Archive for the ‘Innovation and IP’ Category

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FTC – ANALYSIS OF PROPOSED CONSENT ORDER TO AID PUBLIC COMMENT

Tuesday, November 2nd, 2010

In order to aid public comment on the proposed settlement between Intel and the FTC, the FTC produced a written analysis:

The Federal Trade Commission (“Commission” or “FTC”) accepted for public comment an Agreement Containing Consent Order (“Proposed Consent Order”) with Intel Corporation (“Intel”) to resolve an Administrative Complaint issued by the Commission on December 16, 2009.1 The Complaint alleged that Intel unlawfully maintained its monopoly in the relevant CPU markets, and sought to acquire a second monopoly in the relevant graphics markets, using a variety of unfair methods of competition. Consumers were harmed by Intel’s conduct, which resulted in higher prices, less innovation, and less consumer choice in the relevant markets. Consumers were also harmed by Intel’s deceptive disclosures related to its compilers, which violated both competition and consumer protection principles. The Proposed Consent Order will bring immediate relief in the relevant markets and puts Intel under Commission Order.

As described in detail below, the Proposed Consent Order has two fundamental goals. First, it seeks to undo the effects of Intel’s past restraints on competition by enhancing the ability of AMD, NVIDIA, Via, and others to compete effectively with Intel. To that end, the Proposed Consent Order seeks: 1) to make it easier for AMD, NVIDIA, and Via to use third-party foundries to manufacture products (to enable them to better match Intel’s manufacturing advantages) (Section III.A.); 2) to give AMD, NVIDIA, and Via flexibility to secure modifications of change of control provisions in their Licensing Agreements with Intel (Section III.B); 3) to extend Via’s intellectual property license (Section III.C); and 4) to provide assurances to manufacturers of complementary and peripheral products that they will be able to connect their devices to Intel’s CPUs (Section II). These provisions compel Intel to make certain offers; they do not compel a third party to accept them. The goal is to require Intel to open the door to renewed competition, not to force a third party to take any particular action.

Second, the Proposed Consent Order is designed to protect the ability of customers and existing and future Intel competitors to engage in mutually beneficial trade, while prohibiting Intel from using certain practices to deter or thwart such trade. The Proposed Consent Order therefore prohibits Intel from engaging in: 1) certain pricing practices that could allow Intel to exclude competitors while maintaining high prices to consumers (Section IV.A.); 2) predatory design that disadvantages competing products without providing a performance benefit to the Intel product (Section V); and 3) deception related to its product road maps, its compilers, and product benchmarking (Sections VI, VII, and VIII).

FTC Analysis of Proposed Consent Order to Aid Public Comment (PDF)

Posted in CPU Market Competition, Discounting and Rebates, FTC Case Against Intel, FTC Section 5, GPU Market Competition, Innovation and IP, Intel, Legal Filing, Netbook Market, US FTC | No Comments »

Final Modified Settlement Agreement Between FTC and Intel – Decision and Order

Friday, October 29th, 2010

On October 29, 2010, the Federal Trade Commission (FTC) gave final approval to the settlement between Intel and FTC announced on August 4th of 2010.  The full agreement in PDF format can be downloaded below.

The Federal Trade Commission (“Commission”) having heretofore issued its complaint charging the Respondent Intel Corporation with violations of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, and the Respondent having been served with a copy of that complaint, together with a notice of contemplated relief and having filed its answer denying said charges; and

The Respondent, its attorneys, and counsel for the Commission having thereafter executed an agreement containing a consent Order, an admission by Respondent of all the jurisdictional facts set forth in the complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by Respondent that the law has been violated as alleged in such complaint, or that the facts as alleged in such complaint, other than jurisdictional facts, are true and waivers and other provisions as required by the Commission’s Rules; and

The Secretary of the Commission having thereafter withdrawn this matter from adjudication in accordance with § 3.25(c) of its Rules; and

The Commission having considered the matter and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of thirty (30) days, and having duly considered the comments filed thereafter by interested persons pursuant to § 3.25(f) of its Rules, and having modified the Decision and Order in certain respects, now in further conformity with the procedure prescribed in § 3.25(f) of its Rules, the Commission hereby makes the following jurisdictional findings and enters the following Order:

1. Respondent Intel Corporation is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware with its office and principal place of business located at Mission College Boulevard, Santa Clara, California 95054.

12. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the Respondent, and the proceeding is in the public interest.

Docket_No_9341_Intel_Modified_Decision_and_Order

Posted in CPU Market Competition, Compiler Design, FTC Case Against Intel, FTC Section 5, GPU Market Competition, Innovation and IP, Intel, Legal Filing, US FTC, Uncategorized | No Comments »

WSJ OpEd – Tim Muris – Antitrust in a High-Tech World

Thursday, August 12th, 2010

Tim Muris, former chairman U.S. Federal Trade Commission and current advisor to IBM, wrote an op-ed in the Wall Street Journal suggesting the antitrust authorities should be very careful of competitor-driven complaints.

Competition agencies ideally help consumers by ensuring open, competitive markets while eschewing actions that impede innovation and competition. But the accelerating pace of technological development makes their task more difficult. Today’s technology behemoth risks becoming tomorrow’s dinosaur, and competitors sometimes plead for government intervention to obtain what they fail to achieve in the market. As a former head of a competition agency, I offer five principles to guide competition policy toward successful innovators.

  • Be wary of competitor complaints – “Competitor complaints are driving recent EU investigations into companies that include Qualcomm, Google, Oracle and IBM. Competitors can provide valuable information about marketplace realities, but they have every incentive to misuse the government to obtain an advantage that is otherwise unattainable.”
  • There are no shortcuts. “Having encouraged firms to succeed, we should not use that success to presume violations of competition law or to force the firm to justify its actions.”
  • Don’t define markets too narrowly “When something is truly innovative it often becomes the clear leader or creates a whole new product category, at least until someone else develops the next breakthrough…In technology, the relevant competition is often from other systems.”
  • Don’t create disincentives for innovation-” Complaining competitors often want innovators to be forced to share the source of their success, regardless of intellectual property rights…The recently announced EU investigation of IBM risks creating this disincentive.”
  • Consider your remedy early and often – “Even important cases, such as the American government’s against Microsoft, can be bedeviled at the remedial stage.”

The full article is available on the WSJ site (subscription required).

Posted in Compulsory Licensing, Due Process, EC Investigation of IBM Mainframe Tying, Economic Analysis, IBM, Innovation and IP, Uncategorized, mainframe market, tying | No Comments »

FTC Proposed Decision and Order in Settlement with Intel

Wednesday, August 4th, 2010

The final decision and order outlines the conduct restrictions that Intel and FTC agreed upon in August 2010.  These prohibitions and requirements include:

Under the settlement, Intel will be prohibited from:

  • conditioning benefits to computer makers in exchange for their promise to buy chips from Intel exclusively or to refuse to buy chips from others; and
  • retaliating against computer makers if they do business with non-Intel suppliers by withholding benefits from them.

In addition, the FTC settlement order will require Intel to:

  • modify its intellectual property agreements with AMD, Nvidia, and Via so that those companies have more freedom to consider mergers or joint ventures with other companies, without the threat of being sued by Intel for patent infringement;
  • offer to extend Via’s x86 licensing agreement for five years beyond the current agreement, which expires in 2013;
  • maintain a key interface, known as the PCI Express Bus, for at least six years in a way that will not limit the performance of graphics processing chips. These assurances will provide incentives to manufacturers of complementary, and potentially competitive, products to Intel’s CPUs to continue to innovate; and
  • disclose to software developers that Intel computer compilers discriminate between Intel chips and non-Intel chips, and that they may not register all the features of non-Intel chips. Intel also will have to reimburse all software vendors who want to recompile their software using a non-Intel compiler.

FTC Proposed Decision and Order in Intel Antirust Case

Posted in CPU Market Competition, Discounting and Rebates, FTC Case Against Intel, FTC Section 5, GPU Market Competition, Innovation and IP, Intel, Interoperability, Legal Filing, Netbook Market, US FTC | No Comments »

EC Press Release – Commission initiates formal investigations against IBM in two cases of suspected abuse of dominant market position

Monday, July 26th, 2010

The European Commission announced two formal antitrust investigations against IBM:

The European Commission has decided to initiate formal antitrust investigations against IBM Corporation in two separate cases of alleged infringements of EU antitrust rules related to the abuse of a dominant market position (Article 102 TFEU). Both cases are related to IBM’s conduct on the market for mainframe computers. The first case follows complaints by emulator software vendors T3 and Turbo Hercules, and focuses on IBM’s alleged tying of mainframe hardware to its mainframe operating system. The second is an investigation begun on the Commission’s own initiative of IBM’s alleged discriminatory behaviour towards competing suppliers of mainframe maintenance services.

The full press release is available on the EC website.

Posted in EC Investigation of IBM Blocking Mainframe Service Competition, EC Investigation of IBM Mainframe Tying, European Commission, IBM, Innovation and IP, Interoperability, News Item, mainframe market, tying | No Comments »

CNET Column – FTC’s New Strategy “Kick ‘em When They’re Down.”

Sunday, July 25th, 2010

FTC’s new strategy: Kick ‘em when they’re down Author and fellow at Stanford Law School Center for Internet & Society, Larry Downes wrote a column suggesting the FTC’s case against Intel amounts to a new strategy of “Kick’em when they’re down.” In a CNET guest column, Downes argues that the FTC could just as easily make things worse for consumers:

The commission can blow all the smoke it wants to about ensuring “freedom of choice” for consumers, but for better or worse, this litigation and all the rest of it is being brought for the benefit of Intel’s competitors. Which is not to say that Intel hasn’t violated anticompetition laws and that those violations, if left unremedied, “will have an adverse effect on competition and hence consumers,” as the FTC delicately puts it.
Perhaps they will. But there is another, greater danger here, and that is the harm to the entire semiconductor industry that will result from regulators stepping in to resolve what are, in essence, private fights between Intel, its competitors, and some of its biggest customers.

The full article can be found on the CNET website here.

Posted in AMDvIntel Private Litigation in Delaware, Analysis, CPU Market Competition, Discounting and Rebates, EC Case Against Intel, FTC Case Against Intel, GPU Market Competition, Innovation and IP, Intel, NY Case Against Intel | No Comments »

Industry Analyst Peter Kastner Reviews FTC Case Against Intel in The Portlander

Sunday, July 25th, 2010

Industry analyst Peter S. Kastner wrote an op-ed for The Portlander newspaper that provides a pretty detailed analysis of the remedies proposed by the FTC in its lawsuit against Intel. Kastner argues that “The threat to Intel’s business by the FTC complaint is so great and the remedies so draconian that any outcome short of outright dismissal is likely to end up at the Supreme Court.”

He identifies a potentially key flaw in the GPU part of the FTC case: the entire industry is moving back toward integrated graphics:

The nub of the case is how Intel, AMD, and nVidia will compete in the increasingly integrated microprocessor and graphics processor (GPU) market. Both Intel and AMD are over the next year integrating the functions of the GPU into the microprocessor itself, eliminating the “chipset” that today runs integrated graphics in Core 2 and other Intel products.
That hurts nVidia, which makes chipsets with graphics, as well as making discrete graphics cards that compete with AMD’s ATI graphics unit. As in the childhood game of musical chairs, nVidia finds the music has stopped and it lacks a money-making chipset-technology chair to sit on. Meanwhile, AMD and Intel are, as usual, banging head to head bringing new microprocessor architectures to market in 2010 that will have better performance, energy savings, and new technology features.

He also identifies many problematic aspects of the FTC’s proposed remedies including this gem:

In Paragraph 8, the FTC seeks to prohibit Intel from manufacturing or distributing computer software, hardware, or other products that impair the performance, or apparent performance, of non-Intel microprocessors or GPUs. This remedy is game-changing, and with totally foreseeable consequences. First, more than half of all PCs lack discrete graphics cards with GPUs made by AMD and nVidia. These are mainstream PCs bought by the tens of millions by consumers and businesses. Those buyers do not need, or choose not to pay for, the added graphics capabilities from GPUs. All mainstream Intel PC designs today allow a buyer to add a non-Intel graphics card should they want to do so. However, AMD and nVidia each support multiple graphics cards in one, typically high-end, PC.

Second, to support multiple graphics cards requires a motherboard with considerably more robust electrical power, support chips, and circuit traces — all of which add to PC costs. Intel only supports multiple, full-speed (i.e., PCIe x16) graphics cards with products built around the X58 chipset and sold to enthusiasts. Mainstream and value market PCs cost less partly because they do not support multiple graphics cards running at full x16 speeds. The FTC’s Paragraph 8 would force Intel to the highest common denominator, adding approximately $100 retail to every desktop PC, in supporting multiple, full-speed graphics cards.

Click here to read the full article in The Portlander.

Posted in Analysis, Blog, CPU Market Competition, Discounting and Rebates, FTC Case Against Intel, GPU Market Competition, Innovation and IP, Intel | No Comments »

This Week in Antitrust

Sunday, July 11th, 2010

This week’s collection of interesting antitrust pieces regarding technology include Google’s troubles abroad in China and the European Union, SAP’s recent defense against competitor Versata’s antitrust lawsuit, a look at the way changes to European Union anti-competition laws would affect the smartphone marketplace, and a lawyer/would-be politician who is the subject of a lawsuit by 23 lawyers claiming non-payment of attorney fees after a successful jointly-filed legal action against Microsoft.

Google/China – China Is Still Reviewing Google’s License | The Wall Street Journal

Google’s efforts to regain a foothold in China are meeting some resistance from Chinese licensing officials and the company is running into a different kind of trouble in Europe; that of the anticompetitive kind. Jason Dean and Peppi Kiviniemi provide additional information on the search engine/advertising giant’s on-going struggle to prove its business practices are fair and its policy on search results in China are benign and in keeping with Communist censorship regulations. They write:

Wang Lijian, spokesman for China’s Ministry of Industry and Information Technology, said Google’s application for annual renewal of its Internet content provider license came close to the end-of-June deadline, pushing back the approval process.

“As Google submitted the application in late June, it is impossible to finish the examination in such a short time,” Mr. Wang said.

Apparently, the Chinese government is still a little peeved about Google’s decision a few months ago to redirect its Chinese address, google.cn, to a site located in Hong Kong, which was uncensored and incensed Chinese information regulation authorities. In Europe the company is fighting to convince European Commission officials that its search function is not monopolistic and that companies such as Microsoft, who have been assisting the EC with legal legwork, aren’t acting altruistically. Here are the related passages from Dean and Kiviniemi’s article:

The commission began investigating Google in late February, spurred on by complaints from three competitors, including Microsoft Corp. The probe is concentrating on the company’s dominance in online searches and search advertising.

However, [Mr.Joaquin Almunia, the EU competition commissioner] noted that understanding the competitive landscape of online markets is a complex task with its innovative business models that are constantly evolving.

The real question remains the actual degree of barriers to entry to competitors, Mr. Almunia said. How easy is it for consumers to switch from one service to another, and can a company use its strong position in one area such as online search, to prevent competitors from advancing in a related market, are questions the commission is asking.

In their defense, Google claims it is doing its best to comply with informational requests from the EC:

Google said in a statement it was working with the commissioner and his team to answer their questions, “including how Google’s search ranking works to produce the most relevant and useful search results for users, and remains confident it operates within European competition law.”

SAP – EU anticompetition complaint lodged against SAP | Bloomberg Businessweek

Chris Kanaracus offers some coverage on a recent action by software company Versata against SAP for making it hard to inter-operate with their ERP (enterprise resource planning) products and who also have been accused of copying Versata’s software applications. Here’s the scoop:

Versata compared SAP’s actions to the ones that resulted in the landmark antitrust case against Microsoft. An E.U. ruling in Versata’s favor would open up the market for pricing software and give customers choice, it said.

“We are evaluating the complaint and offering no comment until that is complete,” SAP spokesman Andy Kendzie said in an e-mail.

Versata had previously filed a patent suit against SAP in connection with the alleged product cloning. A jury awarded the company roughly US$139 million in damages last year, although the case is not yet finalized.

It appears that SAP is looking down the barrel of another difficult legal battle, but there is still a chance that the company might squeak by with a little fancy footwork and maybe some kind of pre-trial licensing agreement.

Smartphones – The dangers of a “significant” change in EU AntiTrust Laws | all about symbian

A small change in the wording of European Union antitrust law could have some major and lasting effects. Ewan Spence takes a look at the proposed change from the point-of-view that free market factors should determine which software applications smartphone manufacturers decide to support and not be dictated by some restrictive law from on high. He writes:

Having a law that allows a regulatory body to force Company A to put Company B’s product on their platform is a very slippery slope. Having thought about the issue, it’s not one that I want to see on the statute books. What I would like to see is that Company A openly provides the documentation and information that would allow Company B to develop for the platform, and that the hardware (and software) of the platform would not put up a roadblock to the developed software.

In other words, the opportunity for any company should be there, but there should be no compulsion to force its inclusion on any hardware. That should be up to the market. If people want Flash, they can install it.

Spence also uses a Microsoft open-type product to make his point, none other than Windows Media Player:

Yes, it does mean that a closely tied competitive advantage (such as the symbiotic relationship of iPhone and iTunes) is minimised, but it opens up other areas of development and growth. Look at Microsoft’s Windows Media Player: by keeping it open to pretty much any hardware that follows the Media Device Protocol, it continues to prove useful, a consistent interface for users, and a standard that manufacturers and developers (including Symbian) can follow,  knowing that it provides the broadest reach for connectivity.

Increased market penetration and adoption sound like good reasons to leave a platform open to developers who stick to the rules of engagement and should *not* dictate any certain company to mandatorily include support for other companies’ applications, according to Spence. An argument could be made for either, or many, of the stances surrounding smartphone software developer environments but ultimately it will be consumers who make the choice by voting with their dollars and sense.

Microsoft – Lawsuit seeks arbitration for attorney fees in Microsoft settlement case | Simple Thoughts

A lawsuit filed by 23 states against Microsoft is causing much concern to the lawyers involved in the class-action case. According to Michael J. Crumb, the Iowa lawyer who initiated the action owes the other involved parties the payment of attorney fees. So much concern, in fact, that the group has filed a lawsuit against Roxanne Conlin of Des Moines for non-payment of the fees after winning a judgment against the Redmond, Washington software giant.

The lawsuit claims that attorneys in 23 states provided advice, pleadings, participation and prosecution in the class-action case in their states, and in the Iowa case against Microsoft.

The group formed The Microsoft Litigation Consortium. The lawsuit filed last month in Polk County District Court said the group signed an agreement with Conlin that called for the consortium to receive 20 percent of attorney fees awarded in the case. It also said disputes were to be resolved through arbitration.

“The attorney fees awarded to (Conlin) at the conclusion of litigation were not shared … in violation of the … agreement,” the lawsuit states.

The lawsuit said that Conlin has refused to comply with the agreement and that “on multiple occasions (the consortium) has requested that (Conlin) comply with the … agreement and arbitrate the dispute regarding the fees.”

Conlin claims that the ill-timed action by the group is unfounded and likely related to her current bid for Republican U.S. Sen. Charles Grassley’s seat in the fall. Be sure to read the rest of Crumb’s piece for more on this potentially unsettling kerfluffle.

Bonus antitrust piece o’ the week: A Practical Guide To Merger And Acquisition Antitrust Clearance by W. Joseph Price of Kelley Drye & Warren LLP via The Metropolitan Corporate Counsel.

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Posted in Blog, Cases, Companies, Current Affairs, Google, Innovation and IP, Microsoft | No Comments »

Appeal lodged against EU approval of Oracle-Sun merger | IDG

Friday, July 2nd, 2010

Monty Widenius, a leading open-source software proponent, lodged an appeal on Friday against the European Union’s antitrust authorities over their decision to green-light Oracle‘s acquisition of Sun Microsystems at the beginning of this year.

The appeal was filed to the European Court of Justice in Luxembourg. Widenius was one of the co-developers of MySQL, the open source database software owned by Sun, and now by Oracle.

Read the full article on Business Week/IDG.

Posted in Database Market, EC Review of Oracle and Sun Merger, European Commission, Innovation and IP, News Item, Oracle, Sun | No Comments »

An Antitrust Analysis of the Federal Trade Commission’s Complaint Against Intel | Joshua D. Wright

Tuesday, June 8th, 2010

Joshua D. Wright, Associate Professor at the George Mason University School of Law and Economics and Director of Research for the International Center for Law and Economics, provided an in-depth analysis of the FTC’s case against Intel for the ICLE Antitrust and Competition Policy White Paper Series.  The article argues that:

“The Commission’s reliance on Section 5 should be viewed with suspicion because it allows the Commission to evade the more stringent standards of proof that have been emerged in the Supreme Court’s Section 2 jurisprudence. Furthermore, the Commission’s actions surrounding its prosecution of Intel reflect an adversarial attitude that undermines the Commission’s stated comparative advantages over private litigants. Moreover, the Commission’s allegations form a weak case when evaluated under the conventional Section 2 standard. Unlike many Section 2 cases alleging speculative future consumer harm, the disputed conduct in this case has been in the marketplace for nearly a decade, and its competitive footprint is readily observable. The available data do not support the Commission’s theory that Intel’s behavior harmed consumers. To the contrary, it is almost certain that Intel’s distribution contracts led to tangible, demonstrable consumer welfare gains in the form of lower prices. Accordingly, the Commission’s complaint against Intel threatens to harm consumers directly in the computer industry as well as indirectly by undermining the stability and certainly which longstanding Section 2 jurisprudence has afforded the business community by requiring the plaintiffs offer rigorous proof of competitive harm.”

The full article can be downloaded here: Josh Wright- An Antitrust Analysis of the Federal Trade Commission’s Complaint Against Intel

Posted in Analysis, CPU Market Competition, Compiler Design, Discounting and Rebates, FTC Case Against Intel, FTC Section 5, GPU Market Competition, Innovation and IP, Intel, US FTC | No Comments »

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