the TC resolved the few issues raised by the [consulting firm's] report that the TC deemed necessary to address." Id. It therefore appears that any outstanding issues relating to the completeness of the technical documentation are being addressed in an appropriate manner.

³⁴ Indeed, in the unlikely event that the proceedings to this point have not provided Microsoft with sufficient incentive to speedily produce certifiably complete, accurate, and useable technical documentation, this extension of the Expiring Provisions of the Final Judgment should certainly spur Microsoft to do so.

³⁵ In addition, as noted above, Microsoft has agreed that "even if the Final Judgments expire completely in November 2009, it will continue, through November 11, 2012, to make the protocols included in the MCPP available for license on reasonable and non-discriminatory terms with a term of at least five years." 5/12/06 JSR at 10. As a result of this commitment, "industry members will effectively have the ability to license protocols through at least November 11, 2017." Id.

³⁶ The Court is aware that in Hughes v. United States, 342 U.S. 353 (1952), the Supreme Court concluded that a District Court was within its power to modify a consent decree "after a proper hearing." Id. at 357-58. The Court notes, however, that its resolution of the Moving States' motions does not depend upon any disputed facts that might require an evidentiary hearing. Furthermore, the parties were provided a complete hearing on the issues raised in the Moving States' motions through their pleadings and, where the Court identified additional areas requiring consideration, it sought further briefing from the Moving States and allowed Microsoft sufficient time to respond to that briefing. In light of the parties' thorough handling of the relevant issues in their pleadings, the Court concluded that oral argument would be redundant, and was therefore not warranted given the tight schedule for resolution of the Moving States' motions imposed by the parties and the Court.