United States v. Microsoft Corp

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 21, 1998 Decided June 23, 1998
No. 97-5343
United States of America,
Appellee
v.
Microsoft Corporation,
Appellant
Consolidated with
98-5012
---------
Appeals from the United States District Court
for the District of Columbia
(No. 94cv01564)
Richard J. Urowsky argued the cause for appellant. With
him on the brief were John L. Warden, Steven L. Holley,
Richard C. Pepperman, II, Andrew C. Hruska, James R.
Weiss, William H. Neukom and David A. Heiner, Jr.
A. Douglas Melamed, Deputy Assistant Attorney General,
U.S. Department of Justice, argued the cause for appellee.
With him on the briefs were Joel I. Klein, Assistant Attorney
General, Catherine G. O'Sullivan and Mark S. Popofsky,
Attorneys.
Daniel E. Lungren, Attorney General of California, James
E. Ryan, Attorney General of Illinois, Carla J. Stovall, Attor-
ney General of Kansas, J. Joseph Curran, Jr., Attorney
General of Maryland, Scott Harshbarger, Attorney General
for the Commonwealth of Massachusetts, Jeremiah W. (Jay)
Nixon, Attorney General of Missouri, Joseph P. Mazurek,
Attorney General of Montana, Frankie Sue Del Papa, Attor-
ney General of Nevada, Tom Udall, Attorney General of New
Mexico, and W.A. Drew Edmondson, Attorney General of
Oklahoma, members of the Bar of this Court, were on the
brief of certain States as amici curiae, with whom appeared
the various other Attorneys General of the participating
States.
Before: Wald, Williams and Randolph, Circuit Judges.
Opinion for the Court filed by Circuit Judge Williams.
Opinion concurring in part and dissenting in part filed by
Circuit Judge Wald.
Williams, Circuit Judge: The district court entered a
preliminary injunction prohibiting Microsoft Corporation
from requiring computer manufacturers who license its oper-
ating system software to license its internet browser as well.
In granting the preliminary injunction the court also referred
the government's motion for a permanent injunction to a
special master. Microsoft appeals the preliminary injunction
and applies for a writ of mandamus revoking the reference to
a master. We find that the district court erred procedurally
in entering a preliminary injunction without notice to Micro-
soft and substantively in its implicit construction of the
consent decree on which the preliminary injunction rested.
We also grant the petition for mandamus and direct the
district court to revoke or revise its reference.
I.
This case arises from Microsoft's practices in marketing its
Windows 95 operating system. An operating system is, so to
speak, the central nervous system of the computer, control-
ling the computer's interaction with peripherals such as key-
boards and printers. Windows 95 is an operating system that
integrates a DOS shell with a graphical user interface, i.e., a
technology by which the operator performs functions not by
typing at the keyboard but by clicks of his mouse. Operating
systems also serve as "platforms" for application software
such as word processors. As the word "platform" suggests,
the operating system provides a basic support structure for
an application via "application programming interfaces"
("APIs"), which provide general functions on which applica-
tions can rely. Each operating system's APIs are unique;
hence applications tend to be written for particular operating
systems. The primary market for operating systems consists
of original equipment manufacturers ("OEMs"), which make
computers, install operating systems and other software that
they have licensed from vendors such as Microsoft, and sell
the package to end users. These may be either individual
consumers or businesses.
In an earlier opinion, also arising from litigation generated
by the Justice Department's 1994 antitrust suit against Mi-
crosoft, we briefly described Microsoft's role in the software
industry and some of the industry's economics. United
States v. Microsoft Corp., 56 F.3d 1448, 1451-52 (D.C. Cir.
1995). Because IBM chose to install Microsoft's operating
system on its personal computers, Microsoft acquired an
"installed base" on millions of IBM and IBM-compatible PCs.
That base constituted an exceptional advantage, and created
exceptional risks of monopoly, because of two characteristics
of the software industry--increasing returns to scale and
network externalities. First, because most of the costs of
software lie in the design, marginal production costs are
negligible. Production of additional units appears likely to
lower average costs indefinitely. (I.e., the average cost curve
never turns upward.) Second, an increase in the number of
users of a particular item of software increases the number of
other people with whom any user can share work. As a
result, Microsoft's large installed base increases the incentive
for independent software vendors to write compatible applica-
tions and thereby increases the value of its operating system
to consumers.
The Department's 1994 complaint alleged a variety of anti-
competitive practices, chiefly in Microsoft's licensing agree-
ments with OEMs. Along with it, the Department filed a
proposed consent decree limiting Microsoft's behavior, the
product of negotiations between Microsoft, the Department
and European competition authorities. Most relevant here is
s IV(E) of the decree:
Microsoft shall not enter into any License Agreement
in which the terms of that agreement are expressly or
impliedly conditioned upon:
(i) the licensing of any other Covered Product, Oper-
ating System Software product or other product (pro-
vided, however, that this provision in and of itself shall
not be construed to prohibit Microsoft from developing
integrated products); or
(ii) the OEM not licensing, purchasing, using or
distributing any non-Microsoft product.
The Department sees a violation of s IV(E)(i) in Micro-
soft's marketing of Windows 95 and its web browser, Internet
Explorer ("IE").
The Internet is a global network that links smaller net-
works of computers. The World Wide Web ("the Web") is
the fastest-growing part of the Internet, composed of mul-
timedia "pages" written in Hypertext Markup Language
("HTML") and connected to other pages by hypertext links.
Browsers enable users to navigate the Web and to access
information.
Most browsers are designed according to a "multi-
platform" approach, with different versions for each of a
variety of different operating systems. Joint Appendix
("J.A.") 81. Browsers also have the potential to serve as user
interfaces and as platforms for applications (which could then
be written for the APIs of a particular browser rather than of
a particular operating system 1), providing some of the tradi-
tional functions of an operating system. Widespread use of
multi-platform browsers as user interfaces has some potential
to reduce any monopoly-increasing effects of network exter-
nalities in the operating system market. Browsers can en-
able the user to access applications stored on the Internet or
local networks, or to operate applications that are indepen-
dent of the operating system. J.A. 103-05.
Microsoft has developed successive versions of IE, the first
of which was initially released with Windows 95 in July 1995.
Microsoft's Windows 95 license agreements have required
OEMs to accept and install the software package as sent to
them by Microsoft, including IE, and have prohibited OEMs
from removing any features or functionality, i.e., capacity to
perform functions such as browsing. J.A. 86-89.
The first three versions of IE were actually included on the
Windows 95 "master" disk supplied to OEMs. Department
Br. at 4; J.A. 1277-78. IE 4.0, by contrast, was initially
distributed on a separate CD-ROM and OEMs were not
required to install it. Microsoft intended to start requiring
OEMs to preinstall IE 4.0 as part of Windows 95 in February
1998. On learning of Microsoft's plans, the Department
became concerned that this practice violated s IV(E)(i) by
effectively conditioning the license for Windows 95 on the
license for IE 4.0, creating (in its view) what antitrust law
terms a "tie-in" between the operating system and the brow-
ser.2 (It is not clear why extension of Microsoft's established
__________
1 Similarly, Sun Microsystems's "Java" programming language
allows programmers to write applications that will run on any
computer, regardless of the operating system, as long as certain
Java-related software (a Java "virtual machine" and Java "class
libraries") is present. Internet browsers incorporate the necessary
Java-related software, and hence allow Java programs to live up to
their "write once, run anywhere" billing.
2 The Department's language suggests that two products, and
indeed, two license agreements are at issue. See, e.g., the Depart-
ment Br. at 4 ("Microsoft conditioned its OEM licenses to Windows
IE policy to IE 4.0 aroused the Department's concern.) It
filed a petition seeking to hold Microsoft in civil contempt for
its practices with respect to IE 3.0, and requesting "further"
that the court explicitly order Microsoft not to employ similar
agreements with respect to any version of IE.
A party seeking to hold another in contempt faces a heavy
burden, needing to show by "clear and convincing evidence"
that the alleged contemnor has violated a "clear and unambig-
uous" provision of the consent decree. Armstrong v. Execu-
tive Office of the President, 1 F.3d 1274, 1289 (D.C. Cir. 1993).
Finding s IV(E)(i) ambiguous, the district court denied the
Department's contempt petition. But that left open the
possibility that Microsoft's practices might in fact violate the
consent decree (though not so clearly as to justify contempt),
and the district court continued the proceedings in order to
answer that question, appointing a special master not only to
oversee discovery but also to propose findings of fact and
conclusions of law. For the meantime, the court entered a
preliminary injunction forbidding Microsoft
from the practice of licensing the use of any Microsoft
personal computer operating system software (including
Windows 95 or any successor version thereof) on the
condition, express or implied, that the licensee also li-
cense and preinstall any Microsoft Internet browser soft-
ware (including Internet Explorer 3.0, 4.0, or any succes-
sor versions thereof).
J.A. 1300.
A detour is necessary to explore what this injunction
meant. In some of its papers before the court the Depart-
ment had argued for an order barring Microsoft from "forc-
ing OEMs to accept and preinstall the software code" that it
__________
95 on OEMs' licensing Internet Explorer.") It is undisputed that
OEMs enter into only one license agreement, which covers IE as
part of Windows 95. J.A. 1274. Microsoft's central argument, of
course, is that there is only one product. The terminology used in
our introductory recitation of facts is of course not intended to
resolve, or to reflect any resolution of, contested issues, and no
inference as to those issues should be drawn from the wording of
this section.
separately distributes at retail as IE 3.0. J.A. 996. Micro-
soft had responded that a Windows 95 operating system
without IE software code simply would not function. The
government characterized that assertion as "greatly over-
blown." J.A. 1237. The district court, in its justifying memo-
randum, referred to the injunction as barring Microsoft from
"forcing OEMs to accept and preinstall the software code"
separately distributed as IE 3.0, J.A. 1296-97; i.e., it em-
ployed the Department's exact words on the subject. After
the injunction was issued, Microsoft and the Department had
further consultations, at the end of which they entered a
stipulation that Microsoft would be in compliance with the
injunction if it extended to OEMs the options of (1) running
the Add/Remove Programs utility with respect to IE 3.x and
(2) removing the IE icon from the desktop and from the
Programs list in the Start menu and marking the file
IEXPLORE.EXE "hidden." J.A. 1780-81. It appears not to
be disputed that these alternate modes of compliance do not
remove the IE software code, which indeed continues to play
a role in providing non-browser functionality for Windows.
In fact, browser functionality itself persists, and can be
summoned up either by entering four lines of code or by
running any application (such as Quicken) that contains the
code necessary to invoke the functionality. J.A. 1649-55.
The agreed-upon means of compliance simply enable the
OEMs to make user access to IE more difficult.3
Microsoft appealed, as authorized by 28 U.S.C.
s 1292(a)(1), and also sought mandamus directing the district
court to revoke the reference to the special master.
II.
Microsoft claims at the outset that the district court, after
finding no contempt, should simply have dismissed the De-
partment's petition. But although the petition was styled
simply as one for an order to show cause "Why Respondent
__________
3 Additionally, by allowing OEMs to conceal IE, rather than to
refuse it, the remedy fits poorly with the Department's tying
theory. A tie-in is not affected by the purchaser's ability to discard
the tied good.
Microsoft Corporation Should Not Be Held in Civil Con-
tempt," its prayer for relief sought not only pure contempt
remedies (such as the attention-grabbing request for
$1,000,000 a day in damages), but also an order directing
Microsoft to cease and desist from requiring "OEMs to
license any version of Internet Explorer as an express or
implied condition of licensing Windows 95." J.A. 41. This
was plainly a request for clarification of the consent decree,
pinning down its application to the browser issue. Such a
clarification may properly take the form of an injunction.
See Brewster v. Dukakis, 675 F.2d 1, 3-4 (1st Cir. 1982).
Indeed, as a consent decree contains an injunction already, a
clarification naturally acquires the same character. (Of
course, if the supplementary language goes beyond the con-
sent decree, it is a modification rather than a clarification, and
is governed by different standards. See, e.g., United States
v. Western Elec. Co., 894 F.2d 430, 435 (D.C. Cir. 1990)
("Manufacturing Appeal").) Although the framing of this
request as part of a remedy for contempt may have been odd,
Microsoft does not contest that the proceeding put in contro-
versy the meaning of s IV(E)(i) as applied to its browser
technology.
This government request for clarification appeared in its
petition shortly after its primary request--that the court
adjudge Microsoft to be in contempt--and the word "further."
Following "further" are a raft of requests for orders, this
being just one. Microsoft says this clearly shows that the
request was contingent on a finding of contempt. It further
(here, in the sense of "additionally") presses on us some lines
from a colloquy between the district court and a Department
lawyer during the final hearing (December 5, 1997) before the
court made its decision to issue a preliminary injunction:
THE COURT: All right. Let me go to the relief that
you have requested here. Your petition is in terms
phrased only as a petition for a finding of contempt.
MR. MALONE: That's correct, Your Honor.
THE COURT: We've have [sic] gone beyond the show
cause [stage]. They have shown cause, and we're now at
the contempt stage.
Is that the only relief that you're looking for, or am I
to read the petition as what I am inclined to read it as,
and that is a petition for specific enforcement?
MR. MALONE: I think that is exactly how the Court
should read it, Your Honor. I think we have said, very
clearly, in arguing since the beginning that we want the
Court--we believe the Court can find Microsoft in con-
tempt and can impose this specific relief to remedy the
contempt, and should quickly.
Microsoft has opposed that on merits grounds, but I
don't think Microsoft has come along and said, "You can't
do that. This is just an order to show cause or some-
thing else."
The merits are very much before the Court, and what
we're asking is for the specific relief that we requested in
the petition.
That really boils down to, Your Honor, simply an order
telling Microsoft, "You may no longer force OEMs to
take Internet Explorer as a condition of getting you[r]
Windows 95 license."
J.A. 1235-36.
In fact we think this dialogue suggests either that the
Department's request was always in the alternative or that it
modified the request to make it such. "I think that is exactly
how the Court should read it" comes in response to a
suggestion that the petition be read as a request for specific
enforcement, and the interest in clarification is presented as
the Department's central concern. J.A. 1295. Given the
district court's participation in the colloquy, we might be
inclined, if necessary, to defer to its understanding of the
Department's prayer for relief.
Even if we found that the Department's request was in fact
contingent on a finding of contempt, however, we do not think
the district court would have erred in clarifying the decree
sua sponte as an incident to its denial of the contempt
petition. Contempt motions are often accompanied by re-
quests for clarification in the alternative. But they also often
elicit declaratory clarifications, and sometimes even amend-
ments, as accompaniments to denials even without (so far as
appears) explicit alternative requests for clarification. See,
e.g., Wilder v. Bernstein, 49 F.3d 69, 71-72 (2d Cir. 1995);
Thermice Corp. v. Vistron Corp., 832 F.2d 248, 250-51 (3d
Cir. 1987); Gov't of the Virgin Islands v. Sun Island Car
Rentals, Inc., 819 F.2d 430, 431 (3d Cir. 1987); Movie Sys-
tems, Inc. v. MAD Minneapolis Audio Distributors, Inc., 717
F.2d 427, 429-30 (8th Cir. 1983); Vertex Distributing, Inc. v.
Falcon Foam Plastics, Inc., 689 F.2d 885, 888 n.2, 892 (9th
Cir. 1982); Stolberg v. Board of Trustees for State Colleges,
541 F.2d 890, 892 (2d Cir. 1976); Red Ball Int. Demolition
Corp. v. Palmadessa, 947 F. Supp. 116, 121 (S.D.N.Y. 1996);
Johnson v. Heckler, 604 F. Supp. 1070, 1075-76 (N.D. Ill.
1985).
We are aware of no case raising doubts about the propriety
of clarification incident to the denial of a contempt petition.
Indeed, at oral argument Microsoft conceded "in principle"
the court's authority to continue the proceeding in order to
clarify the decree. Transcript at 11.4 Of course, the above
cases characteristically did not explicitly affirm the district
court's authority, although one did just that. See Vertex, 689
F.2d at 892 ("[T]he district court could properly clarify that
ambiguous language, and this it did, requiring defendants to
change their future advertising to comply with the consent
judgment, as clarified.").
Microsoft points out that the question of district court
authority is jurisdictional, so that mere practice may not be
enough. But much repeated practice illumines the generally
understood meaning of petitions for contempt citations. A
court granting a clarification that the parties have not explic-
itly requested has at most construed the petition to contain an
__________
4 Microsoft then grounded its objection on the fact that the
Department had urged the court "not to permit discovery, not to
conduct an evidentiary hearing and to decide the matter on the
papers before the District Court." Id. at 12. These objections,
however valid, are completely independent of the theory we address
here. As we find the preliminary injunction procedurally defective
on other grounds, we need not reach them.
implicit request for declaratory relief. This construction
seems altogether reasonable where, as here, the petition
clearly puts the meaning of the consent decree in issue and
the petition makes the standard request (in the rather typical
words of this petition) for "such further orders as the nature
of the case may require and as the Court may deem just and
proper to compel obedience to and compliance with the orders
and decrees of this Court." J.A. 43. Cf. Johnson, 604
F. Supp. at 1075-76 (denying contempt petition but clarifying
decree in response to request for further relief under 28
U.S.C. s 2202).
Because it was not error for the court to address the issue
of clarification, we must decide whether the preliminary
injunction was correctly granted.
III.
Microsoft argues that the district court failed to comply
with Federal Rule of Civil Procedure 65(a)(1)'s command, "No
preliminary injunction shall be issued without notice to the
adverse party." We agree. Obviously the Department's
request for a contempt citation provided no such notice, for
the governing criteria are completely different. To defeat the
contempt petition, all Microsoft had to do was to show that
the Department failed to meet its burden of showing that the
consent decree unambiguously barred its conduct. For a
preliminary injunction, by contrast, traditional equitable stan-
dards would require the government to show substantial
likelihood of success on the merits (here, that the decree,
properly construed, barred the conduct), plus risk of irrepa-
rable injury, lack of substantial injury to the opposing party,
and consistency with the public interest. See CityFed Finan-
cial Corp. v. Office of Thrift Supervision, 58 F.3d 738, 746
(D.C. Cir. 1995). The contempt petition did not alert Micro-
soft to contest these factors.
Nor could the Department's request for a permanent in-
junction serve as notice--even putting aside Microsoft's argu-
ment that the request was contingent on a situation that
never arose (see section II). The request for a permanent
injunction amounted to no more than a request for a clarifica-
tion, and thus would require only a showing that the Depart-
ment's reading of the consent decree was correct. It did not
put into play the equitable factors of interim irreparable
injury to the requester, harm to the party to be enjoined, and
effects on the public interest. But resolution of these is
essential in granting a preliminary injunction; the proponent
must make a showing about the interim risks precisely in
order to counterbalance the lack of any final ruling in its
favor on the merits.
At oral argument the Department claimed that when the
government seeks a preliminary injunction under a statute,
its showing of a likelihood of success on the merits supplants
the normal need for assessment of the interim risks. This is
true under some circumstances. First, it is clear that if a
statute confers a right to an injunction once a certain showing
is made, no plaintiff--neither governmental agencies nor pri-
vate parties--need show more than the statute specifies.
See, e.g., Illinois Bell Telephone Co. v. Illinois Commerce
Comm'n, 740 F.2d 566, 571 (7th Cir. 1984) (irreparable injury
not required for preliminary injunction under 47 U.S.C.
s 401(b), which provides that court "shall enforce" FCC order
upon showing of disobedience). The statutory specification
displaces the traditional equitable standards, but this dis-
placement is "not lightly assume[d]." Weinberger v. Romero-
Barcelo, 456 U.S. 305, 312 (1982). Plaintiffs must show that
Congress intended to "intervene and guide or control the
exercise of the courts' discretion." Id. at 313. See also
Amoco Production Co. v. Village of Gambell, 480 U.S. 531,
541-45 (1987).
Second, and not entirely distinct in the cases, lurks the
proposition that when a governmental entity sues to enforce a
statute, irreparable injury is presumed to flow from the
violation itself. See, e.g., United States v. Diapulse, 457 F.2d
25, 27-28 (2d Cir. 1972) ("The passage of the statute is, in a
sense, an implied finding that violations will harm the public
and ought, if necessary, [to] be restrained."). It is unclear,
however, whether such decisions actually turn on the identity
of the plaintiff, or whether they are simply instances where
the court read the statute as providing for injunction on a
reduced showing and mentioned the enforcing agency because
it happened to be the plaintiff before the court. As the cases
did not purport to apply the doctrine to all statutes under
which a government agency might seek relief, but limited it,
for example, to "remedial" ones,5 see, e.g., Commodity Fu-
tures Trading Comm'n v. Muller, 570 F.2d 1296, 1300 (5th
Cir. 1978), the latter seems more probable.
Some cases antedating Romero-Barcelo took the view that
mere statutory authorization of injunctive relief displaced
equitable standards, see, e.g., Atchison, Topeka & Santa Fe
Railway Co. v. Lennen, 640 F.2d 255, 259 (10th Cir. 1981)
(citing cases). Under this view s 4 of the Sherman Act, 15
U.S.C. s 4, authorizing such temporary injunctive relief "as
shall be deemed just," but setting no standards for its award,
would evidently be enough. But such cases seem outmoded
by Romero-Barcelo's view that displacement of the usual
equitable standards requires a "clear and valid legislative
command." 456 U.S. at 313, quoting Porter v. Warner Hold-
ing Co., 328 U.S. 395, 398 (1946). In fact, even before
Romero-Barcelo the Court construed s 4's grant as con-
trolled by the ordinary principles of equity courts. De Beers
Consol. Mines v. United States, 325 U.S. 212, 218-19 (1945).
In any event, the Department's suggestion is irrelevant.
The preliminary injunction was entered in a suit to enforce a
consent decree, not a statute. As the settlement of a litiga-
tion, the decree may require less than the statute under
which the suit was brought, or more, United States v. Arm-
our & Co., 402 U.S. 673, 681-82 (1971); Ass'n for Retarded
Citizens v. Thorne, 30 F.3d 367, 369 (2d Cir. 1994), so the
violation of one is not necessarily a violation of the other.
__________
5 We have noted recently, and more than once, that the concept of
a "remedial" statute is unhelpful. All statutes, unless purely declar-
atory, seek to "remedy" something about the pre-existing state of
affairs. The cases seem bereft of references to "destructive"
statutes. See East Bay Municipal Utility Dist. v. United States
Dep't of Commerce, 1998 WL 210612 *5-*6 (D.C. Cir. 1998); Ober
United Travel Agency, Inc. v. United States Dep't of Labor, 135
F.3d 822, 825 (D.C. Cir. 1998).
Thus a finding of probable violation of the consent decree
could not support a presumption of irreparable harm even
under the most extravagant version of the doctrine the gov-
ernment invokes.
So the district court did need to find irreparable injury
before granting the preliminary injunction. The absence of
notice had the effect of precluding the introduction of evi-
dence and argument on this requirement, and the omission
was far from trivial. At oral argument the Department
conceded that it had offered no evidence on the subject, and
Microsoft suggested that it could have forcefully contested
anything the Department might have offered, alluding to
information--obviously not in the record--that no OEM had,
since entry of the preliminary injunction, sought to take
advantage of its terms. Transcript at 10, 61.6
The purpose of Rule 65(a)(1)'s notice requirement is to
allow the opposing party a fair opportunity to oppose the
preliminary injunction, see Weitzman v. Stein, 897 F.2d 653,
657 (2d Cir. 1990), and compliance is mandatory, Parker v.
Ryan, 960 F.2d 543, 544 (5th Cir. 1992). Preliminary injunc-
tions entered without notice to the opposing party are gener-
ally dissolved. See, e.g., Williams v. McKeithen, 939 F.2d
1100, 1105-06 (5th Cir. 1991); Weitzman, 897 F.2d at 657-68;
Phillips v. Chas. Schreiner Bank, 894 F.2d 127, 130-31 (5th
Cir. 1990). Appellate courts have, however, on occasion
allowed a procedurally flawed injunction to remain in place
pending a proper hearing on remand if the equities support
such a disposition. See, e.g., Rosen v. Siegel, 106 F.3d 28, 33
(2d Cir. 1997).
The Department urges us to do so here. Evaluating such a
request requires the court to consider the traditional equita-
__________
6 The district court mentioned irreparable harm, but not in any
terms suggesting focus on the relevant concern--whether denial of
relief would result in harm to the competitive interests asserted by
the government. It said that the Department is threatened with
irreparable harm because "the cost of a compulsory unbundling of
Windows 95 and IE in the future could be prohibitive," J.A. 1297,
which seems rather more like a risk to Microsoft if it continues its
current practice and ultimately loses in court.
ble factors as apparent on the existing record. See, e.g.,
Inverness Corp. v. Whitehall Laboratories, 819 F.2d 48, 51
(2d Cir. 1987). We do not believe that a reviewing court
must entertain such a request; if the record were so deficient
as to make effective evaluation of the equities impossible, a
court might do better simply to vacate the injunction as a
matter of course--especially where, as here, the injunction
was sought only rather obliquely. As later sections will show,
however, the record here is enough for us at least to make a
reasonable appraisal of the Department's eventual likelihood
of success on the merits, and this factor proves dispositive.
Silence at this stage would risk considerable waste of litiga-
tive resources. "When the district court's estimate of the
probability of success depends on an incorrect or mistakenly
applied legal premise, 'the appellate court furthers the inter-
est of justice by providing a ruling on the merits to the extent
that the matter is ripe, though technically the case is only at
the stage of application for preliminary injunction.' " Air
Line Pilots Ass'n Int'l v. Eastern Air Lines, Inc., 863 F.2d
891, 895 (D.C. Cir. 1988) (quoting Natural Resources Defense
Council, Inc. v. Morton, 458 F.2d 827, 832 (D.C. Cir. 1972).
When reviewing preliminary injunctions we have generally
not been hesitant to offer interpretation and guidance on the
substantive legal issues. See, e.g., Defenders of Wildlife v.
Andrus, 627 F.2d 1238, 1243 (D.C. Cir. 1980); Energy Action
Educational Found'n v. Andrus, 631 F.2d 751, 761 (D.C. Cir.
1979); Maryland-National Capital Park & Planning
Comm'n v. U.S. Postal Service, 487 F.2d 1029, 1041 (D.C. Cir.
1973). We thus turn to the interpretation of s IV(E)(i), on
which the merits of the Department's case depend. Our
review of a district court's interpretation of a consent decree
is de novo.7 See, e.g., Richardson v. Edwards, 127 F.3d 97,
__________
7 We agree with Judge Wald's suggestion, see Sep. Op. at 13-14,
that there is something unusual about de novo review of a district
court interpretation of an ambiguous provision of a consent decree.
Consent decrees are generally interpreted as contracts. See Unit-
ed States v. ITT Continental Baking Co., 420 U.S. 223, 236-37
(1975). Interpretation of an ambiguous contract term on the basis
of extrinsic evidence is generally treated as a question of fact, and
101 (D.C. Cir. 1997); United States v. Western Elec. Co., 12
F.3d 225, 229 (D.C. Cir. 1993); United States v. Western Elec.
Co., 900 F.2d 283, 293 (D.C. Cir. 1990) ("Triennial Review ").
IV.
Section IV(E) arose from a 1993 complaint filed with the
Directorate General IV of the European Union ("DG IV")
(the principal competition authority in Europe). Novell, a
rival software vendor, alleged that Microsoft was tying its
MS-DOS operating system to the graphical user interface
provided by Windows 3.11. Before the introduction of Win-
dows 95, which integrated the two, Microsoft marketed the
DOS component and the Windows component of the operat-
ing system separately, and Windows 3.11 could be operated
with other DOS products. But Novell, which marketed a
__________
the district court's findings as to the parties' intent are reviewed
deferentially, i.e., reversed only for clear error. See, e.g., NRM
Corp. v. Hercules, 758 F.2d 676, 682 (D.C. Cir. 1985). This court,
however, has regularly engaged in de novo review of district court
interpretations of concededly ambiguous provisions which the par-
ties sought to clarify with evidence from outside the decree itself.
See, e.g., United States v. Western Electric Co., 12 F.3d 225, 229,
231 (D.C. Cir. 1993) (announcing de novo review despite admitted
ambiguity); United States v. Western Electric Co., 900 F.2d 283,
293, 296 (D.C. Cir. 1990) ("Triennial Review") (same); see also id.
at 294 (characterizing issue as "pure question of law"). Nor does
the Supreme Court's opinion in ITT, which relies on the presence of
ambiguity to distinguish Armour, see ITT, 420 U.S. at 238 & n.11,
give any indication of deference. Of course, de novo review of legal
analysis is in principle compatible with deference to factual findings.
See Triennial Review, 900 F.2d at 293-94 (explaining that "aside
from fact-finding, we owe no deference to the district court's
decisions"); North Shore Laboratories Corp. v. Cohen, 721 F.2d
514, 518-19 (5th Cir. 1983) (reviewing de novo while also noting
deference to factual findings of parties' intent). This mixed ap-
proach may be the correct one, although the centrality of intent
would often make the deference swallow the de novo review, a
result our cases do not seem to contemplate. But here it would
amount to de novo review anyway, as the district court made no
findings of fact as to intent to which we could defer.
competing DOS product, DR-DOS, complained that by means
of specific marketing practices--particularly "per processor
and per system licenses," J.A. 754--Microsoft was creating
economic incentives for OEMs to preinstall MS-DOS as well
as Windows 3.11, thereby using its power in the market for
DOS-compatible graphical user interfaces (where it com-
manded a near 100% market share) to affect OEM choice in
the DOS market.8 J.A. 839-48.
During June 1994 negotiations with the Department, Mi-
crosoft proposed the possibility of a joint settlement, and
representatives of DG IV participated in meetings in Brussels
and later in Washington, D.C. On July 15, 1994, the three
sides reached agreement and Microsoft and the Department
signed a stipulation agreeing to entry of the consent decree,
including s IV(E). Both Microsoft and the Department char-
acterize s IV(E) as an "anti-tying" provision.
Microsoft and the Department engage in a brief battle over
the extent to which antitrust law may be relevant to this
dispute. Without wasting time on the parties' somewhat
exaggerated positions, we can simply say that Microsoft is
clearly right that the decree does not embody either the
entirety of the Sherman Act or even all "tying" law under the
Act, and the Department is equally right to point out that the
consent decree emerged from antitrust claims, unresolved
though they were, so that we must keep procompetitive goals
in mind in the interpretive task.
As Armour makes clear, however, an antitrust consent
decree cannot be read as though its animating spirit were
solely the antitrust laws. "[T]he decree itself cannot be said
to have a purpose; rather the parties have purposes, general-
ly opposed to each other, and the resultant decree embodies
as much of those opposing purposes as the respective parties
__________
8 The indirect nature of the alleged tie may explain why
s IV(E)(i) bars an agreement whose terms are "expressly or impli-
edly conditioned upon ... the licensing of any other Covered
Product."
have the bargaining power and skill to achieve." 402 U.S. at
681-82.
The court's task, then, is to discern the bargain that the
parties struck; this is the sense behind the proposition that
consent decrees are to be interpreted as contracts. See, e.g.,
ITT Continental Baking Co., 420 U.S. at 236-37; Richard-
son, 127 F.3d at 101; Manufacturing Appeal, 894 F.2d at
1390. To find the meaning of an ambiguous provision we look
for the intent of the parties, just as we would with a contract.
See Western Elec. Co., 12 F.3d at 231-32 (reading ambiguous
provision of consent decree "in light of the parties' jointly
intended purpose" (internal quotation omitted)); NRM Corp.
v. Hercules, Inc., 758 F.2d 676, 681-82 (D.C. Cir. 1985)
(contract interpretation). In that quest we may rely on the
same aids to construction as we would when interpreting an
ambiguous contract, including "the circumstances surround-
ing the formation of the consent order." See ITT, 420 U.S. at
238.
Section IV(E)(i) represented the parties' agreed "solution"
to the problem posed by the Novell complaint. The practices
complained of there, coupled with the decree's explicit accep-
tance of Windows 95, establish the competing models that
guide our resolution of the present dispute. Whatever else
s IV(E)(i) does, it must forbid a tie-in between Windows 3.11
and MS-DOS, and it must permit Windows 95. Thus if the
relation between Windows 95 and IE is similar to the relation
between Windows 3.11 and MS-DOS, the link is presumably
barred by s IV(E)(i). On the other hand, a counter-analogy
is Windows 95 itself, which the decree explicitly recognizes as
a single "product" (it defines it as a "Covered Product,"
s II(1)(v)), even though, as we have said, Windows 95 com-
bines the functionalities of a graphical interface and an oper-
ating system. If the Windows 95/IE combination is like the
MS-DOS/graphical interface combination that comprises
Windows 95 itself, then it must be permissible.
The parties offer us little help in picking the correct
analogy. Both propose readings of s IV(E)(i) that fail to
reconcile its language with the facts of the Novell complaint
and the later permissible release of Windows 95. The De-
partment claims that s IV(E)(i) prohibits Microsoft from
bundling together a Covered Product and anything that "Mi-
crosoft simultaneously treats" and "antitrust law regards" as
"a distinct commercial product." Department Br. at 37-38.
It says that the browser-Windows pair is caught in the first
filter (Microsoft's treatment of IE as a separate product)
because Microsoft provides it separately to end users, sells
versions of IE 4 for different operating systems, advertises
IE 4, tracks its performance in a "browser market," and
distributes it on a separate CD-ROM. J.A. 32-37. For
antitrust criteria, the Department draws on Jefferson Parish
Hosp. District No. 2 v. Hyde, 466 U.S. 2 (1984), for the
proposition that products are distinct for tying purposes if
consumer demand exists for each separately. (The Depart-
ment notes correctly that this does not require demand for
one product without the other but simply demand for the two
products from different sellers. See id. at 19 & n.30.)
We are not convinced that these indicia necessarily point to
separateness, especially those that depend on Microsoft's
treatment. Microsoft plausibly characterizes the IE that it
provides to end users as an operating system upgrade, as
does its rival Netscape, J.A. 589, and the Department offers
no means of distinguishing an upgrade from a separate
product. Versions developed for different operating systems
may be better understood as different products altogether;
hence, their relevance to separateness is obscure. Distribu-
tion of software code on a separate CD-ROM shows nothing
at all about whether the code is integrated into an operating
system (software for an operating system that is clearly a
single product may take up many disks).
The Department's interpretation of the "integrated prod-
ucts" proviso does nothing to remedy its reading of the body
of s IV(e)(i). On the Department's account, the proviso
allows Microsoft to incorporate new features into an operat-
ing system and offer the package to OEMs--as long as it and
antitrust law do not simultaneously treat those features as "a
distinct commercial product." Department Br. at 37-38. But
these are just the criteria deployed to argue that IE is an
"other product"; if the proviso merely reiterates them (to say
that what is not an "other product" is "integrated"), it does
nothing. And while the Department says that the proviso
would protect Microsoft from a charge that it had violated the
decree by adopting a technology incompatible with other
firms' products, Department Br. at 37 n.17, it is not apparent
how s IV(E)(i)'s ban might prohibit such conduct nor how, if
it did, the proviso on integration would help it. In short, the
Department effectively reads the proviso out of s IV(e)(i).
But the most immediate problem with this reading is that it
produces the wrong result on the Novell allegations. In its
attempts to define the "product" IE, the Department consis-
tently invokes the concept of "browser functionality." De-
partment Br. at 10; Department Motion for Contempt, J.A.
1317-19; Department Reply Memorandum in Support of
Motion for Contempt, J.A. 1424, 1429. But if functionality is
the criterion of identity (which the Department asserts so as
to claim that the "browser functionality" in Windows 95 is the
same product as IE 4 for other operating systems), Windows
95 looks like a tie-in of two products (MS-DOS and Windows
3.11) that were sold separately in the market: it contains the
functionalities of both. On the Department's reading, it
should thus be prohibited unless Microsoft refrains from
marketing MS-DOS separately. There is some suggestion
that Microsoft has in fact continued to license MS-DOS
separately, at least to end users. Microsoft Reply Br. at 15-
16. More significantly, the consent decree does not condition
its approval of Windows 95 on Microsoft's marketing behavior
with respect to MS-DOS. The failure to produce the right
result when applied to Windows 95, one of the situations
clearly resolved by the decree, is a fatal flaw.9
__________
9 In rejecting the Department's use of functionality here we do
not mean to suggest that it is never an appropriate criterion of
identity. In some contexts it may be appropriate to treat as
equivalent two products that supply the same functionality, if they
meet the same demand. Computer programs written for different
operating systems, however, do not seem to meet the same demand,
so that acceptance of functionality as a sufficient criterion of
identity would lead to odd results. Here, of course, the decree's
acceptance of Windows 95 as a "product" rebuts the Department's
The interpretation that Microsoft advances most strongly
suffers mirror-image defects: it lacks much logical sense and
it fails to fit the decree's setting, the disposition of the Novell
complaint. Microsoft stresses s IV(E)(i)'s "integrated prod-
ucts" proviso, saying that the addition of any feature to an
operating system, as by simply putting the disk containing a
compatible application in the same box with the operating
system disk and requiring an OEM to install both, creates an
integrated product--unless Microsoft also licenses the feature
on a stand-alone basis "in the OEM channel."
This interpretation neatly matches the failure of the De-
partment's theory to account for the permissibility of Win-
dows 95: Microsoft's reading would provide zero relief to
Novell, for it would allow Microsoft to bundle MS-DOS with
Windows 3.11 as long as it did not license MS-DOS separate-
ly to OEMs. In short, the Department's reading does not
permit Windows 95, and Microsoft's does not prohibit a
bundle of Windows 3.11 and MS-DOS. Neither can be the
correct interpretation of a provision that was intended to do
both.
Curiously, in both parties' readings Microsoft's behavior
determines the permissibility of conditioned licensing. This
would be no defect if the behavior were in some way relevant
to the economic principles of tie-ins. But it is not. The
Department offers no theory as to how a seller's abstaining
from separate marketing of the tied good might blunt the
possible anticompetitive effects of bundling.10 It seems espe-
cially beside the point where the goods are complements used
in fixed proportions. A monopolist who ties two such goods
has no obvious reason to market the tied good separately:
since all buyers of the tying good will also take the tied good,
the residual market for the tied good will be minimal. If the
__________
view of what is forbidden; one possible explanation might be that
functionality works as an initial screen for defining products, but
one that is trumped by the "integrated products" proviso.
10 The hospital in Jefferson Parish surely did not offer the tied
good (anesthesia) separately from the tying good (surgery), but this
fact played no role in the Court's decision.
concern is that the tie-in makes it more difficult for competi-
tors to enter the market for the tying good (because they
must also offer the tied good), see Grappone, Inc. v. Subaru
of New England, 858 F.2d 792, 795-96 (1st Cir. 1988) (Breyer,
J.), separate marketing of the tied good actually mitigates the
posited harm by facilitating new entry into the market for the
tying good. Thus both readings allow legitimation by behav-
ior that is either irrelevant or actively harmful.
We think it quite possible, however, to find a construction
of s IV(E)(i) that is consistent with the antitrust laws and
accomplishes the parties' evident desires on entering the
decree. The Department and DG IV were concerned with
the alleged anticompetitive effects of tie-ins. Microsoft's goal
was to preserve its freedom to design products that consum-
ers would like. Antitrust scholars have long recognized the
undesirability of having courts oversee product design, and
any dampening of technological innovation would be at cross-
purposes with antitrust law. Thus, a simple way to harmon-
ize the parties' desires is to read the integration proviso of
s IV(E)(i) as permitting any genuine technological inte-
gration, regardless of whether elements of the integrated
package are marketed separately.
This reading requires us, of course, to give substantive
content to the concept of integration. We think that an
"integrated product" is most reasonably understood as a
product that combines functionalities (which may also be
marketed separately and operated together) in a way that
offers advantages unavailable if the functionalities are bought
separately and combined by the purchaser.
The point of the test is twofold and may be illustrated by
its application to the paradigm case of the Novell complaint
and the subsequent release of Windows 95. First, "inte-
gration" suggests a degree of unity, something beyond merely
placing disks in the same box. If an OEM or end user
(referred to generally as "the purchaser") could buy separate
products and combine them himself to produce the "integrat-
ed product," then the integration looks like a sham. If
Microsoft had simply placed the disks for Windows 3.11 and
MS-DOS in one package and covered it with a single license
agreement, it would have offered purchasers nothing they
could not get by buying the separate products and combining
them on their own.11
Windows 95, by contrast, unites the two functionalities in a
way that purchasers could not; it is not simply a graphical
user interface running on top of MS-DOS. Windows 95 is
integrated in the sense that the two functionalities--DOS and
graphical interface--do not exist separately: the code that is
required to produce one also produces the other. Of course
one can imagine that code being sold on two different disks,
one containing all the code necessary for an operating system,
the other with all the code necessary for a graphical interface.
But as the code in the two would largely overlap, it would be
odd to speak of either containing a discrete functionality.
Rather, each would represent a disabled version of Windows
95. The customer could then "repair" each by installing them
both on a single computer, but in such a case it would not be
meaningful to speak of the customer "combining" two prod-
ucts. Windows 95 is an example of what Professor Areeda
calls "physical or technological interlinkage that the customer
cannot perform." X Areeda, Elhauge & Hovenkamp, Antitrust Law s 1746b at 227,
228 (1996).
__________
11 The same analysis would apply to peripherals. If, for example,
Microsoft tried to bundle its mouse with the operating system, it
would have to show that the mouse/operating system package
worked better if combined by Microsoft than it would if combined
by OEMs. This is quite different from showing that the mouse
works better with the operating system than other mice do. Com-
pare Sep. Op. at 1-2. See X Areeda, Elhauge & Hovenkamp, Antitrust Law p 1746b.
Problems seem unlikely to arise with peripherals, because their
physical existence makes it easier to identify the act of combination.
It seems unlikely that a plausible claim could be made that a mouse
and an operating system were integrated in the sense that neither
could be said to exist separately. An operating system used with a
different mouse does not seem like a different product. But
Windows 95 without IE's code will not boot, J.A. 1623, and adding a
rival browser will not fix this. If the add/remove utility is run to
hide the IE 4 technologies, Windows 95 reverts to an earlier
version, OEM service release ("OSR") 2.0. J.A. 1660-61.
So the combination offered by the manufacturer must be
different from what the purchaser could create from the
separate products on his own. The second point is that it
must also be better in some respect; there should be some
technological value to integration. Manufacturers can stick
products together in ways that purchasers cannot without the
link serving any purpose but an anticompetitive one. The
concept of integration should exclude a case where the manu-
facturer has done nothing more than to metaphorically "bolt"
two products together, as would be true if Windows 95 were
artificially rigged to crash if IEXPLORE.EXE were deleted.
Cf. ILC Peripherals Leasing Corp. v. International Business
Machines Corp., 448 F. Supp. 228, 233 (N.D. Cal. 1978) ("If
IBM had simply bolted a disk pack or data module into a
drive and sold the two items as a unit for a single price, the
'aggregation' would clearly have been an illegal tying ar-
rangement.") aff'd per curiam sub nom. Memorex Corp. v.
International Business Machines Corp., 636 F.2d 1188 (9th
Cir. 1980); X Areeda, Elhauge & Hovenkamp, Antitrust Law p 1746 at 227 (discussing
literal bolting). Thus if there is no suggestion that the
product is superior to the purchaser's combination in some
respect, it cannot be deemed integrated.12
It might seem difficult to put the two elements discussed
above together. If purchasers cannot combine the two func-
tionalities to make Windows 95, it might seem that there is
nothing to test Windows 95 against in search of the required
superiority. But purchasers can combine the functionalities
in their stand-alone incarnations. They can install MS-DOS
and Windows 3.11. The test for the integration of Windows
95 then comes down to the question of whether its integrated
design offers benefits when compared to a purchaser's combi-
nation of corresponding stand-alone functionalities. The de-
cree's evident embrace of Windows 95 as a permissible single
__________
12 Thus of course we agree with the separate opinion that "com-
mingling of code ... alone is not sufficient evidence of true inte-
gration." Sep. Op. at 4. Commingling for an anticompetitive
purpose (or for no purpose at all) is what we refer to as "bolting."
product can be taken as manifesting the parties' agreement
that it met this test.
The short answer is thus that integration may be consid-
ered genuine if it is beneficial when compared to a purchaser
combination. But we do not propose that in making this
inquiry the court should embark on product design assess-
ment. In antitrust law, from which this whole proceeding
springs, the courts have recognized the limits of their institu-
tional competence and have on that ground rejected theories
of "technological tying." A court's evaluation of a claim of
integration must be narrow and deferential.13 As the Fifth
Circuit put it, "[S]uch a violation must be limited to those
instances where the technological factor tying the hardware
to the software has been designed for the purpose of tying
the products, rather than to achieve some technologically
beneficial result. Any other conclusion would enmesh the
courts in a technical inquiry into the justifiability of product
innovations." Response of Carolina, Inc. v. Leasco Response,
Inc., 537 F.2d 1307, 1330 (5th Cir. 1976).
In fact, Microsoft did, in negotiations, suggest such an
understanding of "integrated." In response to the Depart-
ment and DG IV's statement of concern about tying, it
asserted its right to "continue to develop integrated products
like [Windows 95] that provide technological benefits to end
users." J.A. 756 (emphasis added). Microsoft later withdrew
this qualifying phrase, J.A. 760, in order, it claims, to avoid
the application of "vague or subjective criteria"--though why
the absence of criteria should cure a vagueness problem is
unclear. But we do not think that removing the phrase can
__________
13 The separate opinion seems to take this reluctance to engage in
the evaluation of product design as deference to Microsoft's inter-
pretation of the consent decree. See Sep. Op. at 2-3. It is nothing
of the sort. We defer to neither party in interpreting the consent
decree; in fact, we reject both parties' readings. We suggest here
only that the limited competence of courts to evaluate high-tech
product designs and the high cost of error should make them wary
of second-guessing the claimed benefits of a particular design
decision.
drain the word "integrated" of all meaning, and we do not
accept the suggestion that the Department and DG IV bar-
gained for an "integrated products" proviso so boundless as
to swallow s IV(E)(i). Significantly, Microsoft assured the
Department and DG IV that the elimination of the qualifying
phrase "did not represent a substantive change." J.A. 761.
We believe this understanding is consistent with tying law.
The Court in Eastman Kodak Co. v. Image Tech. Servs., 504
U.S. 451 (1992), for example, found parts and service separate
products because sufficient consumer demand existed to
make separate provision efficient. See id. at 462. But we
doubt that it would have subjected a self-repairing copier to
the same analysis; i.e., the separate markets for parts and
service would not suggest that such an innovation was really a
tie-in. (The separate opinion, we take it, makes roughly the
same point by its observation about digital cameras. See
Sep. Op. at 3-4.) Similarly, Professor Areeda argues that
new products integrating functionalities in a useful way
should be considered single products regardless of market
structure. See X Areeda, Elhauge & Hovenkamp, Antitrust Law p 1746b.14
We emphasize that this analysis does not require a court to
find that an integrated product is superior to its stand-alone
rivals. See ILC Peripherals Leasing Corp. v. International
Business Machines Corp., 458 F. Supp. 423, 439 (N.D. Cal.
1978) ("Where there is a difference of opinion as to the
advantages of two alternatives which can both be defended
from an engineering standpoint, the court will not allow itself
to be enmeshed 'in a technical inquiry into the justifiability of
product innovations.' ") (quoting Leasco, 537 F.2d at 1330),
aff'd per curiam sub nom. Memorex Corp. v. IBM Corp., 636
F.2d 1188 (9th Cir. 1980). We do not read s IV(E)(i) to
"put[ ] judges and juries in the unwelcome position of design-
ing computers." IX Areeda, Antitrust Law p 1700j at 15 (1991).
The question is not whether the integration is a net plus but
merely whether there is a plausible claim that it brings some
__________
14 The antitrust question is of course distinct. The parties agree
that the consent decree does not bar a challenge under the Sher-
man Act.
advantage. Whether or not this is the appropriate test for
antitrust law generally, we believe it is the only sensible
reading of s IV(E)(i).
On the facts before us, Microsoft has clearly met the
burden of ascribing facially plausible benefits to its integrated
design as compared to an operating system combined with a
stand-alone browser such as Netscape's Navigator.15 Incor-
porating browsing functionality into the operating system
allows applications to avail themselves of that functionality
without starting up a separate browser application. J.A. 944,
965.16 Further, components of IE 3.0 and even more IE 4--
__________
15 This issue is peripheral on the Department's interpretation of
s IV(E)(i), and the Department may not have contested it as
vigorously as it might. The guidance this opinion seeks to provide
is limited to setting out the legal framework for analysis. The
ultimate sorting out of any factual disputes is a different question,
and one we of course cannot resolve on the limited record before us.
16 It is possible, of course, for applications vendors to bring about
this Microsoft-created integration by distributing IE with their
applications, which is apparently a relatively common practice. See
J.A. 953, 966. Distribution by application vendors does not affect
the conclusion that the integrated design brings benefits, nor does
it suggest that IE has an existence apart from Windows 95. The
consequence of this practice is simply that such applications up-
grade the purchaser's operating system to the Windows 95/IE level.
The customer's act of installing the application implements Micro-
soft's prior integration of IE into Windows 95.
The record also suggests that there are some inefficiencies associ-
ated with application vendors' redistribution of IE code. Applica-
tion vendors' affidavits assert that if the browser is installed in
computers before sale, "installation of our product is faster, we have
reduced product support issues, the perceived footprint (memory
use) of our product is smaller, and in general customer perception
of our product is better." J.A. 953, 966. Although the drawbacks
of installation by applications vendors can be alleviated by OEMs'
preinstalling an integrated operating system containing IE technol-
ogies, the drawbacks are not necessary consequences of a stand-
alone design, but rather incidental costs of a particular method of
bringing about the benefits of integration, namely, distribution of
especially the HTML reader--provide system services not
directly related to Web browsing, enhancing the functionality
of a wide variety of applications. J.A. 607-22, 1646-48.
Finally, IE 4 technologies are used to upgrade some aspects
of the operating system unrelated to Web browsing. For
example, they are used to let users customize their "Start"
menus, making favored applications more readily available.
J.A. 490-95; 1662-64. They also make possible "thumbnail"
previews of files on the computer's hard drive, using the
HTML reader to display a richer view of the files' contents.
J.A. 1664-69. Even the Department apparently concedes
that integration of functionality into the operating system can
bring benefits; responding to a comment on the proposed
1994 consent decree (which the Department published in the
Federal Register as required by the Tunney Act), it stated
that "a broad injunction against such behavior generally
would not be consistent with the public interest." 59 Fed.
Reg. 59426, 59428 (Nov. 17, 1994).
The conclusion that integration brings benefits does not
end the inquiry we have traced out. It is also necessary that
there be some reason Microsoft, rather than the OEMs or
end users, must bring the functionalities together. See X
Areeda, Elhauge & Hovenkamp, Antitrust Law p 1746b at 227; p 1747 at 229. Some
more subtleties emerge at this stage, parallel to those encoun-
tered in determining the integrated status of Windows 95.
Microsoft provides OEMs with IE 4 on a separate CD-ROM
(a fact to which the Department attaches great significance).
It might seem, superficially, that the OEM is just as capable
as Microsoft of combining the browser and the operating
system.
But the issue is not which firm's employees should run
particular disks or CD-ROMs. A program may be provided
on three disks--Windows 95 certainly could be--but it is not
therefore three programs which the user combines. Software
code by its nature is susceptible to division and combination
in a way that physical products are not; if the feasibility of
__________
code by applications vendors. Thus they are not relevant to our
comparison of the stand-alone and integrated designs.
installation from multiple disks meant that the customer was
doing the combination, no software product could ever count
as integrated. The idea that in installing IE 4 an OEM is
combining two stand-alone products is defective in the same
way that it would be nonsensical to say that an OEM install-
ing Windows 95 is itself "combining" DOS functionality and a
graphical interface. As the discussion above indicates, IE 3
and IE 4 add to the operating system features that cannot be
included without also including browsing functionality. See
J.A. 1661-68. Thus, as was the case with Windows 95, the
products--the full functionality of the operating system when
upgraded by IE 4 and the "browser functionality" of IE 4--
do not exist separately.17 This strikes us as an essential
point. If the products have no separate existence, it is
incorrect to speak of the purchaser combining them. Pur-
chasers who end up with the Windows 95/IE package may
have installed code from more than one disk; they may have
taken the browser out of hiding; 18 they may have upgraded
their operating system--indeed, Netscape characterizes the
installation of IE 4 as "really an OS [operating system]
__________
17 Our colleague's separate opinion suggests that IE may be
separated from Windows 95 by treating some or all of the code that
supplies operating system functionality as part of the operating
system. Sep. Op. at 15. But apart from that code, there is nothing
more to IE than the four lines of programming required to summon
browsing functionality from code that also supplies operating sys-
tem functionality. J.A. 1654. Those four lines look more like a key
to opening IE than anything that could plausibly be considered IE
itself.
18 The preliminary injunction, as construed by the parties' later
stipulation, treats Microsoft as in compliance if it allows the options
of (1) running the Add/Remove Programs utility with respect to IE
3.x and (2) removing the IE icon from the desktop and from the
Programs list in the Start menu and marking the file
IEXPLORE.EXE "hidden." See above at p. 7. The injunction's
evidently unique status as a remedy for a "tying" complaint, requir-
ing the defendant merely to allow an intermediary to hide the
allegedly tied product, suggests the oddity of treating as separate
products functionalities that are integrated in the way that Win-
dows 95 and IE are.
upgrade." J.A. 589. But they have not combined two dis-
tinct products.
What, then, counts as the combination that brings together
the two functionalities? Since neither fully exists separately,
we think the only sensible answer is that the act of combina-
tion is the creation of the design that knits the two together.
OEMs cannot do this: if Microsoft presented them with an
operating system and a stand-alone browser application, rath-
er than with the interpenetrating design of Windows 95 and
IE 4, the OEMs could not combine them in the way in which
Microsoft has integrated IE 4 into Windows 95. They could
not, for example, make the operating system use the brow-
ser's HTML reader to provide a richer view of information on
the computer's hard drive, J.A. 1665--not without changing
the code to create an integrated browser. This reprogram-
ming would be absurdly inefficient. Consequently, it seems
clear that there is a reason why the integration must take
place at Microsoft's level. This analysis essentially replays
our comparison of Windows 95 to a bundle of MS-DOS and
Windows 3.11 and concludes that the Windows 95/IE package
more closely resembles Windows 95 than it does the bundle.
The factual conclusion is, of course, subject to reexamination
on a more complete record. On the facts before us, however,
we are inclined to conclude that the Windows 95/IE package
is a genuine integration; consequently, s IV(E)(i) does not
bar Microsoft from offering it as one product.
* * *
A few words with respect to our colleague's separate
opinion may clarify our position. Judge Wald suggests that
"the prohibition and the proviso could reasonably be con-
strued to state that Microsoft may offer an 'integrated'
product to OEMs under one license only if the integrated
product achieves synergies great enough to justify Microsoft's
extension of its monopoly to an otherwise distinct market."
Sep. Op. at 3. We are at a loss to understand how a section
that (1) articulates a prohibition and (2) sets a limit on the
reach of the prohibition 19 can be read to state a balancing
test. Apart from the lack of textual support, we think that a
balancing test that requires courts to weigh the "synergies"
of an integrated product against the "evidence of distinct
markets," Sep. Op. at 5, is not feasible in any predictable or
useful way. Courts are ill equipped to evaluate the benefits
of high-tech product design,20 and even could they place such
an evaluation on one side of the balance, the strength of the
"evidence of distinct markets," proposed for the other side of
the scale, seems quite incommensurable. Both Jefferson
Parish and Eastman Kodak use their "distinct markets"
analysis in a binary fashion: markets are distinct or they are
not. See 466 U.S. at 21-22; 504 U.S. at 462. If, as the
record suggests, Microsoft proposed modification of the inte-
gration proviso because of concern about "vague or subjective
criteria," J.A. 760, an interpretation requiring courts to weigh
evidence that establishes distinctness (or does not) against a
sliding scale of net synergistic value looks like the most total
transvaluation one can imagine.
Institutional competence may not have been foremost in
the parties' minds in drafting the consent decree, and judicial
inability to apply a test does not ipso facto mean that the
parties did not intend it. But if they did intend a balancing
test, they kept that intent well hidden. Nothing in their
__________
19 The proviso may be read to do this either by clarifying the
concepts of "Covered Product" and an "other product" to prevent
an "integrated" product from constituting a forbidden duo, or by
carving out an exception for integrated products even if they
otherwise represent such a duo. We do not believe that the choice
of approach makes a substantive difference.
20 Our colleague seems to hint that one way to perform this
evaluation is to examine whether the integrated product "over-
whelm[s]" the separate market. Sep. Op. at 10. But data on
market performance will obviously not be available when the new
product is introduced, and in any case, the overwhelming of the
separate market is precisely what is feared and may simply indicate
anticompetitive practices.
contemporaneous conduct (or in the conduct of anyone, at any
time) suggests that they contemplated a balancing inquiry.
Windows 95 was not subjected to any such analysis, though
the markets it unified were substantial and obviously distinct.
J.A. 790-96. Indeed, one might think that an especially
compelling case would be required to "justify Microsoft's
extension of its monopoly," Sep. Op. at 3, via Windows 95.
Windows 95 leveraged Microsoft's Windows 3.11 market pow-
er into the operating system market, where network external-
ities are most apparent. See Microsoft, 56 F.3d at 1451.
According to the separate opinion, Windows 95 should have
required the utmost justification. But nothing suggests that
it was analyzed that way, and it seems more likely that it
passed muster not because the synergies of its integration
outweighed the evidence of distinct markets but because it
was, simply, integrated.
The view expressed in the separate opinion seems sure to
thwart Microsoft's legitimate desire to continue to integrate
products that had been separate--and hence necessarily
would have been provided in distinct markets. By its very
nature "integration" represents a change from a state of
affairs in which products were separate, to one in which they
are no longer. By focusing on the historical fact of separate
provision, the separate opinion puts a thumb on the scale and
requires Microsoft to counterbalance with evidence courts are
not equipped to evaluate. We do not think that this makes
sense in terms of the text of the consent decree, the evidence
of the parties' intents, the values the decree was presumably
intended to promote, or the competence of the judiciary.
* * *
At this stage, then, the Department has not shown a
reasonable probability of success on the merits. Given this
failure, there is no reason to allow the preliminary injunction
to remain in effect pending a proper hearing, and we reverse
the district court's grant.
V.
Though the proceedings below may continue, they must do
so without the preliminary injunction. With respect to the
continuation, Microsoft argues that the "blanket" reference to
a special master violates Article III, and, in the alternative,
that the case does not present the exceptional circumstances
required under Federal Rule of Civil Procedure 53(b) 21 and
La Buy v. Howes Leather Co., 352 U.S. 249 (1957), to justify a
nonconsensual reference. Future developments may moot
this problem. In view of our interpretation of the consent
decree, tentative though it be, see University of Texas v.
Camenisch, 451 U.S. 390, 395 (1981); Taylor v. FDIC, 132
F.3d 753, 766 (D.C. Cir. 1997), the Department may well
regard further pursuit of the case as unpromising, especially
given the alternate avenues developing in its recently
launched separate attacks on Microsoft's practices, Nos.
98-1232 and 98-1233. But no such mooting has yet occurred.
Accordingly, we address the questions of whether mandamus
is available to correct the asserted illegality in the reference
and, if so, whether it should issue in this case. We answer
yes to both.
The Department claims that mandamus jurisdiction is lack-
ing. Its primary theory is evidently that an unlawful refer-
ence can be reached by mandamus only if it is so outrageous
as to fail to "comport[ ] with Article III." Supplemental Br.
of United States 9. But La Buy, the Supreme Court's
authoritative pass at the use of mandamus to correct illegal
references, rests simply on the presence of "an abuse of [the
judge's] power under Rule 53(b)," 352 U.S. at 256, and on that
__________
21 The rule provides in relevant part: "A reference to a master
shall be the exception and not the rule. In actions ... to be tried
without a jury, save in matters of account and of difficult computa-
tion of damages, a reference shall be made only upon a showing
that some exceptional condition requires it."
abuse being "clear," id. at 257. To be sure, La Buy observed
that the court of appeals there confronted a district court
"practice" of freewheeling references to masters: "[T]here is
an end of patience." Id. at 258. But we have explicitly
rejected the idea that mandamus is available only to correct
"persistent disregard" of the limits on references. In re
Bituminous Coal Operators' Ass'n, 949 F.2d 1165, 1168 n.4
(D.C. Cir. 1991).
Of course it may be that the boundaries of Rule 53(b) and
Article III are close, so that the La Buy Court, in addressing
the Rule 53 "exceptional condition[s]" criterion, was actually
finding unconstitutional conduct. If true, this helps the De-
partment not at all. If mandamus is available only to correct
unconstitutional abdications of Article III power, but a clear
abuse of discretion under Rule 53 amounts to such an abdica-
tion, we may properly exercise mandamus jurisdiction if we
find the same sort of clear abuse of discretion that the La
Buy Court found.
It is objected that a challenge at the end of the proceeding
provides ample remedy, and black-letter mandamus law tells
us that such adequacy of remedy defeats mandamus. In re
Minister Papandreou, 1998 WL 163561 at *1 (D.C. Cir. 1998)
(discussing mandamus criteria). See also Stauble v. Warrob,
Inc., 977 F.2d 690, 693 & n.4 (1st Cir. 1992) (dictum to effect
that "improvident" reference presents no danger of irrepara-
ble harm); In re Thornburgh, 869 F.2d 1503, 1508 (D.C. Cir.
1989) (reference to a master for purposes of determining
relief is not an "abdication of the total judicial power" such as
to justify mandamus). But the Court's action in La Buy
appears necessarily to depend on the view that, at least at
some point, even the temporary subjection of a party to a
Potemkin jurisdiction so mocks the party's rights as to render
end-of-the-line correction inadequate.
On the merits, the Department defends the reference on
three grounds. First, it asserts that it falls within the well-
recognized category of references for purely remedial deter-
minations, such as the accountings and computations of dam-
ages, which Rule 53(b) expressly permits. Second, it claims
that the technological complexity of the case and need for
speed constitute "exceptional condition[s]" under the Rule.
And third, it says that the order contains an implicit reserva-
tion by the district court of a power of de novo review, and
that that unstated reservation saves the order.
In saying that the reference was merely for purposes of
supervising remediation the Department invokes the well-
established tradition allowing use of special masters to over-
see compliance. See generally Apex Fountain Sales, Inc. v.
Kleinfeld, 818 F.2d 1089, 1097 (3d Cir. 1987) (citing cases).
But this is not such a situation. The issue here is interpreta-
tion, not compliance; the parties' rights must be determined,
not merely enforced. The matters referred to the master are
no more "remedial" than would be those of any total referral
of a contract case. The concern about nonconsensual refer-
ences turns on the determination of rights, not on a formalis-
tic division of the juridical universe into pre-trial, trial and
post-trial. It is for this reason that special masters may not
decide dispositive pretrial motions. See In re United States,
816 F.2d 1083, 1090 (6th Cir. 1987).
The Department also proposes that this is a case of such
technological complexity as to be "exception[al]." So far as
the meaning of the consent decree is concerned, that is
clearly false; the words are in plain English, and if their
meaning is not clear it is not because of some deep technolog-
ical issue but because of uncertainties in the purposes of the
parties that drafted the decree, the sort of uncertainties that
pervade contract actions. As for application of that meaning,
we have just stated our interpretation, an interpretation that
we regard as grounded, as are the related antitrust doctrines,
in a realistic assessment of the institutional limits of the
judiciary. Application of our reading of s IV(E)(i) does not
require a software expert; it precludes Microsoft from any
purely artificial "bolting" of functionalities but is otherwise
deferential to entrepreneurs' product design choices.22
More broadly, if La Buy was not complex, with its six
defendants and nearly 100 plaintiffs (87 in one suit, six in
another), 27 pages of docket entries in one of the cases for
preliminary pleas and motions, over 50 depositions, and intri-
cate charges of monopolization and Robinson-Patman viola-
tions, 352 U.S. at 251-52, we see no reason to think of this
case as especially complicated. In fact, it is very doubtful
that complexity tends to legitimate references to a master at
all. La Buy noted that the complexity of an antitrust case,
rather than justifying a reference, "is an impelling reason for
trial before a regular, experienced trial judge rather than
before a temporary substitute appointed on an ad hoc basis
and ordinarily not experienced in judicial work." Id. at 259.
Thus the only remaining question is whether some implicit
district court reservation of a power of de novo review of the
special master's report, as to both fact and law, could save the
reference. First, we find no such implied reservation. The
order itself recites that "the Special Master shall receive
evidence and legal authority presented by the parties at such
times and places, and in such manner as he shall prescribe,
and shall propose findings of fact and conclusions of law for
consideration by the Court on the issues raised by this case."
J.A. 1301 (emphasis added). The Department suggests that
the use of "propose" is somehow helpful, and distinguishes
the reference from that in Bituminous Coal, which invited
"recommended findings of fact and conclusions of law." 949
F.2d at 1166 (emphasis added). The difference in wording is
immaterial, and in any event a special master's findings and
conclusions are always advisory. Thus, even if we thought
__________
22 To the extent that adjudication may lead the court into deep
technological mysteries, we note the court's power under Rule of
Evidence 706 to appoint expert witnesses. Whether such an expert
is appointed by agreement of the parties or not, the expert's
exposure to cross-examination by both sides, see Rule 706(a), makes
the device a far more apt way of drawing on expert resources than
the district court's unilateral, unnoticed deputization of a vice-judge.
that a reservation of de novo review could save the reference
we would have to vacate it, subject to possible re-issuance
with an unequivocal commitment to non-deferential review.
But we think, in fact, that no such rescue mechanism is
available.
Microsoft notes Rule 53(e)(2)'s instruction that in non-jury
trials, "the court shall accept the master's findings of fact
unless clearly erroneous." (emphasis added). It reads this, as
have courts and commentators, as making deferential review
mandatory. See, e.g., Williams v. Lane, 851 F.2d 867, 884
(7th Cir. 1988); Apex Fountain, 818 F.2d at 1097; In re
Crystal Palace Gambling Hall, 817 F.2d 1361, 1364 (9th Cir.
1987); In re United States, 816 F.2d at 1087, 1088; 9A
Charles A. Wright & Arthur R. Miller, Federal Practice &
Procedure s 2605 at 670 (1995).
The Department counters with a footnote from Stauble to
the effect that a district court may refer fundamental issues
of liability if he affords de novo review. 977 F.2d at 698 n.13.
But compare id. at 698 n.12 (explaining that, because the
parties have agreed that if the reference were constitutionally
deficient the remedy would be remand for a full trial before
the district court, the court will leave for "another day" the
possibility that a master's findings on liability might "perhaps
be salvaged, even after appeal, by having the district court
conduct a deeper, more participatory sort of review."). At
most, however, the thought reflected in the Stauble footnote
might save a reference from invalidation under the Constitu-
tion; that possibility would do little to make it any less the
sort of clear abuse of discretion that is fatal under La Buy.
The same is equally true of the observation in United States
v. Raddatz, 447 U.S. 667, 683 n.11 (1980), saying that the
Court itself, in the exercise of its original Article III jurisdic-
tion, acts on the basis of special masters' reports. Clearly
that practice tells us nothing about the presence of a clear
abuse of discretion under Rule 53(b).
We note some ambiguity on this point in our decision in
Bituminous Coal. Our concluding directive told the judge to
"revise his order of reference ... and to decide de novo,
without deferring to a special master, all potentially disposi-
tive questions of fact or law." 949 F.2d at 1169. The
Department thinks that this implicitly endorsed the possibili-
ty of a non-deferential reference. We think not. In Bitumi-
nous Coal we rejected the coal operators' suggestion that
"any unconsented-to reference would constitute an abuse of
judicial power," id. (emphasis added), but our rejection of that
broad claim was based not on variations in scope of district
court review but on our endorsement of the established and
legitimate practice of using unconsented-to references for
pretrial preparation or for implementation of remedies, id.And in the introductory summary of our disposition we said
that the judge must "revise the order of reference to reserve
for himself, and not delegate to the special master, the core
function of making dispositive rulings, including findings of
fact and conclusions of law on issues of liability." Id. at 1166.
In short, when we said in Bituminous Coal that we were
granting the writ "not because the district judge simply
abused his discretion, but because he has no discretion to
impose on parties against their will 'a surrogate judge,' " id.
at 1168 (citations omitted), we effectively ruled out noncon-
sensual references in nonjury cases except as to peripheral
issues such as discovery and remedy. Compare In re Armco,
Inc., 770 F.2d 103, 105 (8th Cir. 1985) ("Beyond matters of
account, difficult computation of damages, and unusual discov-
ery, it is difficult to conceive of a reference of a nonjury case
that will meet the rigid standards of the La Buy decision.")
(internal quotations omitted).
In short, finding the case devoid of anything remotely
"exceptional" within the meaning of Rule 53(b), we believe the
reference to a master must be vacated. We do not, accord-
ingly, reach Microsoft's claims that the specific referee is
biased or has conducted the proceedings on referral improp-
erly.
VI.
The preliminary injunction was issued without adequate
notice and on an erroneous reading of s IV(E)(i) of the
consent decree. We accordingly reverse and remand. The
reference to the master was in effect the imposition on the
parties of a surrogate judge and either a clear abuse of
discretion or an exercise of wholly non-existent discretion.
We grant mandamus to vacate the reference.
So ordered.
Wald, Circuit Judge, concurring in part and dissenting in
part: I depart from my colleagues only as to their interpre-
tation of the consent decree, which I believe unnecessarily
narrows the scope of the inquiry that the district court may
conduct on remand. First, the majority opinion appears to
decide that there is only one reasonable interpretation of
section IV(E)(i), notwithstanding the fact that we are remand-
ing for further factual development that may well be relevant
to the most faithful interpretation of the section. Second,
although the majority claims to have rooted its interpretation
in antitrust law in accordance with the intent of the parties, it
interprets section IV(E)(i) in a way that is, in fact, inconsis-
tent with at least some governing precedent. For these
reasons, I write separately to suggest that there may be an
interpretation of section IV(E)(i) more consonant with the
intent of the drafters and the weight of antitrust law. If facts
are found on remand to support such an alternative interpre-
tation, it should not be foreclosed by the majority opinion.
Under the majority's interpretation, the proviso of section
IV(E)(i), which says that section IV(E)(i) "in and of itself shall
not be construed to prohibit Microsoft from developing inte-
grated products," is too safe a harbor with too easily naviga-
ble an entrance: So long as Microsoft has created a design to
combine functionalities in a way that offers the ultimate user
some "plausible" advantage otherwise unavailable, Microsoft
may require OEMs to install the resulting creation in its
entirety, without fear of running aground on the main prohi-
bition of section IV(E)(i) (which prohibits Microsoft from
entering into any license agreement "in which the terms of
that agreement are expressly or impliedly conditioned upon"
the licensing of any "other product"). To my mind, this
reading does not impose nearly enough scrutiny on "inte-
gration" and renders the central prohibition of section
IV(E)(i) largely useless. Cf. Beal Mortgage, Inc. v. FDIC,
132 F.3d 85, 88 (D.C. Cir. 1998) (noting the "cardinal inter-
pretive principle that we read a contract to give meaning to
all of its provisions and to render them consistent with each
other") (internal quotation omitted). The majority's interpre-
tation would not, for example, appear to prevent Microsoft
from requiring OEMs to license the right to sell computer
peripherals (e.g., mice) as a condition of licensing Windows 95
so long as Microsoft had the prescience to include code in
Windows 95 that made the cursor more responsive to the end-
user's touch than it would be with other mice. I think the
majority would agree, however, that under any reasonable
reading of section IV(E)(i), the tying of mice to Windows 95
would clearly be prohibited.1 I fail to see why the analysis
should be so different for software than for peripherals or
why our "evaluation of a claim of integration must be [any
__________
1 The majority asserts that if Microsoft tried to bundle its mouse
with the operating system, "it would have to show that the
mouse/operating system package worked better if combined by
Microsoft than it would if combined by OEMs," a test that is
"different from showing that the mouse works better with the
operating system than other mice do." Majority Opinion ("Maj.
Op.") at 23 n.11. But this seems to me to misstate the majority's
own test, which asserts that "the act of combination is the creation
of the design that knits the two together" and not which firm's
employees effect the physical combination. Id. at 28-30. If this is
the case, then the majority's test would consider whether the design
that "knits together" Microsoft's mouse and the operating system
offers advantages unavailable through the combination of a competi-
tor's mouse and the operating system. This is, I think, a standard
easily met. For instance, Microsoft could develop a mouse with a
patented, modestly useful feature, design its operating system to
work best when used with a mouse that had this feature, and then
require OEMs to buy the two products together. The mouse and
the operating system would qualify as integrated under the majori-
ty's test. The majority says that IE 4.0 and Windows 95 are
integrated because the "full functionality of the operating system
when upgraded by IE 4 and the 'browser functionality' of IE 4 ...
do not exist separately." Id. at 29. Likewise, the full functionality
of the patented mouse and Microsoft's mouse-friendly operating
system would not exist separately; the two would be designed for
each other, and their full functionality would only exist when
combined. Thus, under the majority's test, Microsoft would have
avoided the effect of section IV(E)(i) altogether, even if its patented
mouse was of little extra value to the user. I would not think that
the proviso was intended to swallow the consent decree in this way.
more] narrow and deferential," Maj. Op. at 25, for software
than for other computer-related products. See, e.g., Fire-
stone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 112 (1989)
(courts construe contractual provisions "without deferring to
either party's interpretation"). Our role, after all, is to
interpret the consent decree as we would a contract: in a
manner that is "grounded in the text of the agreement and
contemporaneous understandings of its purposes, not in our
own conception of wise policy." United States v. Western
Elec. Co., Inc., 846 F.2d 1422, 1427 (D.C. Cir. 1988).
Another--some might say more--reasonable reading of
section IV(E)(i) would give much greater weight to the main
prohibition of the section. On its face, that prohibition for-
bids Microsoft from requiring OEMs to accept under one
agreement any offering that is in reality two products: a
"Covered Product" and, for purposes of this case, an "other
product." The proviso, on the other hand, permits Microsoft
to develop and license "integrated" products.2 Read togeth-
er, I think the prohibition and the proviso could reasonably be
construed to state that Microsoft may offer an "integrated"
product to OEMs under one license only if the integrated
product achieves synergies great enough to justify Microsoft's
extension of its monopoly to an otherwise distinct market.
As I explain below, and as I read the majority opinion to
agree, the consent decree was drafted against a backdrop of
antitrust law. Under antitrust law, two products are consid-
ered distinct if there exists "sufficient consumer demand so
that it is efficient for a firm to provide [the first product]
separately from [the second]." Eastman Kodak Co. v. Image
Technical Servs., Inc., 504 U.S. 451, 462 (1992). The difficul-
ty in this case is that technological evolution can change the
boundaries of what is "efficient." For example, Eastman
Kodak cites cameras and film as examples of two functionally
linked products for which there exist separate markets. See
id. at 463. But antitrust law presumably would not bar the
__________
2 The proviso states only that Microsoft is permitted to "develop"
integrated products, but the parties agree that "develop" should not
be limited to mere research and development.
development of digital cameras, which do not require film in
any conventional sense.
Thus, antitrust law cannot avoid determining whether a
particular technological development has occurred because it
is efficient or merely because it permits a monopolist to
extend its monopoly to a new market. Software code is a
particularly stark example of why such analysis is essential if
antitrust concepts are to survive at all. Here, the majority
effectively exempts software products from antitrust analysis
by stating that "[s]oftware code by its nature is susceptible to
division and combination in a way that physical products are
not." Maj. Op. at 28. But this to me is an argument for
closer, rather than more relaxed, scrutiny of Microsoft's
claims of integration. An operating-system designer who
wished to turn two products into one could easily commingle
the code of two formerly separate products, arranging it so
that "Windows 95 without IE's code will not boot," id. at 23
n.11, so that Windows 95 without Internet Explorer would
"represent a disabled version of Windows 95," id. at 23, and
so that Internet Explorer instructs the Add/Remove function
to leave so much of that program in place that "four lines of
programming" will suffice to activate it, see id. at 29 n.17.
This is not to say that commingling of code is per se perni-
cious or even suspicious. Rather, the point is that comming-
ling alone is not sufficient evidence of true integration; the
courts must consider whether the resulting product confers
benefits on the consumer that justify a product's bridging of
two formerly separate markets.
Although this task is difficult, it is by no means the
impossible project that the majority suggests. As I explain
below, traditional antitrust analysis, and the usual methods of
the law, provide the courts with a range of ways to address
the ultimate question of efficiency. See, e.g., PSI Repair
Servs., Inc. v. Honeywell, Inc., 104 F.3d 811, 817 (6th Cir.
1997), cert. denied, 117 S. Ct. 2434 (1997) (citation omitted)
("While we are mindful of the various efficiency gains that
can accrue to both suppliers and consumers from bundling
certain products together, we are confident that the antitrust
laws provide the tools to distinguish between meritorious and
non-meritorious claims."). As I see it, the efficiency calculus
takes two factors into account. The first is evidence that
there are real benefits to the consumer associated with
integrating two software products; I call these benefits "syn-
ergies." 3 The second is independent evidence, of the type
that is usually employed in antitrust analysis, that a genuine
market exists for the two products provided separately. For
example, Windows 95 includes a built-in calculator program
with relatively few functions. Although there may be few
synergies associated with building this program into the
operating system, there is also not likely to be much of a
market for this program provided separately, and this factor
must be taken into account. Market evidence of demand for
independent products will spare the courts from the need to
speculate in the abstract about considerations of efficiency.
Taken together, then, these two factors generate a balanc-
ing test. The greater the evidence of distinct markets, the
more of a showing of synergy Microsoft must make in order
to justify incorporating what would otherwise be an "other"
product into an "integrated" whole. If the evidence of dis-
tinct markets is weak, then Microsoft can get by with a fairly
modest showing (although perhaps not the minimal showing
required by the majority). But if there are clearly two
distinct markets, then Microsoft would need to demonstrate
__________
3 The majority questions the institutional competence of the
courts to judge the level of synergy provided by an "integrated"
product. See Maj. Op. at 25. By no means do I endorse routine
judicial intervention in the details of product design. But I also do
not endorse (as the majority comes close to doing) judicial abdica-
tion in the face of complexity. The courts are certainly capable of
determining whether a particular integration offers any synergistic
benefits at all and whether these benefits are minimal, significant,
or great. As this is a factual determination, they may be guided in
this effort by, for example, affidavits, consumer surveys, and other
evidence presented by the parties as well as testimony from experts
selected by the parties or by the court. Certainly this approach is
preferable to the majority's proposal, under which antitrust law
surrenders to any bona fide assertion of a "plausible" benefit of
integration.
substantial synergies in order to compel OEMs to accept a
new "integrated" product that bridges those markets. In
other words, the decree does not purport to chill Microsoft's
technological development of its products by prohibiting a
product outright merely because it incorporates new fea-
tures--the proviso makes clear that Microsoft is free to
design such products and to market their benefits to OEMs
such that OEMs overwhelmingly choose the new product over
a competitor's product.4 The proviso thus becomes a safe
harbor only for those integrations in which the "other prod-
uct" has been (legitimately) technologically subsumed in a
greater whole.5
__________
4 During his tenure as special master in this case, Lawrence
Lessig offered a similar, although not identical, interpretation of
section IV(E)(i) in a letter that has been made part of the record in
this appeal. See Letter from Lessig to Malone et al., January 19,
1998 (asserting that the prohibition of section IV(E)(i) forbids only
tying through contract; it does not, as the proviso makes clear,
forbid tying through technological efforts). The fact that Professor
Lessig has proposed this quite plausible alternate interpretation of
section IV(E)(i) does not, of course, suggest that his interpretation
is the only acceptable one--that is a matter for the proceedings on
remand to determine.
5 The majority expresses puzzlement as to how a section "that (1)
articulates a prohibition and (2) sets a limit on the reach of the
prohibition" can be read to state a balancing test. Maj. op. at 31.
As I read section IV(E)(i), its application turns on distinguishing
two products from a single, integrated product. The section surely
requires that the product be legitimately integrated; otherwise,
section IV(E)(i) would have no force. One plausible interpretation
of the decree is that it refers the court to antitrust law to decide
whether a product is legitimately integrated; in these circum-
stances, the antitrust analysis requires balancing. For my part, I
am at a loss to understand how a consent decree that is clearly
intended to limit Microsoft's conduct could be read to impose so
little scrutiny of that conduct.
One might ask why, under my proposed reading, section IV(E)(i)
contains a proviso at all. I think it possible that the proviso was
intended, "in the intensely lawyered atmosphere surrounding this
decree, to make assurance doubly sure," United States v.
Thus, the real question for purposes of determining if a
violation of the degree has taken place is whether a new
combination of formerly separate functionalities still contains
an "other product" or if the two functionalities have been
legitimately blended, or "integrated," and so have lost their
former identities and become one product to which the prohi-
bition no longer applies. (This, of course, is a factual ques-
tion to be explored on remand.) As I have already suggested,
and as the majority agrees, given the context in which section
IV(E)(i) arose, it is appropriate to look to antitrust law as a
guide to determining when such integration occurs. Al-
though the majority opinion claims that its construction is
consistent with antitrust law, see Maj. Op. at 22, it does not,
in my view, give due weight to the Supreme Court's holding
in Jefferson Parish Hospital District No. 2 v. Hyde, 466 U.S.
2 (1984), the leading guide to the separate product determina-
tion.6 In Jefferson Parish, the Court considered whether
anesthesiological services, which a hospital had required pa-
tients to take only from certain anesthesiologists, were in fact
separate products from the other services provided by the
hospital or, rather, were part of what the hospital claimed
was a "functionally integrated package of services." Id. at 19.
__________
Western Elec. Co., Inc., 12 F.3d 225, 238 (D.C. Cir. 1993) (Williams,
J., dissenting)--in other words, that it was a lawyerly redundancy.
I do not think, however, that it is necessary to read the proviso as
serving so limited a function. Under my reading, the proviso
serves to clarify that the prohibition of section IV(E)(i) is not
boundless--that a product is not barred simply because it contains
new combinations of previously existing functionalities. The provi-
so thus functions to eliminate one possible reading of section
IV(E)(i). Given that the proviso is cast in terms of interpretation--
it says that section IV(E)(i) "shall not be construed" to bar integrat-
ed products--it is appropriate to accord it this limited, interpretive
function.
6 The majority rejects DOJ's contention that a product is separate
if Microsoft so treats it, see Maj. Op. at 19-20, but it does not
address the government's associated contention that a product is
separate if antitrust law so treats it, see id. at 19 (noting DOJ's
citation of Jefferson Parish).
In rejecting the hospital's argument that such a package did
not involve a tying arrangement, the Court held that "the
answer to the question whether one or two products are
involved turns not on the functional relation between them,
but rather on the character of the demand for the two items."
Id. Thus, the fact that the hospital provided "the space,
equipment, maintenance, and other supporting services neces-
sary to operate the anesthesiology department," purchased
the necessary drugs and supplies, and furnished the required
nursing personnel, id. at 6, did not prevent a finding of
separateness, nor did the district court's conclusion that the
hospital believed that a "closed system" anesthesiology de-
partment "resulted in the best quality of patient care." Hyde
v. Jefferson Parish Hosp. Dist. No. 2, 513 F. Supp. 532, 540
(E.D. La. 1981). In other words, despite the overlap between
the services provided by the hospital and those provided by
the anesthesiologist, and despite the claimed benefits of an
"integrated" relationship, the Court held that the proper
focus of analysis was whether the arrangement tied two
distinct markets for products that are separate from the
buyer's perspective. See Jefferson Parish, 466 U.S. at 19-20
(citing Times-Picayune Publishing Co. v. United States, 345
U.S. 594 (1953), and Fortner Enters. v. United States Steel
Corp., 394 U.S. 495 (1969)). It is not clear to me why this
analysis should be markedly less applicable in the technologi-
cal context; indeed, the post-Jefferson Parish trend is to
apply its test even in the technological realm. See, e.g.,
Allen-Myland, Inc. v. International Bus. Machs. Corp., 33
F.3d 194, 211-12 (3d Cir. 1994) (computer parts and installa-
tion); Service & Training, Inc. v. Data Gen. Corp., 963 F.2d
680, 684 (4th Cir. 1992) (diagnostic software and mainte-
nance/repair service); Digidyne Corp. v. Data Gen. Corp., 734
F.2d 1336, 1339 (9th Cir. 1984) (central processing units and
operating system); cf. Jefferson Parish, 466 U.S. at 25 n.42
("In the past, we have refused to tolerate manifestly anticom-
petitive conduct simply because the health care industry is
involved.").
The tying analysis is, of course, a pragmatic one. For
example, no one would claim that tying law was violated by
the practice of selling shoes in pairs despite the possible
existence of some market for only left shoes (among those
with only one foot, for example, or with differently sized feet).
Likewise, it is in all likelihood not a tying violation for
Jefferson Parish's hospital to require that patients accept the
hospital's receptionists (instead of bringing their own) and
accept the cleaning services and meals provided in their
rooms (instead of making other arrangements) and to charge
patients for these services. This is so even though there
might be a limited group of patients who would prefer to
make their own arrangements for receptionists, cleaning, and
meals. Cf. Jefferson Parish., 466 U.S. at 22 n.36 (noting that
the antitrust analysis might differ for "radiologists, patholo-
gists, and other types of hospital-based physicians"); see also
Jack Walters & Sons Corp. v. Morton Bldg., Inc., 737 F.2d
698, 703 (7th Cir. 1984) (noting that "[t]he practice has been
to classify a product as a single product if there are rather
obvious economies of joint provision"). In the case of the
shoes, the receptionist, and the cleaning, a judgment is made
that the benefits of joint provision clearly predominate over
what is undoubtedly a minimal separate market (if one can be
said to exist at all). In the case of the anesthesiologist, by
contrast, the Court found that the claimed benefits--24-hour
anesthesiology coverage, flexible scheduling, and facilitation
of work routine, professional standards, and equipment main-
tenance--were not sufficient to justify joint provision because
there was a very substantial market for anesthesiologists'
services and because these benefits could be achieved without
the forced tie (by, for example, promoting the benefits of the
hospital's anesthesiologists to patients and setting standards
of compatibility). See Jefferson Parish, 466 U.S. at 25 n.42.
Under this doctrine, then, an "integrated" product cannot
simply be one where some benefit exists as a result of joint
provision, since the hospital easily met this standard. Rath-
er, "integration" must mean something more: a combination
of functionalities in which the synergies created predominate
over the existence of a separate market--in other words,
where the benefits of the combination dissuade consumers
from seeking and suppliers from providing the alleged "tied"
product.7
__________
7 As to the majority's observation that a product is not "integrat-
ed" if OEMs could perform the integration equally well on their
This alternative interpretation of section IV(E)(i) also ac-
commodates the majority's "paradigm" case. The mere pro-
vision of Windows 3.11 and DOS 6.22 as a single product may
have created some benefits--reduction of transaction costs,
guaranteed compatibility, and a single source of customer
support services, for example. These benefits were not,
however, enough to overwhelm the existence of a separate
operating system market--indeed, the very presence of No-
vell's product as an operating system to be used with Win-
dows 3.11 suggests the existence of such a market. See, e.g.,
J.A. 845 (DG IV Statement of Objections) ("Such tying affects
the competitive freedom of the licensee to find a better
substitute or obtain better terms for the operating system to
be used with Windows."). Windows 95, however, is a differ-
ent matter. In that case, the whole is clearly greater than
the sum of its parts--as the majority notes, "it is not simply a
graphical user interface running on top of MS-DOS." Maj.
Op. at 23. And it is clear on the present record that
Microsoft, at least, understood Windows 95 to provide such
benefits. See, e.g. J.A. 1101 (Microsoft's "Windows 95 Fea-
ture Review") ("When you first boot Windows 95 it is immedi-
ately apparent that the old world of Windows running on top
of MS-DOS is no more."). Thus, the synergistic benefits
appear to have been large enough so that it would have been
reasonable for DOJ to agree to treat Windows 95 as an
integrated product.8
__________
own, my only comment is that this is an obvious point, and I am
unclear what it adds to the analysis. A synergy should only count
as such if it has benefits that the purchaser could not achieve
equally well on his own. For example, there are synergistic bene-
fits to combining cookies and milk, but a consumer can achieve
them perfectly well at home. Thus, a supermarket could not
ordinarily invoke this synergy as a justification for requiring cook-
ies and milk to be bought together.
8 The majority objects that there is no evidence that Microsoft
and DOJ subjected Windows 95 to a balancing analysis. Maj. Op.
at 31-32. Because of the procedural posture of this case, however,
there is little evidence of any kind in the record as to what the
parties to the consent decree intended. There is certainly no
The majority's interpretation, however, departs from this
precedent by accepting any "plausible claim" that the combi-
nation (i.e., the design) offers "some advantage." Maj. Op. at
26-27. Of course, both the majority's interpretation and my
alternative proposal would discredit any specious claims of
integration--Microsoft's claim that it could simply put two
disks in the same box and claim integration, for example, see
id. at 21, would hardly merit a second thought. But the
majority's considerable deference to Microsoft's plausible
claims of advantage, coupled with Microsoft's privileged
knowledge of the inner workings of its operating system,
barely raises the bar of section IV(E)(i) above ground level.
It is difficult to imagine how Microsoft could not conjure up
some technological advantage for any currently separate soft-
ware product it wished to "integrate" into the operating
system.9 And for the majority, the chase ends there: Inter-
net Explorer, it contends, shares code with the operating
system in a way that other browsers do not, and therefore it
is integrated. But the fact that parts of Internet Explorer
share code with the operating system and thus with other
applications should not end the analysis any more than did
__________
indication that Microsoft and DOJ subjected Windows 95 to the
majority's minimal test.
9 The majority's test would seem to permit Microsoft to "inte-
grate" word-processing programs, spreadsheets, financial-
management software, and virtually any other now-separate soft-
ware product into its operating system by identifying some minimal
synergy associated with such "integration." In effect, the majority
has fashioned a broad exemption from the antitrust laws for operat-
ing system design, apparently because an operating system is not
like a peripheral, whose "physical existence makes it easier to
identify the act of combination." Maj. Op. at 23 n.11. Surely,
however, physical existence cannot serve as a limitation to the
application of antitrust law--the provision of services, for example,
is a mutable "product" without tangible existence and yet has often
been the subject of antitrust analysis. See, e.g., Jefferson Parish,
466 U.S. 2 (anesthesiological services); Allen-Myland, 33 F.3d 194(installation of computer parts); Service & Training, 963 F.2d 680(computer maintenance and repair services).
the fact that the anesthesiologists in Jefferson Parish shared
hospital equipment and personnel with the hospital and its
staff (or that the hospital could identify some minor practical
benefits to requiring the use of only certain anesthesiolo-
gists). The analysis must also consider whether Internet
Explorer is a separate product under antitrust law, that is,
whether "consumers differentiate between [Internet Explor-
er] and [Windows 95]" such that consumers desire to pur-
chase--and hence that manufacturers desire to supply--a
substitute for Internet Explorer from another manufacturer;
in other words, whether there is "a distinct product market in
which it is efficient to offer [the tied product] separately from
[the tying product]." Jefferson Parish, 466 U.S. at 22; see
also Digidyne, 734 F.2d at 1339 ("[t]he undisputed facts
summarized in the district court's opinion establish that a
demand existed for NOVA instruction set CPUs [central
processing units] separate from defendant's RDOS [operating
system], and that each element of the NOVA computer
system could have been provided separately and selected
separately by customers if defendant had not compelled
purchasers to take both"). Whether such a market exists,
and whether it is significant enough to outweigh the particu-
lar synergies associated with integrating IE 3.0 and/or IE 4.0
into Windows 95, is, of course, a factual determination within
the province of the district court. Relevant indicators in the
market analysis, however, would surely include (1) whether
manufacturers of other operating systems require OEMs to
include a particular browser, see, e.g., Jefferson Parish, 466
U.S. at 23 n.39 (noting that "other hospitals often permit
anesthesiological services to be purchased separately"); X
Areeda, Antitrust Law p 1746, at 225 (1996) (suggesting
comparison of alleged tie with practices in analogous competi-
tive markets); (2) whether Microsoft's own actions reflect a
perception of a competitive market for "Internet Explorer"
separate from the market for Windows 95, see, e.g., Allen-
Myland, 33 F.3d at 208-09 (noting probative value of internal
reports in determining distinct product markets); and even
(3) the very existence of competitor browser manufacturers,
see, e.g., Eastman Kodak, 504 U.S. at 462 (noting that "the
development of the entire high-technology service industry is
evidence of the efficiency of a separate market for service").
The majority opinion, however, relies on none of these consid-
erations. By discounting the relevance of such analysis, the
majority in fact shorts traditional antitrust law.
Despite the plausibility of this alternative interpretation,
the extent to which antitrust law was intended to inform the
interpretation of the decree--specifically the interpretation of
the terms "integrated product" and "other product"--is an-
other question best left open to the district court on remand.
Everyone agrees, I believe, that section IV(E)(i) of the decree
is ambiguous--indeed, had it been unambiguous, the district
court could have fished or cut bait, i.e., it could have deter-
mined either that Microsoft's actions constituted contempt or
that they did not violate the decree at all. Thus, I do not
read the majority opinion to say at any point that there is a
plain meaning of section IV(E)(i) that can be located in the
text alone. To the contrary, we are relegated to ordinary
principles of contract law: searching for the parties' intent
and guided in that adventure by "conventional 'aids to con-
struction,' including the 'circumstances surrounding the for-
mation of the consent order, any technical meaning words
used may have had to the parties, and any other documents
expressly incorporated in the decree.' " United States v.
Western Elec. Co., 894 F.2d 430, 434 (D.C. Cir. 1990) (quoting
United States v. ITT Continental Baking Co., 420 U.S. 223,
238 (1975)). Under these principles, the interpretation of an
ambiguous contract involves factual findings as to the parties'
intent. See, e.g., Bennett Enters., Inc. v. Domino's Pizza,
Inc., 45 F.3d 493, 497 (D.C. Cir. 1995); Carey Canada, Inc. v.
Columbia Cas. Co., 940 F.2d 1548, 1553-54 (D.C. Cir. 1991).
In non-plain meaning cases such as this one, appellate courts
generally decline to embark on their own factfinding mission,
deferring to the district court's role as the primary factfinder
and reviewing its findings only for clear error. See, e.g.,
United States v. Insurance Co. of N. Am., 131 F.3d 1037,
1042-43 (D.C. Cir. 1997) (declining to determine intent of
parties to contract on the basis of incomplete record and
remanding for further findings). While the district court
below did conclude that "[r]eading [section] IV(E)(i) in light
of its avowed purpose raises a logical inference that the
parties anticipated the use of [tying law] antitrust precedents
in determining the application of [section IV(E)(i)] to the
conduct the government challenges here," United States v.
Microsoft Corp., 980 F. Supp. 537, 542 (D.D.C. 1997)--a
conclusion that suggests that Jefferson Parish, decided well
before the parties' agreement, is indeed relevant to the
construction of the decree--it is not inconceivable that, given
notice and an adequate opportunity to present evidence and
arguments, the parties will succeed in persuading the district
court otherwise.10 The majority opinion, however, leaves
little room for such efforts--its interpretation seems clearly
meant to be the last word.11
Finally, and relatedly, I note that when the parties' contem-
poraneous understanding of section IV(E)(i) is ultimately
revealed, there is further work to be done on how the parties
intended that understanding to be applied. Should the dis-
trict court conclude that whether something is an "other
product" depends on the existence of a separate market for
that product, it must still determine how that "something" is
defined--in this case, "Internet Explorer." Here, again, the
majority relies heavily on a presumption that "Internet Ex-
plorer" contains code that upgrades the operating system as
well as code that enables end-users to access the Internet and
therefore concludes that there is no "separate" product for
any tie-in analysis. See Maj. Op. at 29.12 The validity of that
__________
10 Indeed, the district court acknowledged that "[d]isputed issues
of technological fact, as well as contract interpretation, abound as
the record presently stands." Microsoft, 980 F. Supp. at 543.
11 The majority's assertion that "the district court made no find-
ings of fact as to intent to which we could defer," Maj. Op. at 15 n.7,
makes restraint particularly appropriate.
12 Notably, the majority's assertion to this effect relies on testi-
mony presented by Microsoft during hearings on whether Microsoft
had failed to comply with the preliminary injunction, testimony that
was challenged by the government. See Maj. Op. at 29 (citing, e.g.,
J.A. 1661-68). The parties' eventual settlement of this dispute, see
perception is not so evident to me. The fact that the supplies
and equipment that made the anesthesiologist's job possible
in Jefferson Parish remained at the hospital--that, in a
manner of speaking, the anesthesiologist was something of an
interface between the end-user patient and the hospital's
"operating system"--did not prevent the Court from conclud-
ing that his portion of the service constituted a separate
product. Unfortunately, perhaps due to the irregular nature
of the preliminary injunction proceedings, the district court
made little in the way of findings concerning what the linch-
pin product "Internet Explorer" is intended to encompass.13
It would not be unreasonable, as the prior discussion sug-
gests, to approach the problem from the perspective of a
typical end-user, who most likely regards "Internet Explorer"
as a particular vehicle for accessing information on the Inter-
net, regardless of the underlying code associated with that
process. The fact that, as the majority suggests, see Maj. Op.
at 29-30, "Internet Explorer" distributes certain code to the
operating system may simply suggest that some or all of this
code should not be considered part of "Internet Explorer" at
all but part of the operating system. Or perhaps the work
that this code does could be done equally well by similar code
written by Netscape or some other competitor, in which case
the code's function is not necessarily an operating system
__________
J.A. 1780 (Stipulation and Order), obviated any need for factual
findings on this issue by the district court. Given that much of the
testimony involved in-court demonstrations, see, e.g., J.A. 1661-72, I
believe that it would be premature for this court to weigh in with its
own resolution of this factual dispute.
13 The district court's opinion does refer to one unit of analysis as
"the software code that Microsoft itself now separately distributes
at retail as 'Internet Explorer 3.0,' " Microsoft, 980 F. Supp. at 544,
but the usefulness of this description was called into question in
subsequent proceedings. See J.A. 1619 (assertion by Microsoft
executive that it distributed no product at retail titled "Internet
Explorer 3.0"); J.A. 1780 (agreement by DOJ and Microsoft that
removal of only certain files would comply with preliminary injunc-
tion).
function at all.14 Which approach to the meaning of "prod-
uct" was the contemporaneous understanding of the parties to
the decree, however, remains to be determined.
Furthermore, the record suggests that many of the benefits
that the majority asserts for the incorporation of Internet
Explorer into Windows 95, including customizing of "Start"
menus and "thumbnail" previews, see id. at 27-28, are provid-
ed only by Internet Explorer 4.0 and not by Internet Explor-
er 3.0. See, e.g., J.A. 490-95, 1664-69. The majority seems
to conclude that IE 3.0 and Windows 95 are "integrated" on
the basis of little or no evidence. Should more evidence on
this point come to light, the district court thus cannot be
bound by the majority's conclusions. As to IE 4.0, the
district court's preliminary conclusions seemed to hinge on
the fact that Microsoft had offered the program only on a
separate disk and not on the technology involved, see Micro-
soft, 980 F. Supp. at 544, thus suggesting that more factfind-
ing also needs to be done as to IE 4.0.
Because I believe there is significant further factfinding as
to intent and operation to be accomplished by the district
court on remand, I would not rule out its authority to reissue
a preliminary injunction.15 That is why I am troubled by the
__________
14 A word-processing program, for example, may contain a dictio-
nary feature as well as update certain operating-system code once
installed. The fact that other applications may call on the dictio-
nary files, or that if the word-processing program were removed in
its entirety, certain operating-system files would be "degraded,"
does not necessarily mean that the word-processing program is
integrated with the operating system. It may be that only part of
the program is so integrated, or it may be that none of it performs
an operating-system function.
15 In this respect, I note that this court has rejected the notion
that the requirement that the government show a "substantial
likelihood of success" means "to a certainty" or even "to 51 per-
cent." See Washington Metro. Area Transit Comm'n v. Holiday
Tours, Inc., 559 F.2d 841, 844 (D.C. Cir. 1977). Rather, because the
district court is to assess the propriety of a preliminary injunction
in light of the relative strengths of all four factors (likelihood of
success on the merits, irreparable injury, harm to other parties, and
seemingly authoritative nature of the interpretation of section
IV(E)(i) in the majority opinion, which would appear to
foreclose any other interpretation of the section and proviso
that might evolve in further proceedings and justify either a
preliminary or a permanent injunction. To that extent, I
respectfully dissent from the majority opinion.
__________
furtherance of the public interest), "the necessary 'level' or 'degree'
of possibility of success will vary according to the court's assess-
ment of the other factors." Id. at 843.