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Intel-FTC deal leaves Intergraph to square – $$$ needed?

The FTC might be happy, but Intergraph wants massive damages. Solution - buy it?

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If Intel's settlement with the Federal Trading Commission stands, the chip giant still has one outstanding piece of business to deal with - Intergraph, and it could turn out to be a pricey business. Earlier today it was announced that Intel had struck a courtroom steps deal with the FTC, and provided that the terms (which are currently confidential) are approved, the company will have escaped from antitrust action by the US government. Intergraph's own antitrust action is still pending, so the next move will be for Intel to square the company. But how? The solution will lie somewhere between what the FTC wanted from Intel, and what Intergraph wants. The FTC's preferred remedy calls for "relief sufficient to foreclose the possibility that Intel might again attempt to maintain its monopoly power by using exclusionary practices to compel others to grant intellectual property licences." The FTC case, which has been described in the media ad nauseam as "narrow," was that Intel used its monopoly powers to leverage patents and favourable agreements out of its customers and partners, DEC, Compaq and Intergraph being the companies cited in the FTC complaint. Numerous other companies have however been cited as being in similar positions (e.g. Acer), so any Intel deal will have to cover companies generally, as well as just these three. The FTC says that relief "must enjoin Intel from discriminating against other companies in order to force those companies to license or sell property to Intel on Intel's terms. The order should cover the sale of products and the provision of information, prototypes and technical assistance concerning products in which Intel has a dominant position." Effectively the FTC is saying that Intel has to implement a non-discriminatory licensing policy, selling chips to all and sundry and giving everybody advance product information on level terms. No more trading IP for commercial advantage. This, incidentally, is something that Intel has freely admitted to doing, Intel's case being that it has the right to do so. As the terms of the deal remain confidential, we can't be sure how much it has given the FTC, but undoubtedly it will have had to agree to backing away from the current policy, which boils down to 'you scratch my back, I won't flay yours.' Intergraph is clearly going to be covered by the deal, and helped by it. But there are other matters outstanding which mean that the Intergraph suit doesn't automatically collapse with the FTC one. Intergraph says that it "suffered significant damage to its sales momentum and market reputation," and that can only be fixed by dollars. It also maintains that the patents which are a part of its dispute with Intel are valid, and that the Pentium, Pentium Pro and Pentium II infringe these patents, so that amounts to dollars too. And it says that "the potential size of these royalties [on the Pentia] is large, in that royalties are typically based on a percentage of the revenue of the products in which the patented technology is used." That's going to amount to tons of dollars. Having decided to head-off the FTC action before it could degenerate into a Microsoft-style circus, Intel's thoughts must now be turning to clearing the decks entirely by neutralising Intergraph. So do not be at all surprised if chipzilla elects to do this via the time-honoured mechanisms. Money will quite likely change hands, and Intel could find itself owning a rather useful designer of Intel-based workstations. Mind you, the price could still be pretty high, given that both IBM and HP have been rumoured as possible bidders for Alabama's finest. ®

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