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MICROSOFT talks settlement with Justice Department, state officials

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WASHINGTON (AP) _ Although their meeting was only for introductions and to set up future sessions, Microsoft and a new crop of Justice Department officials are off on another round of settlement talks.

Almost a month after a federal appeals court set aside a court-ordered breakup of the software maker, Microsoft's lawyers sat down in Washington on Monday with new Justice antitrust chief Charles James and others, according to a spokeswoman for Attorney General Eliot Spitzer of New York.

Spitzer's state is one of the 18 suing Microsoft for anticompetitive practices. The attorney generals of Iowa and Connecticut _ Tom Miller and Richard Blumenthal, respectively _ also attended the meeting.

Spokeswoman Juanita Scarlett would not provide details about the meeting and the participants refused to discuss it. Over the course of the four-year case, the two sides have held extensive negotiations over a possible settlement _ each time falling short of a deal.

The meeting came just days after both sides made overtures.

The Bush administration on Friday named a new lead trial attorney, Philip Beck, bringing a fresh face to a legal battle that at times has turned acrimonious.

Microsoft recently announced changes to its Windows operating system to answer some of the legal concerns in the case. The company also settled with one of the states that originally filed the antitrust charges.

All that activity was spurred by a U.S. Court of Appeals ruling in June that concluded that Microsoft had operated as an illegal monopoly that harmed consumers, but nonetheless reversed a judge's order to break the company into two parts.

The appellate judges sent the case back to a different lower court judge to decide a new penalty.

The fact that the parties are talking does not mean that a settlement is certain or even likely. Even with the help of a court-appointed mediator, Microsoft and its pursuers failed to settle the case before the lower court ruled last year.

Though President Bush has voiced concerns about the antitrust case and its potential effect on computer innovation, his administration has moved vigorously to pursue it.

The Justice Department last week asked the appeals court to speed up the process. Microsoft opposed that bid and called for the court to reconsider a key finding that was not favorable to the company.

Legal experts said Microsoft's movements so far have been designed to buy time so that its new operating system, Windows XP, will hit stores in October. Several of the 18 state attorneys general suing Microsoft have said they fear that new features bundled into Windows XP represent more of the same noncompetitive practices that sparked the current antitrust case.

Windows XP is integral to the company's Internet plans. Those include its controversial .NET strategy, which would give consumers access to Microsoft programs and documents through the Internet.
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