By Chris Coyle
June 14, 2000

On Tuesday evening, Microsoft received some welcome news when the U.S. Court of Appeals agreed to hear their appeal about District Court Judge Thomas Penfield Jackson's ruling that the company should be split into two separate companies, one for the Microsoft operating system and one for everything else (application software, Internet Explorer, websites).

The court decided to hear the case due to "the exceptional importance of these cases."

This is a huge blow to the Justice Department, who wanted the case to be sent directly to the Supreme Court due to the fact that Microsoft won an appeal in the appeals court back in 1998 with another case.

The Justice Depatment has asked Judge Jackson to send the appeal straight to the Supreme Court, bypassing the appeals court, using the Expediting Act as their basis. The Expediting Act is a special rule sometimes used in antitrust cases "of general public importance" to send them directly to the Supreme Court.

"Immediate Supreme Court review of this case is in the public interest becasue of its importance to the American economy," said the Justice Depatment in a published statement.

If Judge Jackson agrees with the government, then the only way the U.S. Court of Appeals would hear the case is if the Supreme Court decided to send the case back to them.

The whole thing started when Judge Jackson delayed a ruling on Microsoft's request to stay the antitrust penalties and restrictions he issued until Microsoft filed a notice of appeal.

Microsoft, in response, filed a notice of appeal to Judge Jackson as well as a stay motion to the U.S Court of Appeals. That is when the appeals court decided to take the case.

Unfortunately for the government, this decision was made before Judge Jackson could rule on the government's request that the case be taken straight to the Supreme Court.

Although the breakup of Microsoft won't take place until the company exhausts their appeals, they still must worry about the penalties and restrictions on how they conduct business. These restrictions include the publishing of source code for Microsoft software and the guidelines on how Microsoft can conduct business with other companies. If Microsoft is not granted a stay for this, the restrictions will go into effect in 90 days (it is now 83 days; the 90 days started once the ruling was announced).

The government is strongly opposed to lifting the restrictions, saying that doing so "would greatly damage the public interest." They also say that Microsoft is trying "to minipulate the court" into sending the case to the appeals court.

However, Microsoft spokesman Jim Cullinan said, "We remain confident of our appeal, and believe that either the appeals court or Supreme Court will reverse the judgement by the District Court."

Whatever they say, I think it's pretty obvious that Microsoft would much rather fight this case in the appeals court than in the Supreme Court.

Wherever the case goes next, it will no doubt be awhile before we find out the future of Microsoft. However, the market took kindly to the news today, with the stock gaining 2 5/8, nearly 4 percent.

Of course, Microsoft is not out of the woods, yet. Judge Jackson could still rule to send the case directly to the Supreme Court. He has said that he favors this course of action. Even if it gets to the Superme Court, no one knows what will happen there. The point is, there is still a lot of uncertainty out there about Microsoft. The uncertainty has pushed the stock price down from its $120 high to its current level of 70 1/2. Anyone who is positive on the company's future may have found themselves a great buying opportunity. Of course, their future may depend on one simple question: Can a Microsoft divded among itself still stand?

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