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Judge tells Microsoft, U.S. to hurry

She gives them 2 weeks to create own settlement

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WASHINGTON — A U.S. district judge ordered the lawyers for Microsoft and the government Friday to begin a new round of intensive settlement negotiations.

Should talks fail, Judge Colleen Kollar-Kotelly indicated that the company faced the prospect of a quick series of hearings next spring to enable her to fashion a tough and broad penalty.

"It's my view that if everybody is reasonable, a fair settlement should be reached," Kollar-Kotelly told the lawyers at a hearing Friday morning here lasting almost an hour. It was the first time she presided in court over a Microsoft hearing.

She instructed the parties to "engage in discussions seven days a week, 24 hours a day." Exerting pressure on both sides, she ordered them to simultaneously begin to prepare for hearings on the proper remedy.

The judge gave the parties two weeks to come up with a settlement on their own. If that failed, she said she would appoint a mediator to supervise negotiations until Nov. 2. She brushed aside repeated requests by Microsoft's lawyers to limit the scope of the remedy, pointedly noting that if the company did not like the way she was proceeding, they should simply negotiate a resolution to the case.

Rejecting a request by a Microsoft lawyer for more time to turn over company documents for the penalty phase of the case, she said 28 lawyers were officially listed in the case by the government and Microsoft, more than sufficient manpower to proceed on a settlement track while also preparing for hearings.

"It sounds to me like you've got more than enough resources," Kollar-Kotelly said, addressing the company's lawyers. "And if you don't wish to use all these resources, settle the case. You are always free to use your resources in other ways."

Methodically outlining a timetable from prepared notes, she instructed the government's lawyers to produce a proposed list of witnesses by Dec. 7, along with a list of proposed remedies. Microsoft lawyers were ordered to respond with its list of witnesses and remedies a week later. She set a tentative date of March 11 for beginning the penalty hearings.

Earlier this month, the government said it intended to seek similar penalties to those that were imposed in the case last year by Judge Thomas Penfield Jackson on an interim basis. Those remedies included limiting Microsoft's ability to prevent computer makers from modifying software packages and precluding onerous licensing agreements. Microsoft has said some of the interim remedies "are outside the scope of the issues in the case and evidence presented at trial."

In an order filed an hour after Friday's hearing, Kollar-Kotelly wrote that if the parties cannot resolve the case by Oct. 12, they must jointly submit the name of someone to act as a mediator. She also ordered the government and the company to report every 10 days to her about the progress of negotiations.

"The court cannot emphasize too strongly the importance of making these efforts to settle the case and resolve the parties' differences in this time of rapid national change," she wrote in her order.

"The claims by plaintiffs of anticompetitive conduct by Microsoft arose over six years ago, and these cases have been litigated in the trial and appellate court for over four years. As the Court of Appeals has noted, the relevant time frame for this dispute spans 'an eternity in the computer industry.' "

Shortly after the hearing, lawyers from the federal government, the states and the company met briefly and privately to begin resolving logistical questions about the talks.

Previous efforts to settle the case have failed, including an intensive round of mediation last year supervised by Richard A. Posner, a federal appeals judge and noted economics and law scholar.