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July 25, 1997updated 05 Sep 2016 12:51pm

DEC-INTEL CASE HEATS UP WITH MONOPOLY ALLEGATIONS

By CBR Staff Writer

By John Rogers

The legal skirmish between Digital Equipment Corp and Intel Corp has heated up again with DEC now raising anti-trust issues in court. In a filing with a federal court in San Jose, DEC accused Intel of using monopoly power in demanding the return of technical documents.

The latest development in the two-month-old case is significant in that it is the first time such accusations have actually been brought up in court after much public mudslinging. DEC’s filing came in response to a suit initiated by Intel in May alleging breach of contract and seeking the return of information on Intel’s next-generation chips.

The Intel suit was itself a response to DEC’s patent infringement suit against the chipmaker. Although DEC on Monday agreed to return some of the documents, it claims that others are essential to its business and that Intel is acting in bad faith and in violation of antitrust law by demanding their return.

Intel says that DEC’s filing is basically just posturing and in keeping with its previous comments about the case. DEC has complained that Intel has a virtual stranglehold on the microprocessor industry with about 90% of the market share, and is seemingly attacking Intel on the grounds of something the legal community calls the essential facilities doctrine.

The doctrine maintains that any company which refuses to grant competitors access to a product or service essential to the firm’s business and necessary for effective competition may be in violation of antitrust laws and must make it available to competitors at a reasonable cost. This holds true even if the monopolist has done nothing illegal in creating or maintaining its monopoly.

The concept of essential facilities dates back to a 1912 Supreme Court case, The United States vs. Terminal Railway Association, in which a group of railroads owned the only railroad bridges crossing the Mississippi River and denied competing railroads access to them, effectively excluding them from the market. The Court found that the controllers of the bridges were in violation of The Sherman Antitrust Act and subsequently forced them to open the bridges to competition.

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Essential facilities has taken on a whole new relevance in the world of information technology, as companies like Intel and Microsoft Corp have been accused by some of effectively operating legal monopolies. It will be difficult to prove that Intel holds essential facilities though, says Richard Stoeuer of the New York law firm Kaye, Scholer, as Intel could point out that firms such as Advanced Micro Devices Inc and Cyrix Corp produce chips that compete with Intel products.

Stoeuer explains that essential facilities are said to exist only when a monopoly has something that cannot be duplicated. He reasons that by making its filing, DEC may be hoping to convince the judge to issue a preliminary injunction giving it access to Intel’s intellectual property until the case is settled either way.

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