But the 4th Circuit Court of Appeals in Richmond, Va., upheld a requirement that Microsoft cease distributing certain copies of its own Java virtual machine, saying that Microsoft "exceeded the scope" of a January 2001 license agreement with Sun. The three-judge panel said the agreement only gives Microsoft the right to include its own Java VM in Windows, not to offer it separately through computer makers or through Windows Update, which Microsoft stopped doing in February.
The panel devoted the bulk of its 28-page opinion to assailing other portions of an injunction imposed on Microsoft by a district court earlier this year. In explaining the need for the injunction, U.S. District Judge J. Frederick Motz concluded there was a "serious risk" that the market could tip away from Java and toward Microsoft's .Net.
"We conclude that the district court's findings are insufficient to support its conclusion that immediate irreparable harm will be sustained if the mandatory preliminary injunction is not entered, and accordingly, that injunction must be vacated," the panel said Thursday.
Both companies said they were "pleased" with the decision.
"We are extremely pleased with the appellate court's ruling today affirming the copyright infringement injunction," Lee Patch, Sun's vice president for legal affairs, said in a statement. "This decision confirms that Microsoft violated our prior settlement agreement, and that it did so in a way that continued to fragment the Java platform on PCs."
But Patch said he was "disappointed" that the appeals court rejected the must-carry requirement.
The case now returns to Motz for further proceedings and an eventual trial, unless the companies agree to a settlement.
In December, Motz concluded that Sun stood a good chance of winning its antitrust lawsuit against Microsoft and told both sides to craft a preliminary injunction, which he approved on Jan. 21.
In his 11-page order, Motz gave Sun what it requested when filing the lawsuit: an injunction ordering Microsoft immediately to stop distributing incompatible versions of Sun's Java interpreter and to begin shipping authorised versions with Windows and Internet Explorer in four months.
Microsoft immediately appealed Motz's decision to the 4th Circuit, calling it "extreme and unprecedented" and accusing Sun of violating a California law that prohibits unfair competition. On Feb. 4, a three-judge panel of the appeals court put Motz's injunction on hold until the panel could hear oral arguments--which took place on April 3--and reach its own decision.
Sun's case builds on a previous legal assault on its rival, which began in October 1997 and alleged that Microsoft violated its license agreement by distributing incompatible versions of Java and deceptively promoting those versions as compatible. The two companies settled in Jannuary 2001, with Microsoft agreeing to pay Sun US$20 million and inking a contract that governs how Microsoft could distribute Java.
The Java language lets programs run without alterations on a variety of computers. Because a Java program can run, for instance, on a mainframe from IBM, a Unix server from Sun and a Windows PC from Dell Computer, it represents a possible threat to Microsoft's dominant Windows OS.
In an internal e-mail message dated September 1996, Microsoft Chairman Bill Gates wrote that the Java platform "scares the hell out of me," because it's "still very unclear to me what our OS will offer to Java client applications code that will make them unique enough to preserve our market position."
