WASHINGTON (AP) - A federal appeals court unanimously reversed the breakup of Microsoft on Thursday, agreeing with the software maker that the trial judge engaged in ''serious judicial misconduct'' by making derogatory comments about the company.
The U.S. Court of Appeals for the District of Columbia upheld the conclusion that Microsoft violated antitrust laws but ordered that a new judge decide what penalty the company should face.
By a 7-0 vote, the appeals court concluded U.S. District Judge Thomas Penfield Jackson made inappropriate comments to the news media and outside court that gave the appearance he was biased against Microsoft.
The judge's actions ''would give a reasonable, informed observer cause to question his impartiality in ordering the company split in two,'' the appeals court said.
In a rare rebuke of a colleague, the appeals judges said Jackson ''engaged in impermissible ex parte contacts by holding secret interviews with members of the media and made numerous offensive comments about Microsoft officials in public statements outside of the courtroom, giving rise to an appearance of partiality,'' the court said.
''Although we find no evidence of actual bias, we hold that the actions of the trial judge seriously tainted the proceedings before the District Court and called into question the integrity of the judicial process,'' the court added.
Though winning a major victory, Microsoft officials in Redmond, Wash., were mum on the decision. Investors, however, reacted with glee.
Shares of Microsoft were down 89 cents to $70.25 before word of the ruling began leaking out. The shares surged $3.82 to $74.96 before they were halted in late morning trading on the Nasdaq.