## Facts

- The United States and Microsoft entered a 1994 antitrust consent decree that, among other terms, barred Microsoft from conditioning licenses of its operating systems on licensing other distinct Microsoft products.
- Microsoft marketed and licensed the Windows 95 operating system to computer manufacturers (OEMs).
- Microsoft conditioned OEM licenses of Windows 95 on the OEMs also licensing Microsoft’s Internet Explorer (IE) browser.
- The United States contended this conditioning violated the consent decree’s anti-tying provision because IE was a distinct product from the operating system.
- The district court issued a preliminary injunction prohibiting Microsoft from requiring OEMs who licensed its operating system to license its browser as well.
- The district court also referred the government’s request for a permanent injunction and related decree-interpretation questions to a special master.
- Microsoft pursued (1) an interlocutory appeal from the preliminary injunction and (2) a petition for a writ of mandamus challenging the special master reference.

## Issues

1. Whether the district court violated Rule 65(a) and due process by entering a preliminary injunction without adequate notice and opportunity for Microsoft to be heard.
2. Whether the district court misconstrued the 1994 consent decree by treating the Windows 95–IE arrangement as prohibited conditioning of separate products rather than potentially permissible integration.
3. Whether the district court exceeded the limits of Federal Rule of Civil Procedure 53 by broadly referring decree-interpretation and permanent-injunction matters to a special master.

## Decision

- The court of appeals reversed the preliminary injunction.
- The court held the injunction was procedurally defective for lack of adequate notice and opportunity to be heard under Rule 65(a).
- The court also held the injunction rested on an erroneous, overly broad construction of the consent decree.
- The court granted mandamus and directed the district court to revoke or revise the special master reference to conform to Rule 53’s limits.

## Legal Principles

- Consent decrees are construed largely as contracts, with emphasis on the decree’s text and context rather than broader antitrust policy goals not expressed in the decree.
- A consent decree that prohibits “conditioning” an operating-system license on another product does not necessarily forbid Microsoft from incorporating new functionality into the operating system; the key question is whether the conduct is prohibited conditioning of distinct products under the decree’s terms.
- A preliminary injunction generally may not issue without notice and a meaningful opportunity to be heard, as required by Rule 65(a) and basic procedural fairness.
- Referrals to special masters under Rule 53 are limited; core judicial responsibilities such as interpreting and enforcing a consent decree ordinarily must remain with the Article III court absent adequate justification for a master’s role.

## Conclusion

The D.C. Circuit set aside interim relief against Microsoft because the district court issued a preliminary injunction without adequate Rule 65 notice and on an incorrect reading of the 1994 consent decree, and it restricted the use of a special master by granting mandamus to require the reference be revoked or narrowed under Rule 53.


United States v. Microsoft Corp., 147 F.3d 935 (D.C. Cir. 1998)