Chips: Intel Responds to FTC Administrative Complaint

Edge: Work-Group Computing Report, June 15, 1998

Intel Corporation said Monday that it believes the Federal Trade Commission's administrative complaint before an FTC Administrative Law Judge is based upon a mistaken interpretation of the law and the facts.

"For years Intel has shared its intellectual property and early samples of its products with a number of key customers. These customers work with Intel to develop products for the market on a mutually beneficial basis. We believe the ultimate beneficiaries of this approach have been consumers because they get the latest technology and best products as soon as possible. At the same time, for more than 10 years, Intel has taken unprecedented steps to ensure that all of our activities and policies are in full compliance with existing law," said F. Thomas Dunlap, Intel vice president and general counsel. "The Commission's decision Monday signals that they want to change the very laws upon which we've based our policies."

Monday's decision stems from the intellectual property lawsuits filed against Intel by Digital Equipment Corporation in May 1997, Intergraph in November 1997 and Compaq in 1995. Those disputes prompted Intel to stop disclosing its intellectual property, in the form of confidential product information, to those companies. By its administrative complaint, the Commission apparently questions whether Intel has the legal right to assert its intellectual property rights as a defense to an attack on its core microprocessor business.

Intel contends that Monday's decision by the FTC to file an administrative complaint is also an attempt to assert a new legal theory under antitrust law. Although the key legal requirement of an antitrust claim is harm to competition, the FTC is unable to show harm to competition in any market. Under the FTC's theory, a company with high market segment share like Intel cannot use its intellectual property rights even against a company that threatens its core business, and even when there is no harm to competition.

"Intel intends to work through the administrative complaint process and if necessary appeal to a federal court. We believe that ultimately that process will conclude that our actions are lawful," Dunlap said.

Intel, the world's largest chip maker, is also a leading manufacturer of computer, networking and communications products. Additional information about Intel is available at www.intel.com.