Microsoft Corp. today appealed the preliminary injunction issued by U.S. District Judge Thomas Penfield Jackson last Thursday that bars the software giant from forcing OEMs to bundle the Internet Explorer browser with all machines they ship with Windows 95. Charging that the preliminary injunction overstepped the bounds of the case, Bill Neukom, Microsoft's senior vice president for law and corporate affairs, said the case should have ended once the judge denied the DOJ's request that Microsoft be found in contempt of the 1995 consent decree. Since that request was denied, Neukom said that the injunction is "in error." Neukom and Brad Chase, Microsoft's vice president of Internet marketing and developer relations, discussed Microsoft's appeal during a conference call yesterday afternoon. While seeking an appeals hearing, Microsoft will comply with Judge Jackson's injunction by offering PC makers three options: They can ship the same version of Windows 95 they have been shipping all along with IE integrated if they choose; they can remove from Windows 95 all the files that are included in the retail version of IE 3.0; or they have the option of installing the original retail version of Windows 95, released in August 1995, that did not include IE in the OS. However, these so-called "dumbed-down" versions of Windows 95 will not allow signups to the Microsoft Network or "basic browser functionality." The price for these versions will be same as the OEM version that includes IE 4.0. "By having to comply with the Judge's order, we are left with an OS that does not boot," said Chase. "So we are making changes and providing alternatives that should be workable." The key in going forward, according to Microsoft officials, is that the Redmond, Wash., company is not prevented from creating an integrated product such as OSR (OEM Service Release) 2.5 - the new version of Windows 95 that includes IE 4.0 and is being released to OEMs this week. However, to comply with the injunction, Microsoft must offer OEMs alternatives they can license. Chase said Microsoft is going "full-steam ahead with Windows 98" but added that the company will cross any bridges with regards to that OS when it comes to them. "We are not prevented from building Windows 98, but as far as options for licensing or how the ruling will impact that, we have not had a chance to examine those issues yet," Chase added. The reason that the preliminary injunction is "in error," according to Neukom, is that it is not clear and unambiguous that Microsoft violated the consent decree. As a result, the Judge did not hold Microsoft in contempt in this "contract" case, he said. During the conference call today, Neukom and Chase reiterated Microsoft's case, saying IE is a core component of the OS and that the longer term impact of this case is troubling since it calls into question the integration of features and products by any software developer. Today's moves by Microsoft are the latest in the battle that started in October when the DOJ filed suit, charging the software developer with violating its 1995 consent decree. Although Judge Jackson issued the preliminary injunction, he denied the DOJ's request that Microsoft's Non-Disclosure Agreements be removed from OEM licensing agreements. Also for now, the Judge denied the government's request that Microsoft be fined $1 million per day for violating the consent decree.