FW: Digital: (NYT) May File Antitrust Suit Against Intel

Robert S. Thau (rst@ai.mit.edu)
Mon, 2 Jun 1997 17:01:32 -0400 (EDT)

Joe Barrera writes:
> Told you...
> http://www.nytimes.com/library/cyber/week/060297intel.html

Short summary: I guess you were right to suggest that they might
*try* antitrust, but I still don't see, having read the article, how
their case has a ghost of a chance. But then again, I'm not a lawyer.

Longer argument: The article is worth a read, but my conclusion from
it is that Digital is throwing everything they can think of at Intel
in the hopes that something will stick (which is often, though not
always, a sign of weakness in a legal case). One revealing quote:

Antitrust lawyers who reviewed the letter said that Digital
appeared to be arguing that Intel chips are an "essential
facility" to the computer industry, much like a single concert
hall in a large city is essential to the entertainment industry
because there are no alternatives in that market.

The first significant bit is the "appeared to be arguing" phrase; it
seems to imply that the experienced antitrust pracitioners consulted
by the Times (one who is quoted by name was a former head of the
antitrust department at DOJ), given the text of Digital's letter,
weren't entirely sure what legal principles Digital's lawyers were
*trying* to invoke.

Moreover, if they really do need to argue this "essential facility"
doctrine, and if the meaning of the word "essential" as a legal term
of art has anything at all to do with its meaning in colloquial
English (not a given, to be sure), then I'm not sure I see Digital's
point. It's hard to argue that access to Intel processors is
"essential" to making computers, or even PC-compatible computers (if
the courts will agree to define "the market" that narrowly), when
Digital *itself* had already announced (before the patent suit) plans
to build PC-compatibles without Intel processors (using the AMD K6).
See http://www.news.com/News/Item/0,4,10030,00.html for details.

Further, the Times article notes that even if Intel declines to sell
directly to DEC, they could probably still get Intel chips through
resellers, which many PC-compatible manufacturers do already.

Moving along,

[DEC attorney] Siekman also wrote that Intel, as a
"monopolist," had no right to alter its relationship with
Digital by demanding the return of confidential documents
without "a legitimate business justification."

But the experts don't think much of that argument either:

... [former DOJ antitrust head Charles] Rule said that
Digital's initial lawsuit and its allegations that Intel
willfully stole Digital technology could be reason enough to
alter the relationship. "The justification is, 'We don't
particularly like dealing with a company that is suing us,' "
he said.

That last argument ought to sound familiar.

(BTW, if Digital is really right to argue that Intel, by virtue of its
position in the industry, is effectively obliged to share its product
plans with everybody, well, hey, where's my copy?)

Finally, two points in regard of this:

> I wonder how much spare manufacturing capacity DEC has? If not much,
> then not being able to buy Intel chips is going to be pretty limiting...

Second, and more pedantically, it's the manufacturing capacity at
Intel-compatible chip-makers which would put the squeeze on, if
anything does. So I don't see how DEC's manufacturing capacity is at
issue, unless and until they start fabbing their own Intel-compatible
processors. (This is, I suppose, a possibility; they could license the
K6 or Cyrix 6x86 chip masks).

I don't mean to suggest that Intel is pure as the driven snow here.
However, if Intel's truly nasty legal battles with AMD never drew
serious attention from the DOJ (and I seem to recall that they
didn't), I have a hard time seeing how anything Intel does in
*response* to Digital's lawsuit would, particularly in light of
Digital's own highly aggressive legal tactics. (It is, I understand,
fairly rare for patent infringement cases to be filed without any
attempt at resolving the matter ahead of thime through negotiation).