Posted: 9:00 p.m., EDT, 6/8/98
U.S. hits Intel with antitrust charges
By Alexander Wolfe
WASHINGTON — Confiming long-standing reports of a pending antitrust suit, the U.S. Federal Trade Commission on Monday charged Intel Corp. with using "its monopoly power to cement its dominance over the microprocessor market."
Specifically, the FTC cited Intel for illegally withholding technical information from three companies: Digital Equipment Corp., Intergraph Corp. and Compaq Computer Corp. The FTC said Intel (Santa Clara, Calif.) sought to punish the three for refusing to license key patents on favorable terms.
Of the three vendors, Intergraph Corp. has engaged in the most recent legal battle with Intel. The two began tussling last fall, when Intergraph sued in U.S. District Court in Alabama charging Intel with "anti-competitive practices." These included allegations that Intel sought to obtain rights to a series of Intergraph cache-management patents through "coercive tactics," according to the complaint.
In April, Intel suffered a serious setback when an appeals court ruled that Intel must provide technical information and sell microprocessors to Intergraph while the case wends its way through the courts.
Reached today, Intergraph chairman and chief executive officer Jim Meadlock said that the access to technical data has enable his company to put its product-development efforts back into gear, but it would be September before "we really can be on the front end of new [microprocessor] releases."
"Intel is beginning to cooperate," Meadlock said. "We've gone from having no information and no advance product [samples] to getting advance information. We're a whole lot better off than we were."
As fallout from the legal fracas, Intergraph had to pull back from aggressive growth targets. "For more than a 12-month period, we've been hurt a lot," Meadlock said. "Certainly we've scaled back our expectations somewhat for this year, based on the problems we have. But hopefully, we'll be able to begin to regain momentum in the third quarter, though you can never replace what was taken away in terms of momentum in the market."
Asked if Intergraph is getting all of the advanced information it needs regarding Intel's upcoming 32-bit Katmai and 64-bit Merced microprocessors, Meadlock said: "I'm not sure we really know. You have to know the right questions to ask. We're getting information; it's all funneled through one sales guy."
Digital differences
Digital's donnybrook with Intel flared up in May, 1997, when Digital charged Intel with infringing 10 patents related to its microprocessors. The Digital patents centered on branch-prediction, cache management and superscalar instruction-execution technology.
At the time, some industry analysts believed that Digital chief executive Robert Palmer was making a bold play to secure patent-licensing revenues from Intel.
The case was settled last fall under a deal which wiped the legal slate clean and gave Intel control of Digital's semiconductor operations for some $625 million. Intel officially took over Digital Semiconductor, which designs and makes the Alpha CPU, in May 1998.
Moving forward
The FTC's antitrust case against Intel will be heard and decided by a U.S. administrative law judge. The FTC wants the court to order Intel not to repeat its alleged misconduct. The agency said in a statement that it would allow Intel to be free to change customer's access to products and technology, but only "when it has legitimate business reasons, rather than to coerce licensing or sale of property."
Intel had not returned calls seeking comment by press time.
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