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.