A federal appeals court on Friday rejected Microsoft's request to delay the company's four-year antitrust case, clearing the way for the case to be sent back to a new judge who will decide what penalty the software giant should face for antitrust violations.
The Supreme Court may still decide whether to hear Microsoft's appeal, but a decision is not expected before October.
Last week, Microsoft asked the appeals court that currently has the case to hold off any action until the Supreme Court decides whether to take the case. It also said that if the appeals court didn't put the case in hold, it would put the public's faith in the judicial system in jeopardy.
The U.S. Court of Appeals for the District of Columbia unanimously disagreed.
"Microsoft has failed to demonstrate any substantial harm that would result from the reactivation of proceedings in the district court," the appeals court ruled.
"It appears that Microsoft has misconstrued our opinion, particularly with respect to what would have been required to justify vacating the district court's findings of fact and conclusions of law," the court wrote.
The court ruled that the case should be returned to a lower court in seven days, where a new judge will be picked at random. The judge will decide how Microsoft should be penalized for its anticompetitive practices.
The penalty, which is likely to come after a hearing process, could require simple changes in Microsoft conduct or a breakup of the Redmond, Wash., firm. U.S. District Court judge Thomas Penfield Jackson ordered the company be split in two, but that portion of his ruling was overturned by the appeals court in June.
The appeals court's decision was widely predicted by legal scholars, several of whom think that Microsoft is playing for time in order to protect Windows XP's release.
"It's pretty clear that they saw this as nothing more than a Microsoft delaying tactic," said University of Baltimore law professor Bob Lande, "and they weren't going to let Microsoft get away with it."
"We are pleased with the court's decision and look forward to proceedings in the District Court," a Justice Department spokeswoman said shortly after the ruling was announced.
The Justice Department had asked the appeals court to not delay in pursuing penalties against Microsoft, adding that dragging the case out would disrupt the computer market.
--Reuters and the Associated Press contributed to this report.