Catherine S. Campbell, Esq.*

In a potentially pivotal antitrust decision, a federal district court recently ruled against a giant of the computer industry -- Intel Corp., the dominant maker of PC central processing units ("CPU") -- and in favor of a more minor player -- Intergraph Corp., a manufacturer of computer work- stations and computer software. In addition to numerous tort, contract, and patent infringement claims, Intergraph alleged that Intel had also violated the antitrust laws by abusing its monopoly position in the microprocessor market. Judge Edwin L. Nelson of the United States District Court in Birmingham, Ala. on April 10, 1998, agreed and issued a preliminary injunction against Intel based primarily on this single antitrust claim for monopolization. (Intergraph Corp. v. Intel Corp., 3 F.Supp. 1255, 1998-1 Trade Cas. (CCH) ¶ 72,126 (D. Ala. 1998). In further negative developments for Intel, this judicial finding caught the eye of the Federal Trade Commission which was already investigating the firm and has now brought an antitrust lawsuit against the firm and include Intergraph's allegations.

The crux of Intergraph's suit stems from Intel's retaliatory actions towards Intergraph for refusing to provide Intel with free patent licenses of valuable Intergraph computer technology. In response to Intergraph's refusal, in mid-1997, Intel terminated its contracts with Intergraph under which it provided the firm with the newest Intel product specifications as well as allocated to the firm a certain number of next generation products. The court found that to remain commercially viable Intergraph must have access to Intel's CPU product specifications and allocations in order to produce computer workstations that complement Intel's CPUs. In fact, by early 1998 Intergraph had lost business in this manner.

In a thorough 80-page opinion, the court found that Intergraph had a substantial likelihood of proving its monopolization claim, thus justifying the injunction. The court determined that Intel held monopoly power in the relevant market for high performance CPUs based on its 90% market share, as well as 100% of a relevant submarket for Intel CPUs, and abused this power by attempting "to coerce Intergraph into relinquishing its intellectual property rights as a condition of Intel permitting Intergraph to continue as a competitor in the high-end graphics workstation market." Furthermore, the antitrust laws do not permit monopolists to refuse to deal with customers when the monopolist controls an "essential facility." According to the court, Intel's product specifications and allotments constitute such an essential facility because "competitors cannot effectively compete in the relevant markets without access to them." Based on this and other violations of the antitrust laws, the court granted the preliminary injunction sought by Intergraph, requiring Intel to provide the product specifications and product allocations to Intergraph in the form and at the time they are provided to "similarly situated competitors."

Although Intel has indicated that it will comply with the ruling, this sudden cooperative stance may not save Intel from serious antitrust problems. If the court's ruling that Intel is a monopolist holds up at trial and on appeal, the firm may be deluged with antitrust suits from rivals and customers claiming Intel has used its monopoly position in an anticompetitive manner. If successful, these suits would subject Intel to treble damages, and could force a change in its

current business practice of excluding some customers and rivals from access to its technology specifications. Furthermore, the FTC's lawsuit against Intel is bolstered by the court's ruling and factual findings and will likely seek to require the firm to share information with all interested parties.

Intergraph has won the first round against Intel, but now must prove its case at trial to convert the preliminary injunction into the status quo, as well as withstand any appeal of the P.I. decision.

*Catherine S. Campbell received her Juris Doctorate from Georgetown University in 1989. She has her own antitrust consulting practice in New York and currently is involved in writing a book on antitrust and intellectual property issues affecting hi-tech industries.