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Intel-FTC witness list takes shape

Some of the top hardware executives and antitrust experts are being lined up to testify in the Federal Trade Commission's antitrust suit against Intel.

Some of the top hardware executives and antitrust experts are being lined up to testify in the Federal Trade Commission's antitrust suit against Intel, scheduled to start March 9.

Topping the list of high tech executives that may appear in the action are Advanced Micro Device's chief operating officer Atiq Raza, Intergraph chief executive Jim Meadlock, and two of his top lieutenants, sources familiar with the case say. Their testimony is expected to go to the heart of FTC allegations that Intel used its might in the market for microchips to bully companies into licensing their intellectual property in ways that benefited Intel.

Sources say the trial will also include two of the nation's leading economists. University of California professor Carl Shapiro will argue on Intel's behalf that the company does not posses monopoly power in any market, a key issue in the case.

Frederic M. Scherer, an economist at Harvard University's Kennedy School of Government, meanwhile, is expected to testify for the FTC that, in fact, Intel is a monopolist.

Intel has hired other big gun experts witnesses as well, including Harry Manbeck, a former commissioner at the Patent and Trademark Office and General Electric's general patent counsel for 20 years, and Roger Milgrim, a private attorney whose book Milgrim on Trade Secrets is considered the definitive resource on the topic. Alan J. Smith, a computer science professor from the University of California, will appear on Intel's behalf as well.

In a complaint filed in June, the FTC accused Intel of illegally wielding its alleged monopoly power in the microprocessor market to force computer makers Intergraph, Digital Equipment, and Compaq Computer to license their technology in ways that benefited Intel. The chip giant denies any wrongdoing.

Attorneys for both sides are scrambling to complete depositions of industry executives and expert witnesses expected to testify in the trial, which is scheduled to start on March 9 in administrative court in Washington, D.C. Attorneys are squaring off over last minute issues, such as what evidence may be presented at trial and the legal status of potential witnesses to be called.

Still in dispute is the testimony from AMD COO and chief executive heir apparent Raza, who is being subpoenaed by the FTC. An AMD spokesman declined to discuss the matter except to say that the company would comply with its legal obligations.

Also listed as a potential witness for the FTC are Intergraph's Meadlock; Wade Patterson, CEO of Intergraph Computer Company, a hardware subsidiary of Intergraph, and Steve Phillips, Intergraph's executive vice president and chief legal officer.

In a case that mirrors the FTC action, Intergraph is pressing a private lawsuit against Intel that alleges the chip giant illegally withheld crucial technical information from Intergraph after the workstation maker asserted intellectual property rights against Intel.

Legal eagles
In addition to top names in the chip industry, the case is attracting top flight legal talent as well. Richard Parker, the head of the FTC's legal team, is coming off of a victory last summer when the agency successfully blocked two mega-mergers involving four of the largest drug wholesalers in the U.S. The FTC had argued the mergers--involving Bergen Brunswig, Cardinal Health, McKesson, and AmeriSource Health--would result in two companies that controlled 80 percent of the market.

Intel's legal team comes from the company's long time outside firm Gibson Dunn & Crutcher, a firm known for expertise in both high technology and antitrust litigation. In 1993 the firm successfully defended American Airlines in a predatory conduct case against Continental and Northwest Airlines. In that case, the Gibson Dunn team went up against David Boies, the Justice Department's lead attorney in the Microsoft antitrust trial.

Dueling economists
In order for the government to prevail in the case, it must first show that Intel holds monopoly power. Because Intel's position in the chip market is a crucial factor in the case, the trial's star witnesses will be dueling economists.

Sources close to the case say Intel is pinning its hopes on Shapiro, a professor at UC Berkeley's Haas School of Business and former chief economist at the Justice Department's antitrust division. Shapiro, who is expected to argue that Intel is not a monopolist, is held in high esteem in government and industry circles alike.

Both FTC chairman Robert Pitofsky and former Intel CEO Andy Grove have heaped praise on Shapiro's recent book Information Rules, which argues that while technology changes, economic principles do not. During his 1995 stint at the Justice Department, Shapiro helped investigate Microsoft.

Squaring off against Shapiro, sources say, is Frederic M. Scherer, one of the most respected authorities on antitrust economics. The author of numerous books that focus on a field of economics known as industrial organization, Scherer is expected to argue that Intel holds monopoly power in the chip market.

Other names on a list of potential witnesses include:

  • Alan J. Smith, a professor of computer science at UC Berkeley, testifying for Intel.

  • Yale Patt, a University of Michigan computer scientist who will go up against Smith for the FTC.

  • G. Gervais Davis, a Monterey, California patent attorney.

    As both sides fine tune their cases, they must prepare themselves for the potential wild card that a federal appeals court may rule as early as this summer in the related antitrust and patent case brought by Intergraph. A lower court decision in that case held that Intel violated antitrust laws when it threatened to withhold key technical information if Intergraph did not agree to cross-license its intellectual property.

    Last April, the judge in that case said it was likely Intergraph would prevail in its lawsuit and ordered Intel to make key technical information available to Intergraph. That preliminary injunction is now on appeal with the U.S. Court of Appeals for the District of Columbia and may well to have a strong effect on the FTC/Intel case.