The Microsoft Trial: The Best Legal Show In Town
It was the type of situation most lawyers strive to avoid. On the morning of Sept. 11, New York-based attorney John L. Warden, who is leading Microsoft Corp.'s defense against the Justice Dept.'s landmark antitrust suit, found himself in the middle of a long wrangle with U.S. District Judge Thomas Penfield Jackson in a Washington, D.C., federal court.
The subject was Microsoft's contracts with companies that connect people with the Internet--agreements that trustbusters say illegally prevented these companies from promoting a rival Web browser made by Netscape Communications Corp. "If your browser is all that good, why do you need restrictive covenants to begin with?" Jackson asked Warden.
"Why does Coke have a deal with Disney? Promotional and marketing agreements are part of business and competition," responded Warden, a burly native of Indiana, who, in spite of decades at Wall Street's starchy Sullivan & Cromwell, has a gentle southern accent and is renowned for his folksy courtroom manner. Arguing that the judge should dismiss the department's case, Warden insisted that the types of contracts Microsoft signed with Internet service providers are common in the business world. "Coke has a pretty commanding position in its business, your honor, and I assure you they have...many of these promotional and marketing agreements."
"Of course, they don't have a monopoly," Jackson shot back. That, Warden recognized, was the end of that. Bowing to the judge's "skepticism about my prior points," the experienced litigator quickly moved on. To nobody's surprise, Jackson later rejected Microsoft's motion to dismiss.
Welcome to John Warden's world. On Oct. 15, the 58-year-old trial lawyer is scheduled to begin defending Microsoft against a judge who is clearly hostile to his client's arguments. As daunting as Warden's challenge is, though, it's no bigger than the one facing his adversary, Justice's lead litigator, David Boies. Although Boies, 57, appears to have Jackson's sympathy, his arguments are likely to be less popular with a more important audience: Jackson's superiors, the jurists of the District of Columbia U.S. Court of Appeals. In June, the appeals court dealt a blow to Justice's case when it ruled in a related suit that judges should avoid second-guessing a company's software-design choices--a decision that appears to limit Jackson's ability to find wrongdoing by Microsoft.
The confrontation between the two veteran litigators should be quite a show. A renowned courtroom magician, Boies will need all of his skills to navigate around the seemingly forbidding appeals-court decision. But already, he has shown a willingness to boldly revise his original strategy. Soon after the May appeals-court decision, he repositioned the government's suit away from a narrow focus on Microsoft's alleged mistreatment of Netscape toward a broader attack on its alleged pattern of bullying competitors.
Warden, meanwhile, will focus on shredding the government's evidence. While Boies tries to weave together testimony from Microsoft rivals and damaging internal E-mails into a portrait of a dangerous corporate predator, Warden will attack the government witnesses' credibility and attempt to demonstrate that the E-mails have been taken out of context. He will also hammer home the point that Microsoft's decision to combine the browser into the operating system helped consumers--and therefore, by definition, would not be illegal.
Both men have impressive portfolios. Although Warden is not as widely known as Boies, he put Sullivan & Cromwell on the antitrust map when he helped reverse a huge jury verdict against client Eastman Kodak Co. The private suit had accused Kodak of illegally protecting its film monopoly by making new film that worked only with a new Instamatic camera, much as Microsoft is accused of tying its browser to the Windows operating system. After another firm botched the trial, Warden's appellate work led to a 1979 circuit court ruling that "any firm, even a monopolist, may generally bring its product to market whenever and however it chooses."
An unflappable advocate who is partial to Saville Row-like pinstripe suits and bowler hats, Warden was tapped to take over Microsoft's defense after Jackson's temper boiled over in dealing with the company's previous attorney, Sullivan & Cromwell's aggressive Richard J. Urowsky. Already, Warden has rebuilt Microsoft's credibility with Jackson by toning down its once-shrill attacks on the government and cooperating more fully with courtroom edicts. "One of his strengths is establishing chemistry with the judge," says Paul C. Jasinski, general counsel for British Airways in the U.S., who has tapped Warden to defend antitrust suits filed against the British carrier by Virgin Atlantic Airways and US Airways.
Away from the courtroom, Warden enjoys playing tennis and bridge. A board member of New York's American Ballet Theater, he's fond of thrillers but hates John Grisham novels. "I found his first book so ridiculous I never picked up another one," Warden laughs.
Like Warden, who is a casual friend, Boies has participated in some of the most important antitrust cases in recent history. The Sycamore (Ill.) native first rose to prominence when he helped IBM defeat the government in its epic suit against the company, which dealt with business practices similar to those in the Microsoft case. "This is a guy who knows every trick that a monopolist can play in litigation," says Alan K. McAdams, a Cornell University professor who was Justice's chief economist on the IBM suit, during which he was cross-examined by Boies.
Boies can be a cunning tactician. In 1985, he successfully defended CBS in a libel suit broUght by General William C. Westmoreland. George Vradenburg III, who hired Boies to defend CBS in that suit, recalls that the judge had imposed a 100-hour limit on each side's presentation. Every evening, he says, Boies would compliment Westmoreland's attorney on his cross-examination of the strongest witness for CBS. "Why? David wanted the other attorney to use up all his time with one of our least vulnerable witnesses," says Vradenburg, now general counsel for America Online Inc.
FREE AGENT. Frequently teased for his inexpensive Macy's suits and wearing his $35 Casio watch over his sleeve, Boies is, for a corporate attorney, something of a maverick. In 1997, when New York's prestigious Cravath, Swaine & Moore refused to let him represent the Yankees in an antitrust dispute because it had a long-term conflicting relationship with Time Warner Inc. (owner of the Atlanta Braves), he left and started his own litigation boutique, Boies & Schiller In Armonk, N.Y. For the Justice Dept., because "this is one of the most interesting pieces of litigation going on right now," Boies agreed to halve the usual $550-an-hour rate he charges corporate clients. He unwinds by four-wheeling in his jeep and gambling in Las Vegas.
Boies is admired for his photographic memory and his ability to cut through a morass of minutiae to present the big picture--an important skill in this case, which could easily bog down in technical jargon. In court arguments and briefs for the case, Boies has tried to tell a simple story: that Microsoft engaged in illegal acts to protect its monopoly in the Windows operating system. "The core issues that the courts have to decide are very simple," Boies says, adding that he can't afford to "get lost in some of the details."
But for all his cleverness in the courtroom, Boies will have a tough time proving that each of Microsoft's meetings with Netscape, Intel, Apple Computer, and other companies was conducted for illegal gain--especially with a 12-witness limit on each side. Warden has argued that such meetings between competitors are common practice in high tech and never harmed rivals. Says Chicago antitrust attorney Hillard M. Sterling: "Justice has a steep uphill climb in tying these anecdotes together into a coherent theme of anticompetitive behavior."
Although a last-minute settlement is always possible, both camps' public statements suggest that any middle ground will be hard to find. And that means David Boies and John Warden may be spending a lot of time together before Judge Jackson--perhaps continuing their tug-of-war all the way to the Supreme Court.