The penalties proposed by the dissident attorneys general in the

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antitrust case are as bad as breaking the company up and should be thrown out, Microsoft said in a U.S. District Court filing today.

Responding to a filing submitted by the attorneys general of nine states and the District of Columbia who did not sign on to a settlement deal between Microsoft and the Department of Justice last month, Microsoft said the nonsettling parties are working to further the agendas of its business adversaries.

"It is readily apparent (both from the terms of their proposal and from their comments to the press) that the nonsettling States seek to punish Microsoft and to advance the commercial interests of powerful corporate constituents -- Microsoft competitors such as

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,

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,

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and

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. Neither objective is appropriate under the antitrust laws," the filing stated in part.

Tom Miller, Iowa's attorney general and one of the leaders of the dissident states, defended his group's recommendations. "Of course we stand by our remedy proposals, which are truly fair and effective."

A Microsoft spokesman said the outcome of the case that found Microsoft illegally maintaining a monopoly should be proactive, not punitive.

"Under antitrust policy, there is not punishment, there is remedy," said Microsoft's Jim Desler. "Penalties happen in criminal law, and remedies happen in civil proceedings. This is a civil proceeding."

On Friday the nonsettling states and the District of Columbia submitted proposed remedies which would include Microsoft offering a stripped-down version of its Windows operating system so that competitors could have a better chance of selling software to run on top of it. They argued that Microsoft should be forced to offer its Office software for non-Windows systems, and that Windows should include the Java programming language, developed by Sun, so consumers wouldn't have to download it from the Internet to run Java-based software.

In addition, the nonsettlers called for assurances that Microsoft couldn't retaliate against competitors, and for the appointment of a single "special master" who would supervise the company's compliance with the law. The filing also proposed that Microsoft be subject to monitoring for 10 years, as opposed to the five-year period proposed in the original settlement.

Today, Microsoft said those steps simply go too far.

"In many respects, the nonsettling States' proposed conduct restrictions are no less extreme than plaintiffs' previous proposal to break up Microsoft into separate operating system and applications companies, which plaintiffs discarded in view of the Court of Appeals' decision," Microsoft said in its 36-page filing today. In June, the appeals court set aside a previous recommendation to break the company up, though it didn't discard it entirely.

The case is now before U.S. District Court Judge Colleen Kollar-Kotelly, who is resposible for deciding its remedy phase. She has scheduled hearings for the nonsettling states in the case early next year, and she will review the proposed settlement at the same time. Under federal mandate, she must determine whether the settlement is in the public interest. That settlement calls for Microsoft to open up the base code of its software to competitors so they can more easily write programs to run with it, and be subject to a three-person oversight committee for at least five years.

Earlier today, the Senate Judiciary Committee held hearings on the settlement. Sen. Patrick Leahy (D, Vt.), the committee's chairman, was critical of the proposed settlement during those hearings, though he ultimately doesn't have the authority over its approval.

"The serious questions that have been raised about the scope, enforceability and effectiveness of this proposed settlement leave me concerned that, if approved in its current form, it may simply be an invitation for the next chapter of litigation," Leahy said in prepared remarks.

In regular trading Wednesday, Microsoft shares closed up 63 cents, or 0.9%, at $67.95.