On the eve of an appeals court appearance, the state of West Virginia unexpectedly dropped its bid to seek stronger penalties in the Microsoft antitrust case, privately settling with the company and leaving Massachusetts as the final holdout. Representatives from West Virginia and Massachusetts were to have met with Microsoft and the US Department of Justice (DOJ) on Wednesday, when they would have presented written arguments to the US Court of Appeals for the District of Columbia. Now, only Massachusetts will stand against Microsoft in the hearings, scheduled for November 4.
   "Massachusetts remains committed to this appeal and will see it through," a spokesperson for Massachusetts Attorney General Tom Reilly said late yesterday. West Virginia Attorney General Darrell McGaw agreed to drop his state's appeal of the wider Microsoft case as part of a separate settlement with the company in which the state will also drop other suits filed against Microsoft under state law. Brad Smith, a Microsoft general counsel, says the settlement is comparable to the agreements the company reached with California and Florida. In the West Virginia settlement, Microsoft will provide $18 million worth of vouchers toward hardware and software purchases; as much as half of that amount will go to the state's poorest schools, Smith noted. Microsoft will give the state an additional $1.7 million, $1 million of which is headed for West Virginia schools.
   Originally, 19 US states and the District of Columbia allied with the DOJ in its historic antitrust battle against Microsoft, but over time several states dropped out of the lawsuit. After Microsoft lost the case and settled with the DOJ, 9 states and the District of Columbia--the so-called nonsettling states--remained, and the group continued its legal battle in a series of hearings in early 2002, seeking stricter penalties. When these efforts failed, the remaining states--except West Virginia and Massachusetts--ultimately accepted the federal settlement or separate deals with the company. Now, only Massachusetts and a small number of industry groups that are largely backed by Microsoft competitors remain.