FC: Old antitrust case now relevant to Microsoft: US vs. United Shoe

[Declan McCullagh <declan () well com>]

http://www.wired.com/news/politics/0,1283,36581,00.html

   MS Trial: If the Shoe Fits ...
   by Declan McCullagh (declan () wired com)

   3:00 a.m. May. 31, 2000 PDT
   WASHINGTON -- The U.S. Justice Department spends years in court
   battling a world-renowned corporation with top-tier research labs, a
   90 percent market share, and an attitude to match.

   The government wins a court order, but then, some years later and
   after fierce lobbying from competitors, accuses its antitrust target
   of violating it. As proper punishment, DOJ lawyers argue, their
   opponent's attorneys must describe to the trial judge how best to
   carve their client into competing halves.

   The judge eventually agrees, and divvies up the corporation. He even
   forces the company to license its intellectual property freely, no
   matter how much it objects to the idea.

   Sound familiar? It should.

   The case, however, isn't about Microsoft, but one that might soon be
   surprisingly relevant: U.S. v. United Shoe Corp., the first time a
   federal court split a single company into pieces.

   During a hearing last week, the Justice Department and Microsoft each
   cited United Shoe Corp. to buttress their arguments, and both sides
   have referenced it in recent legal briefs.

   When U.S. District Judge Thomas Penfield Jackson decides -- perhaps as
   early as this week -- what punishment to levy against the software
   giant, he'll also justify it by discussing United Shoe. Microsoft's
   final arguments are due on Wednesday, and Jackson could rule any time
   thereafter.

   To Microsoft, the considerable delay before the breakup of the shoe
   equipment-manufacturer provides ample evidence that courts should be
   reluctant to levy such Draconian penalties.

   "In United Shoe Machinery, in 1918, the beginning of the battle of the
   century, the court said that dissolution as a remedy is extreme, even
   in its mildest demand," said John Warden, a Microsoft attorney.

   "What I submit makes this remedy so extreme is that ... it will go a
   very long way to ensuring that Microsoft is the one company in the
   world that won't win -- can't win -- the next round of competition for
   the market," Warden said.

   The Justice Department spent half a century battling the shoe
   equipment-maker in court, finally persuading the Supreme Court to
   agree in 1968 that the company should be taught a lesson, dismembered,
   and forbidden to compete with its former selves for five years.

   Justice Department attorney David Boies said that's a perfect
   precedent to apply to Microsoft.

   "Microsoft comes forward with this definition of what they call
   'unitary companies' that are not supposed to be broken up. Now, the
   first example, of course, of a unitary company that was broken up was
   United Shoe," Boies said.

   [...]

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