MICROSOFT TO ENTER CLOSED-DOOR MEETING IN MEDIATION PROCESS.

Byline: James V. Grimaldi The Seattle Times

A meeting between Microsoft and government attorneys has been set for Tuesday in Chicago with a mediator who might provide the software corporation its best shot at resolving the landmark antitrust lawsuit.

Richard Posner, chief judge of the 7th U.S. Circuit Court of Appeals, has called lawyers for the Justice Department, 19 states and Microsoft to meet for the first time since the Microsoft trial judge sought his help to mediate a settlement, a source said.

U.S. District Judge Thomas Penfield Jackson, having ruled that Microsoft has abused its monopoly power, is poised to rule in early spring that the software giant broke federal antitrust law.

After delivering a devastating defeat to Microsoft, Jackson then asked Posner, a noted conservative antitrust scholar whose philosophy dovetails with Microsoft's views on antitrust law, to help resolve seemingly unbridgeable differences between the two sides.

Next week's closed-door meeting is likely to be shrouded in secrecy. Spokesmen for both sides declined to comment publicly on the settlement schedule.

Microsoft spokesman Mark Murray would say only, ``We're very eager to see whether a mediated solution can be achieved that is fair to Microsoft, fair to consumers and fair to the future of the high-tech industry.''

Iowa Attorney General Tom Miller, one of 19 attorneys general suing Microsoft, had no comment about the negotiations. He has issued only a terse statement embracing mediation in concept.

``We welcome the judge's order,'' Miller said. ``We always have believed in the mediation process.''

The meeting will mark another unusual milestone in the case some said could determine the future of the computer industry. Never before has a federal district judge turned to an appellate judge to mediate an antitrust lawsuit brought by the government.

The idea even struck Posner at first as unusual, and he questioned it when posed by Jackson, the trial judge told attorneys last week.

According to a transcript of the conference, Jackson had checked out the plan with Judge David Sentelle of the District of Columbia appeals court.

Sentelle thought it acceptable because Posner is not in the chain of review for Jackson's final judgment. After consideration, Posner agreed.

Then Jackson worked hard to convince the attorneys.

Microsoft attorney John Warden was enthusiastic at the mention of Posner, while Department of Justice attorney David Boies expressed reservations, and the states' representatives reserved judgment. After some prodding from the judge, the government agreed to the plan.

But public statements from both sides since the judge's ruling show they are still far apart.

For example, Microsoft Chairman Bill Gates has said he is open to settlement but that the company will stand firm regarding its ability to add whatever it wants to Windows.

That point could pose problems: The government argued, and the judge agreed, that Microsoft had tied its Internet browser to the Windows operating system to crush competitor Netscape.

The Department of Justice, when it filed its lawsuit, outlined remedies meant to neutralize market-destroying powers, such as tying, that come with the monopoly Microsoft possesses.