The Microsoft Trial: 1998-2001

Judge Jackson then took another unexpected step: he announced that he was initiating a formal mediation process and that he had recruited Judge Richard Posner to act as the mediator. A former law professor at the University of Chicago, Posner had joined the Seventh Circuit Court of Appeals in 1981. A prolific author, he had a formidable reputation as a scholar of antitrust law. Although there would be 18 drafts of an agreement between the parties over the next several months, Microsoft refused to accept the government's terms, and the mediation collapsed in April 2000. Judge Jackson then delivered his findings of law, ruling against Microsoft on three of the four charges, the only favorable finding being on the "exclusive dealing" charge under Section 1. On May 24 Judge Jackson affirmed the government's proposal for the breakup of Microsoft into two companies, one restricted to operating systems, and the other to applications software. There was also an extensive list of conduct constraints. The federal Court of Appeals immediately announced that it would hear the anticipated appeal en banc—that is, with all justices sitting (three recused themselves). Judge Jackson then took the unusual step of invoking the 1974 Antitrust Expediting Act to request the U.S. Supreme Court to take up review of the case directly. However, in September 2000, the Supreme Court rejected this request, sending the case back to the Court of Appeals.

On June 28, 2001, the U.S. Court of Appeals for the District of Columbia vacated Judge Jackson's order to break-up Microsoft. The Court of Appeals upheld several findings of fact, including that the company violated federal antitrust laws. But the unanimous decision cited Judge Jackson's conduct as the reason for vacating his decision that Microsoft should be broken into two smaller companies. The court said that Jackson's secret interviews with members of the media and several offensive comments about Microsoft in public statements outside of the courtroom gave the appearance of partiality on Jackson's part. The Court of Appeals remanded the case back to a lower court for reassignment to a different judge.