Microsoft Asks to Postpone Court Date With Dissident States

Microsoft (MSFT Quote) on Tuesday requested an emergency two-week delay in its antitrust trial, citing a need for more time to respond to changes in a proposal from hold-out states filed a day earlier.

Hearings on the proposed sanctions of the nine nonsettling states were scheduled to begin next Monday and last for at least a month. The nonsettling states filed proposed changes to their proposal a week before the hearings were scheduled to begin. A separate hearing on the proposed settlement with the Justice Department is still on schedule for Wednesday.

In a statement released by Iowa Attorney General Tom Miller, the nonsettling states said they "will strongly resist" the motion to postpone the hearing.

Microsoft said it needs to conduct additional depositions to respond to the changes, noting that the states revised 11 of 16 sections of their proposed judgment in the antitrust case. The Redmond, Wash., company said it seeks to redepose seven witnesses on the nonsettling states' witness list, including executives from Sun Microsystems(SUNW Quote), AOL Time Warner(AOL Quote) and Novell(NOVL Quote).

Microsoft also charged that the states purposely timed their revisions to "inflict maximum prejudice on Microsoft."

Background

In June, the U.S. Court of Appeals found that Microsoft had illegally maintained a monopoly in computer operating systems and remanded the case to the lower court to figure out how the company should be penalized. After months of haggling, Microsoft settled the case in November with the Justice Department and half of the 18 states that were pursuing it. U.S. District Court Judge Colleen Kollar-Kotelly has scheduled a hearing Wednesday to decide whether the settlement is in the public interest.

It's possible that the judge won't issue a ruling on whether the settlement serves the public interest until after the hearings on the dissenting states' sanctions.

The DOJ's proposed settlement calls for Microsoft to open up parts of the source code for Windows to enable competitors to more easily write software to run with it, as well as the appointment of a three-member oversight panel to make sure the company complies for five years.

The attorneys general for the nine dissenting states and the District of Columbia want Microsoft to offer an alternate version of its Windows operating system without "bundled" software programs such as Windows Media; to ensure that its Office software is compatible with non-Windows systems; and to include the Java programming language in Windows XP.

The days leading up the district court hearings this month have been characterized by last-minute changes on both sides. Last week, Microsoft and the Justice Department filed primarily technical revisions to their proposed settlement.

The dissenting states' changes filed Monday are aimed at deflating "Microsoft's overblown rhetoric and apocalyptic predictions about the proposed remedies," Connecticut Attorney General Richard Blumenthal said in a press release. For instance, the states clarified that they want Microsoft to create and release one -- rather than several -- modular versions of Windows from which various features such as browsers and media players can be extracted.

That change seemed to come in response to charges from Microsoft that the states' proposal would require it to release too many different versions of Windows.

Shares of Microsoft closed down 22 cents to $63.08 in today's trading.