In the annals of technology, Microsoft Corp. is famous for flubbing its first attempts at new software. But by dint of extraordinary resources and unflinching will, it learns from its errors, re-tools and re-invents until it succeeds.
Now the company hopes the same formula has worked in its long-running battles with antitrust enforcers.
Yesterday, Microsoft's lawyers rested their case in the latest round of court hearings, held to determine how its violations of antitrust laws should be rectified. And though some oral arguments remain to be aired, it soon will be time for a judge to retire to chambers, to review a mass of evidence and testimony and to determine the software giant's fate.
And so the speculation begins: Did Microsoft get it right this time and persuade District Court Judge Colleen Kollar-Kotelly to adopt a settlement deal the company struck with the Justice Department? Or did state prosecutors prevail in arguing that the agreement is so porous it keeps the software market in the grip of an illegal monopolist?
If the courtroom demeanor of the judge is any indicator, Microsoft fared well, and certainly better than in its original trial two years ago. Battle-tested and deeply familiar with the technological complexities of the case, its attorneys won favor with the judge as she sustained objection after objection, preventing the states from putting damaging evidence about Microsoft's conduct into the record.
It was nearly the reverse two years ago, when District Court Judge Thomas Penfield Jackson growled at Microsoft continuously. He ultimately delivered one of the most devastating antitrust decisions in a generation, ordering that the company be broken up.
So appalled was Jackson by Microsoft's conduct and lawyering that he couldn't stop himself from talking with reporters about it, which got him tossed off the case by a federal appeals court.
The appellate judges also threw out the breakup order, but unanimously affirmed Jackson's central finding that Microsoft illegally protected its monopoly power and sent the case back to the district court for hearings on what to do about it.
This time, it was the trial team for the remaining states, led by litigator Brendan V. Sullivan Jr. of Williams & Connolly, that ran afoul of the judge throughout the two-month proceedings.
Sullivan's associates were frequently berated by the judge, and through several miscalculations failed to get key evidence into the record. Among the most crucial: A deposition by a Microsoft executive detailing how computer makers complained the company was using the proposed federal deal as a club to win even more favorable licensing terms for its dominant Windows operating system.
An official of one computer maker, Gateway Inc., did testify on the issue for the states, but the deposition from the Microsoft executive involved several other unhappy manufacturers.
The states also did not produce an economic expert who supported one of its key proposals, that Microsoft be required to offer a version of Windows that allows applications to be removed and replaced with those made by rivals.
Carl Shapiro, an economics professor at the University of California at Berkeley, declined to support or oppose the provision because he could not evaluate its technical feasibility. This played into the hands of Microsoft, which claims it cannot separate programs such as the Internet Explorer Web browser without causing the operating system to fail.
"My impression is that the states did a better job of showing the [federal agreement] to be deficient than in making the particular case for their remedies," said Howard University antitrust professor Andrew Gavil, who opposes the Justice Department settlement.
Meanwhile, Microsoft's executives, including Chairman Bill Gates, dropped their arrogant defiance of the past. Though no less resolute in their view that the remedies proposed by the states would be the ruin of the company, they were the picture of decorum and deference.
The states -- though saddled with the harder task of both attacking the federal settlement as inadequate and promoting their broader sanctions as being necessary -- were not without their high notes.
Several Microsoft witnesses who don't work for the company lost credibility as they were forced to admit that they had not read the remedy proposals, had drafts of their testimony written by Microsoft lawyers or had their research funded by the company.
Often, witnesses for the company relied on each other's testimony. Yesterday, a technical expert said he based some of his findings on testimony by Gates and had gathered other information by interviewing Microsoft employees.
Tom Greene, an assistant California attorney general, said the states were "very pleased" with how the case is going and with the performance of the Williams & Connolly team.
Greene said that the proposal requiring the unbundled version of Windows is firmly rooted in the appeals court's ruling, which found that commingling of browser code with operating code was anti-competitive.
And he said the states successfully made the case for its other key provisions, which include broader disclosure of software code so that rival software can run on Windows; a requirement that the Office suite of programs be made available for additional operating systems, and that Microsoft be required to carry the Java programming language with its operating system.
But throughout the case, the states seemed open to changes to their proposals. Their attorneys would frequently get witnesses to identify how language and definitions might be modified to make them more acceptable.
"The question is, will she be hands-on enough to craft her own remedy" using parts of each side's proposals, Gavil said.
In Microsoft's view, the states did not meet their burden of proof on any of their proposed provisions, and thus the judge must choose the settlement deal.
"We presented convincing evidence of how draconian and unfair the states' proposal is," said an obviously pleased Dan K. Webb, Microsoft's lead attorney.
Some legal experts cautioned against trying to divine outcome from watching the judge.
"Very often . . . they will give every deference to the party they are about to drop the boom on," said Jeffrey Shohet, an antitrust lawyer in San Diego.
In the end, Kollar-Kotelly will have to decide how much weight to give the testimony and previous rulings in the case. She also must consider how much deference to give the Justice Department, which argues that it and not the states is the primary enforcer of national antitrust law.
And she will be weighing Microsoft's broad argument that the states' remedies will unnecessarily hurt the company and consumers, versus the states' view that greater competition might be messy but is beneficial in the long run.
On those issues, she was inscrutable throughout the trial.
