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On February 3, 2003, the Fourth Circuit Court of Appeals granted a stay pending appeal of a preliminary injunction order entered by the District Court in Baltimore that required Microsoft to distribute Sun's Java runtime environment (JRE) with Windows XP and to halt "separate" distribution of Microsoft's virtual machine for Java (MSJVM). The Court of Appeals decision came as Microsoft was taking the first of many steps to comply with the preliminary injunction order.

Microsoft is pleased that the Fourth Circuit has stayed the preliminary injunction order pending appeal and has agreed to hear our appeal on an expedited basis. Although we have worked diligently over the past several weeks to comply with the preliminary injunction order, we will not begin distributing Sun's JRE in Windows XP until the Court of Appeals has decided our appeal. If we prevail on appeal, Microsoft does not intend to provide Sun with free distribution of Sun's JRE.
Even if the preliminary injunction order is vacated by the Court of Appeals, Microsoft will continue the process of phasing out the MSJVM as contemplated by our January 23, 2001 Settlement Agreement with Sun. Under the terms of that Settlement Agreement, Microsoft may no longer make any modifications to the MSJVM after January 2004, even modifications that are necessary to repair critical customer defects or critical security vulnerabilities. Given the imminence of that deadline, Microsoft has decided not include the MSJVM in any new products. Microsoft is also distributing via Windows Update a revised version of the Windows XP Service Pack 1 Upgrade that no longer contains the MSJVM. Between now and January 2004, Microsoft intends to provide existing users of the MSJVM with necessary fixes to the extent we are legally permitted to do so. Although we believe that we have a right to make such fixes, we cannot guarantee that Sun will not succeed in its ongoing efforts to prevent Microsoft from providing support to users of the MSJVM.
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