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Intel, Intergraph in war of words

Intel and one of its chief antagonists, Intergraph, wasted little time in waging a public war of words over the FTC's case.

Intel and one of its chief antagonists, Intergraph, wasted little time in waging a public war of words over the government's decision to pursue legal action against the chip behemoth today.

Intel said the Federal Trade Commission is venturing into untested legal waters as regulators voted to press charges against the chipmaker for anticompetitive behavior.

"Intel contends that today's decision by the FTC to file an administrative complaint also is 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," said Thomas Dunlap, Intel vice president and general counsel.

The FTC filed an action against Intel this morning, See special coverage: Intel in legal vise alleging that the company has on at least three separate occasions used its dominance in microprocessors to influence computer makers and affect competition. The lever Intel controls, the FTC charges, is access to advanced microprocessor information; without it, PC manufacturers can't compete evenly with those that get it.

Intergraph said the FTC's action validates what the company has asserted in a separate breach-of-contract action.

In its suit, which is also central to the FTC's case, Intergraph has alleged that Intel stopped supplying the workstation vendor information on upcoming processors. Intergraph said this was the result of its refusal to give Intel and other workstation makers a free license to its proprietary chip technology. Intel's actions, among other effects, forced the company to delay certain workstations.

"As a company that has been harmed to the point of having to sue Intel, Intergraph certainly understands the circumstances which prompted the FTC to also file suit against Intel. It is reassuring that FTC investigators apparently believe our concerns reflect a broad threat to the computer industry," Intergraph said in a prepared statement.

"We expect to win our case, either through trial or settlement, regardless of the FTC's actions," the company added. "The federal court's 80-page preliminary injunction against Intel found that Intergraph has a 'substantial likelihood' of proving one or more of its claims, including an antitrust claim against Intel."

Intergraph was referring to a lengthy decision handed down in the Intergraph vs. Intel trial court in April, which forced Intel to continue to supply Intergraph with chips and information while the suit was pending. (See related story)

Compaq declined to comment, and Digital could not be reached. Intel is an investor in CNET: The Computer Network.

Legal observers are largely divided on the outcome of the case. Courts have been reluctant to force companies--even companies in monopoly situations--to license their intellectual property, sources have said. At the same time, there is nothing in the law that says that cannot be done.

Intel's Dunlap didn't dispute the factual underpinnings of the FTC's complaint. In fact, the Intel executive acknowledged that the company withdrew agreements to provide advance information to both Digital Equipment and Compaq Computer during disputes over patents, two of the events at the core of the FTC's case.

The difference, Dunlap added, is that Intel believes their actions in withdrawing information were legal.

"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," he said in a prepared statement.

Also, Dunlap seemed to indicate that the case could last quite a while, stating: "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."