FTC Will Go After Intel

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June 08, 1998 (1:08 PM EDT)

By Mary Mosquera,

The Federal Trade Commission slapped Intel with an antitrust lawsuit Monday, saying it has used its monopoly power against selected PC makers to retaliate for taking the chip maker to court over patent infringement.

"Intel cut off competition and repeatedly used its monopoly power as a club," said William Baer, director of the FTC's bureau of competition.

The decision of the five-member commission starts the proceedings. Allegations will be ruled upon after a formal hearing, Baer said.

Intel (company profile) terminated relationships with three customers -- Compaq, Digital, and Intergraph -- to strike back because they refused to license their patents to Intel. These customers have no alternatives for microprocessors if Intel cuts off access to its technical information, Baer said.

"If firms cannot protect their patented innovations from Intel, they won't want to innovate at all," he said. "The FTC's action is to protect Intel from unlawfully protecting its monopoly."

The trustbusters have been investigating Intel's use of its monopoly power in microprocessors, concentrating on its relationships with customers and rivals -- especially its practice of holding back necessary information from licensees involved in litigation against Intel.

Intel is supposed to provide a stream of information to show how customers' computers work with Intel's motherboard, Baer said. Intel benefits from sharing this information with PC makers.

Intel has done a good job of producing more, better, and cheaper products, Baer said. "But it is illegal to lock others out of the market," he added.

"This is not an attack on Intel's success, which we applaud," Baer said. "It is not an attack on Intel's right to protect its intellectual property rights."

Intel could have gone to court to protect what it considers its intellectual property rights against its customers, the FTC official said. Instead, Intel used "extra judicial self-help" to secure its monopoly power.

The FTC has examined closely Intel's refusal to give technical data to Intergraph, a workstation maker in Huntsville, Ala., and Digital, based in Maynard, Mass. Both computer companies filed patent infringement suits against the chip giant.

Intel does not dispute its practice of withholding information from its customers. It said a company has rights to its intellectual property.