Meadlock Makes His Case Against Intel : Intel engaged in a pattern of harrassment and withholding of key technical infromation to gain patent rights, Intergraph exec claims

Electronic News, March 8, 1999 by Hugh Willett

San Jose, Calif.-Regardless of the outcome of the FTC's antitrust case against Intel Corp., Intergraph Corp., CEO Jim Meadlock - who will testify in the FTC hearing scheduled this week - is certain his company will never recover from the damage he said it sustained as a victim of Intel's anti-competitive practices.

Once the leading supplier of Intel-powered workstations, Huntsville Ala.-based Intergraph suffered an irrecoverable loss of market share after Intel embarked on what Meadlock describes as campaign of harassment and deception orchestrated to gain access to patent rights that would give Intel a virtual monopoly on high end microprocessor and system design.

Even more egregious, according to Meadlock, is the fact that Intergraph was not a competitor but a major customer when Intel engaged in such practices as witholding information needed to fix bugs in Intel processors, denying tradeshow support and delaying the release of technical data needed to assure system level compatibility with third party chipsets.

"We were not only a major customer, we brought Intel into the high-end workstation business. We helped them take on SGI (Silicon Graphics Inc.) and Mips. We were Intel's best friend," he added.

The "friendship" that was going strong through the end of 1996 mysteriously turned sour by the middle of 1997 when the information sent to all Intel customers regarding Penitum bugs was allegedly witheld from Intergraph. Shortly thereafter, Intel approached Intergraph with a proposition: better service and support might be forthcoming if Intergraph were to turn over certain patent rights on high end MPU and system design to Intel, Meadlock said.

Intel's offer was nothing less than extortion, Meadlock claims. Intel offered no payment or cross-license in exchange for valuable patents that would allow it to continue monopolizing system design technology into the next century, he added.

"I told Intel's Pat Gelsinger that the proposition was illegal and unethical," Meadlock said. "All we wanted was to be treated the same as any other of Intel's valued customers."

Instead of equal treatment, Intergraph received treatment that got increasingly worse, including being dropped from Intel tradeshow participation, denial of access to the specifications on Intel's Accelerated Graphics Port, and ultimately, denial of the rights to purchase Intel's highest performance processors as well as denial of the support usually provided with their purchase.

"This kind of harassment went on for a year and a half before we ever filed suit against them," Meadlock said. "They were our major supplier, we knew it wouldn't help our relationship if we had to get into a legal battle over this."

Eventually, cut off from the kind of support it needed to be competitive, Intergraph filed suit against Intel. Upon filing three separate complaints against Intel charging patent infringement and other anti-competitive practices, Intergraph was asked to testify in the FTC case, Meadlock said.

Intel has steadfastly maintained that it changed its relationship with Intergraph only after the suits were filed against it. According to Meadlock, the moves were actually orchestrated by Intel behind the scenes well in advance of the public confrontation for the purposes of gaining patent rights.

"We believe that Intel learned about the strength of our patents sometime early in 1997, probably at a meeting held with IBM in which we can document the subject was discussed, and then decided to use their increasing leverage over Intergraph as a means of extorting our patent technology," he said.

At his point it is too late to make up for the lost market share caused by Intel's behavior, Meadlock said. Instead Intergraph will try to pick up damages representing the lost market share as part of the suits it is filing. The FTC case is important because it is based on Intel's use of similar anti-competitive practices allegedly used against Compaq and DEC. The case is also important to the supply of third party processors to a market that has been dominated by Intel's monopoly.

"If left uncontested, Intel has the power to kill AMD and Cyrix and leave the market with no competition. Intel's intent to pursue a continued technology monopoly based their intellectual property monopoly is evidenced by their actions in this case." n