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Intel not out of the woods yet

Intel not out of the woods yet

Intergraph hasn't demonstrated a likelihood that Intel violated antitrust laws in its dealings with the workstation maker, a US Appeals Court said recently. As a result, Intel is entitled to limit the terms of its business relationship with Intergraph if it pleases, the court said.

The 41-page order overturns a preliminary injunction awarded to Intergraph by a lower court earlier this year.

Intergraph is suing Intel in an Alabama district court for allegedly infringing on microprocessor patents. Intergraph asked the district court to force Intel to continue treating Intergraph as it would any other chip customer for the duration of the case.

The lower court determined that Intergraph is likely to prove at trial that Intel is a monopoly and that it violated antitrust laws, and it granted Intergraph the preliminary injunction on that basis.

The appeals court vacated that order, saying the lower court had incorrectly applied the antitrust laws.

In particular, the appeals court questioned the lower court's finding that Intel holds a monopoly in any market relevant to the case. The only market in which the two firms compete today is the graphics chip market, where Intel probably does not have monopoly power, the appeals court said.

`Intel's market power in the microprocessor market is irrelevant to the issues of this case, all of which relate to the effect of Intel's actions on Intergraph's position in its own markets,' the appeals court said.

The appeals court also said the lower court was wrong to apply antitrust laws under the `essential facility' theory. Applying the essential facility theory depends on Intel and Intergraph competing in the same market, the appeals court said.

`Despite the district court's sensitive concern for Intergraph's well-being while it conducts its patent suit against Intel, there must be an adverse effect on competition in order to bring an antitrust remedy to bear,' the appeals court concluded.

`Intergraph has not shown a substantial likelihood of success in establishing that Intel violated the antitrust laws in its actions with respect to Intergraph,' the appeals court said.

Consent decree

Intel's treatment of Intergraph was a focus of the US Federal Trade Commission's antitrust case brought against the giant chip maker in the middle of last year. The case was settled in March of this year after Intel signed a consent decree in which it agreed to stop withholding product information from vendors with which it has disputes.

Because of that consent decree, Intergraph doesn't expect today's order to have a significant impact on its hardware business, or on the other parts of its case against Intel, the company said in a statement issued last week.

The case is currently scheduled to come to trial in June 2000. Intergraph has posted background information about the case, including links to filings, on its Web site at http://www.intergraph.com/intel.


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