Court of Appeals Decision (Last Post -- Judge Wald's concurrence and dissent-B):
The majority's interpretation, however, departs from this precedent by accepting any "plausible claim" that the combination (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 [*85] 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 software product it wished to "integrate" into the operating system. n9 And for the majority, the chase ends there: Internet 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 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 anesthesiologists). The analysis [*86] must also consider whether Internet Explorer is a separate product under antitrust law, that is, whether "consumers differentiate between [Internet Explorer] and [Windows 95]" such that consumers desire to purchase--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 ("the 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 particular 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. [*87] 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 competitive 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., AllenMyland, 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 considerations. By discounting the relevance of such analysis, the majority in fact shorts traditional antitrust law.
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n9 The majority's test would seem to permit Microsoft to "integrate" word-processing programs, spreadsheets, financialmanagement software, and virtually any other now-separate software 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 operating 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, 80 L. Ed. 2d 2, 104 S. Ct. 1551 (anesthesiological services); Allen-Myland, 33 F.3d 194 (installation of computer parts); Service & Training, 963 F.2d 680 (computer maintenance and repair services).
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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 another 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 determined 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 construction,' including the 'circumstances surrounding the formation 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., 282 U.S. App. D.C. 271, [*89] 894 F.2d 430, 434 (D.C. Cir. 1990) (quoting United States v. ITT Continental Baking Co., 420 U.S. 223, 238, 43 L. Ed. 2d 148, 95 S. Ct. 926 (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., 310 U.S. App. D.C. 192, 45 F.3d 493, 497 (D.C. Cir. 1995); Carey Canada, Inc. v. Columbia Cas. Co., 291 U.S. App. D.C. 284, 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., 327 U.S. App. D.C. 383, 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 "reading [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 [*90] 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. n10 The majority opinion, however, leaves little room for such efforts--its interpretation seems clearly meant to be the last word. n11
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n10 Indeed, the district court acknowledged that "disputed issues of technological fact, as well as contract interpretation, abound as the record presently stands." Microsoft, 980 F. Supp. at 543.
n11 The majority's assertion that "the district court made no findings of fact as to intent to which we could defer," Maj. Op. at 15 n.7, makes restraint particularly appropriate.
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Finally, and relatedly, I note that when the parties' contemporaneous 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 district 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 Explorer" 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. n12 The validity of that 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 concluding that his portion of the service constituted [*92] 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 linchpin product "Internet Explorer" is intended to encompass. n13 It would not be unreasonable, as the prior discussion suggests, 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 Internet, 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 function at all. n14 Which approach to the meaning of "product" was the contemporaneous understanding of the parties to the decree, however, remains to be determined. [*93]
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n12 Notably, the majority's assertion to this effect relies on testimony 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 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.
n13 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 injunction). [*94]
n14 A word-processing program, for example, may contain a dictionary feature as well as update certain operating-system code once installed. The fact that other applications may call on the dictionary 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.
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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 provided only by Internet Explorer 4.0 and not by Internet Explorer 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 [*95] 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 Microsoft, 980 F. Supp. at 544, thus suggesting that more factfinding 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. n15 That is why I am troubled by the 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.
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n15 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 percent." See Washington Metro. Area Transit Comm'n v. Holiday Tours, Inc., 182 U.S. App. D.C. 220, 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 furtherance of the public interest), "the necessary 'level' or 'degree' of possibility of success will vary according to the court's assessment of the other factors." Id. at 843.
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