In a unanimous decision, the court said District Court Judge Thomas Penfield Jackson, who issued the breakup order, engaged in “serious judicial misconduct” by making derogatory statements about the company to the press.
“Although we find no evidence of actual bias, we hold that the actions of the trial judge seriously tainted the proceedings before the District Court and called into question the integrity of the judicial process,” the judges wrote.
The appeals court ruled to send the case back to the U.S. District Court, but under another judge, who will review the penalty.
The court did reverse part of Jackson’s decision, which said Microsoft’s packaging of its Internet Explorer Web browsing software with its Windows operating system violated antitrust law.
But left standing was the ruling that Microsoft holds a monopoly in personal computer operating systems.
In his ruling last June, Jackson said Microsoft — the world’s largest software company — violated the Sherman Antitrust act and ordered it split in two.
Microsoft spokesman Jim Cullinan applauded the decision, saying it “removes the break-up cloud from the company” and “significantly narrows this case.”
Attorney General John Ashcroft called the decision “a significant victory” for those prosecuting Microsoft.
The Justice Department and 17 of the 19 states that sued Microsoft for antitrust violations had recommended the software giant be split up to allow for more market competition.
Ashcroft said today he would be open to settlement talks with the software giant. Other possible legal avenues include appealing the decision to the Supreme Court or seeking penalties from the case’s new judge.