Microsoft Corporation issued its first formal reply to the antitrust lawsuit leveled against it by the U.S. Department of Justice on Tuesday when it filed papers with the U.S. District Court in Washington. In these papers, Microsoft denied every allegation against it and described the government's case as "completely groundless." Microsoft's response was directed at both the DOJ and the 20 states and District of Columbia, which filed a joint lawsuit against Microsoft back in May.

But the most stunning news today came with a countersuit that Microsoft brought against the attorneys general of those states: the company says that their lawsuits "unconstitutionally undermine" Microsoft's intellectual property under federal law. Microsoft says it will file a more complete position statement by August 10th.

In its filing Tuesday, Microsoft included a number of central points, all directed toward claims made against it in the lawsuits. The company claims to have made plans to integrate Web technologies into Windows "long before Netscape even existed." This integration, it says, was a key effort to remain competitive with IBM OS/2 Warp and Apple Macintosh. Microsoft claims that Internet Explorer has gained marketshare on its own merits, not because it exploited its operating system monopoly. It also denied claims made by Netscape officials that it offered to "divide the browser market" with Netscape.

"We are working hard to prepare our case in the short time frame provided by the Court, and we are confident that we will present a powerful and winning case," said William Neukom, Microsoft's senior staff lawyer. "As the recent Appeals Court decision shows, the facts will clearly prove that Microsoft's actions are completely legal and good for consumers."

Microsoft has posted the entire text of its formal response to the Web