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Subject: <nettime> Intel and the Essential Facilities Doctrine From: James Love <love@cptech.org> Date: 15 Apr 1998 05:55:28 +0200 * * * * * Sender: owner-nettime-l@basis.Desk.nl Precedence: bulk ------------------------------------------------------------ Info-Policy-Notes | News from Consumer Project on Technology ------------------------------------------------------------ April 14 - Federal Judge says Intel CPU Platform is Essential Facility James Love <love@cptech.org> http://www.cptech.org 202.387.8030 The April 10, 1998 decision in Intergraph Corporation vs. Intel Corporation is an extremely important case. A federal judge has now ruled that Intel's CPU platform is an "essential facility," and the judge has identified specific remedies which address the Intel's abuse of its dominant position. Intel was accused by Intergraph of withholding technical data about Intel CPUs, including next generation CPUs not yet on the market. Intergraph claimed that Intel was withholding information from Intergraph in order to force Intergraph provide Intel with free licenses to Intergraph patents and other intellectual property, and that Intel was leveraging its dominant position in the CPU market gain market share in the sub market for graphics subsystems. U.S. District Court Judge Edwin L. Nelson's opinion refers to increasing returns, "lock-in," "monopoly leveraging," "coercive reciprocity," "unconscionable" termination of access to technical data needed to develop interoperable products, and a range of other items. The most important and central theme of the opinion is that Intel's CPUs are an "Essential Facility" and that manufactures of personal computers, software or graphics chips must have access to technical data about the CPUs in order to develop interoperable products. The Essential Facilities doctrine is controversial. The Department of Justice antitrust chief Joel Klein has been criticized for DOJ's failure to bring an essential facilities case against Microsoft. Many programers believe an essential facilities case is needed, and that DOJ should seek timely and non-discriminatory disclosure of Microsoft "Applications Programing Interfaces" to unaffiliated developers, and related "interoperability" remedies, in order to make the Windows Platform more open, and less of a weapon against rival software companies. Judge Nelson's decision in the Intergraph v. Intel case is evidence that such a case can be litigated and won. The following is an outline of the opinion: United States District Court, Northern District of Alabama, Northeastern Division Intergraph Corporation, Plaintiff(s),vs.Intel Corporation, Defendant(s) (CV-97-N-3023-NE). Outline of Memorandum of Opinion and Preliminary Injunction http://www.intergraph.com/intel/highlights.stm I. Background. II. Findings of Facts. A. Intel's Position in the Microprocessor Market. B. Intergraph and the Workstation Market. C. The Relationship Between Intergraph and Intel. D. Intel's Conduct with Respect to Intergraph. 1. Intel's Product Distribution System. 2. Intel, Intergraph and Essential Facilities. 3. The Graphics Subsystem Market. 4. Intel's Use of NDAs to Coerce Intergraph. 5. Intel's Conduct to Restrain Competition in the Graphics Subsystem and Workstation Markets. 6. Intel's Conduct Toward Intergraph Since the Hearing. III. Monopoly Power and the Relevant Market. IV. Harm to Intergraph and Hardship to Intel if the Injunction is Granted. V. Conclusions of Law. A. Section II of the Sherman Anti-Trust Act. 1. Intel Monopoly Power. a. The Relevant Market b. Intel's Extraordinary Market Share c. Intergraph is Technologically and Economically "Locked-In" to Intel's Microprocessor and Technical Information. d. Customer Loyalty to Intel Enhances it Monopoly Power. e. Intel's Large Installed Base And Network of Customers Further Enhances Its Market Power. 2. Intel has Willfully Acquired and Maintained Its Monopoly Power. B. Intel's Unlawful Refusal to Deal and Denial of Access to Essential Facilities. C. Intel's Unlawful Monopoly Leveraging. D. Intel's Unlawful Coercive Reciprocity. E. Intel's Use of Patented Technology to Restrain Trade. F. Intel's Retaliatory Enforcement of the NDAs. G. Intel's Agreements are Unlawful Restraints of Trade in Violation of Section 1 of the Sherman Act. H. Necessity of Preliminary Relief to Prevent Threatened Anti-Trust Harm. I. Public Interest in the Anti-Trust Laws. J. Specific Performance of Intel's Commitments. K. Relief from the Unconscionable Nature of NDAs. 1. The NDA's Were Unconscionable At The Time They Were Made. 2. Termination of the NDAs Would Be Unconscionable. 3. Intergraph is Entitled to "Reasonable Notification" of Termination. VI. The Propriety of Injunctive Relief Against Intel A. The Court's Inherent Power to Order Injunctive Relief. B. Standard for Granting Injunctive Relief. C. Substantial Likelihood of Success on the Merits. D. Threat Of Irreparable Harm. E. Balancing the Harms. F. The Public Interest. G. Administrative Burdens Associated with Administering Injunctive Relief. VII. Preliminary Injunction. I could not find an Intel press release about the decision. The Intergraph press release about the case is on the Web at: http://www.intergraph.com/press98/aprilorder.stm People interested in the Essential Facilities Doctrine in the context of the computer industry might also see the American Committee on Interoperable Systems "COMMENTS ON DRAFT ANTITRUST GUIDELINES FOR THE LICENSING AND ACQUISITION OF INTELLECTUAL PROPERTY," at http://www.sun.com/ACIS/Antitrust.html, or listen to Morgan Chu's presentation about the Essential Facilities Doctrine presented at the Appraising Microsoft Conference. http://www.appraising-microsoft.org/day1rm.html James Love love@cptech.org http://www.cptech.org 202.387.8030 ------------------------------------------------------------------ INFORMATION POLICY NOTES is a newsletter sponsored by the Consumer Project on Technology (http://www.cptech.org, 202.387.8030, fax 202.234.5127). Archives of Info-Policy-Notes are available from http://www.essential.org/listproc/info-policy-notes/ Subscription requests to "listproc@cptech.org" with the message "subscribe info-policy-notes Jane Doe" ------------------------------------------------------------------ --- # distributed via nettime-l : no commercial use without permission # <nettime> is a closed moderated mailinglist for net criticism, # collaborative text filtering and cultural politics of the nets # more info: majordomo@desk.nl and "info nettime-l" in the msg body # URL: http://www.desk.nl/~nettime/ contact: nettime-owner@desk.nl