Antitrust Round Two: Intel

On Feb. 23, the curtain goes up on the other big high-tech trial in Washington, D.C.--the Federal Trade Commission_s case against Intel Corp. Compared with the Microsoft Corp. trial, this dispute will seem less dramatic. On its face the case addresses concerns about Intel_s contracting policies; the real legal issue, however, is the degree to which antitrust law limits a tech company_s discretion in licensing its intellectual property. The speed with which new technology comes to market depends upon the industry_s ability to sidestep intellectual property conflicts using licensing and cross-licensing agreements; thus, any limits the FTC imposes on the right to negotiate and enter into these agreements could affect the industry significantly. Intellectual property (patents, copyrights and trademarks) is the only truly bankable product the high-tech industry produces. In many instances, its value can be realized only when it is combined through licenses and cross-licenses with intellectual property owned by others. Often thousands of technology patents, copyrights and trademarks held by hundreds of companies are licensed and cross-licensed to produce a single product. Given the thicket of intellectual property rights in this industry, even giants such as Intel, Microsoft and Compaq Computer Corp. cannot deploy new technologies without first licensing intellectual property. Intel, like many high-tech companies, regularly conditions the granting of a license to its technology on the licensee_s willingness to grant Intel a reciprocal cross-license to use the licensees technology. This has created a highly efficient, barter-based market that has helped clear away the potential infringement claims that might delay the deployment of new technology. The FTC became involved when one of the participants refused to barter. Workstation manufacturer Intergraph Corp. (Huntsville, Ala.), which had acquired the Clipper RISC (reduced instruction set computing) processor from National Semiconductor Corp., refused to cross-license certain Clipper-related technologies to Intel -even though Intergraph had licensed Intel_s technology. Intergraph eventually sued Intel for patent infringement, and Intel revoked Intergraph_s license. Other Intel dustups involving Compaq and Digital Equipment Corp. apparently prompted the FTC to act.