GOVERNMENT

SEATTLE, WA -- Microsoft Corp. (NasdaqNM:MSFT) announced Thursday that it was pleased with a U.S. appeals court's reversal of a proposed breakup of the software giant, saying the ruling would give it good standing in any retrial. However, the software giant, which was sued by the U.S. Justice Department as well as 19 states for allegedly using its Windows operating system monopoly illegally, also indicated it was ready to approach the bargaining table for a settlement. ``Today's ruling drastically narrows the case and removes the breakup cloud from the company,'' Microsoft spokesman Jim Cullinan said. ``We will continue to work to resolve the remaining issues without the need for continued litigation, which benefits no one,'' Cullinan said. In a ruling that reversed parts of the lower court's decision but upheld other parts, the U.S. Appeals Court, District of Columbia, overturned an order to break the company in two but left intact its finding that Microsoft illegally maintained its Windows monopoly. The seven-judge appeals panel agreed that Microsoft possesses a monopoly in personal computer operating systems and that some of its business practices amounted to illegal use of that monopoly. The court also ordered that a new lower court judge examine whether Microsoft illegally tied its Internet browser to Windows to maintain that monopoly, a question that could have implications for future versions of the software that bundle in other features. But it overturned a ruling by the lower court judge, Thomas Penfield Jackson, that Microsoft had tried to monopolize the Web browser market. Microsoft stated that the bulk of the appeals ruling was positive and supported its argument that it has the right to keep adding features to Windows. ``The central issue in the case has always been the ability of every company to innovate and improve its products, and we are very pleased that today's ruling reverses the district court on this issue,'' Cullinan said. That ``provides a very positive framework if these issues have to be retried,'' Cullinan said.