Federal judge denies Microsoft motion to dismiss antitrust case

? A federal judge refused Wednesday to throw out a suit by nine states accusing Microsoft Corp. of antitrust violations.

Microsoft had asked the judge to toss out the suit, saying the states could not show specific harm to their citizens and do not have authority to ask for sweeping penalties that would apply to the entire nation.

Before she ruled, U.S. District Judge Colleen Kollar-Kotelly asked the opinion of the Justice Department. Federal lawyers as well as representatives of 25 other states that offered an opinion on the standing issue agreed that the states should be able to sue.

The Justice Department, which made its own far more lenient settlement with Microsoft last year, maintained its opposition to the nine states’ call for strict penalties. Kollar-Kotelly has not yet ruled on whether to grant the states’ request for those penalties.

Microsoft has two other important motions still pending before the judge, including one asking Kollar-Kotelly to toss out the case because of a lack of evidence from the states.

Another motion would do away with the single most powerful proposal against Microsoft. That penalty would force Microsoft to create a modular version of the Windows operating system in which computer manufacturers could swap out some features in favor of those made by competitors.

Kollar-Kotelly presided over two months of hearings, starting in March, in which witnesses including Microsoft Chairman Bill Gates and top technology company executives debated the states’ proposals.

The states say the federal settlement will not go far enough to restore competition in the software industry. They say their ideas, which include making Microsoft give up most rights to its leading Internet Explorer Web browser, are more likely to increase consumer choice and promote innovation.

Microsoft was found by a federal appeals court to have used illegal means to stamp out nascent competition in order to protect its Windows monopoly.

The original judge in the antitrust case, Thomas Penfield Jackson, ordered Microsoft broken into two companies. An appeals court upheld many of the violations but reversed the breakup order and appointed Kollar-Kotelly to determine a new punishment.

Both the states and Microsoft are due to deliver closing arguments June 19. A ruling is expected in late summer.

States that rejected the government’s settlement with Microsoft last fall and are pressing for tougher penalties are Iowa, Utah, Massachusetts, Connecticut, California, Kansas, Florida, Minnesota and West Virginia, along with the District of Columbia.