[Ip-health] FTC orders compulsory license on Intel patents as remedy to anticompetitive practices

James Love james.love at keionline.org
Thu Sep 2 08:59:17 PDT 2010


On August 4, 2010, the US Federal Trade Commission ordered a compulsory
license on patents, as part of a settlement regarding anticompetitive
conduct in the computer chip market.  From the ABA report on this case:

"The settlement also requires Intel to modify its intellectual property
agreements with competing chip manufacturers 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. Among the other provisions of the settlement agreement,
Intel will be required to extend a licensing agreement with one company
for five years beyond the current term, maintain an interface for at
least six years in a way that will not limit the performance of GPU
chips, and disclose to software developers that its computer compilers
discriminate between Intel chips and non-Intel chips."

The ABA report follows:

ABA Antitrust Section Intellectual Property  E-Bulletin 
Issue 55 | August 2010 

U.S. Agencies 
FTC Settles Complaint Charging that Intel Engaged in Anticompetitive
Conduct in Computer Chip Markets 

On August 4, 2010, the Federal Trade Commission (FTC) announced it had
reached a settlement with Intel Corp. that will resolve an FTC complaint
that Intel engaged in anticompetitive conduct in connection with
computer chips. The FTC issued the administrative complaint against
Intel in December 2009, in which the FTC alleged that Intel violated
Section 5 of the FTC Act by using anticompetitive tactics to deny rivals
access to the market and deprive consumers choice and innovation for
central processing unit (CPU) microchips, graphics processing unit (GPU)
chips, and other computer chips. The FTC alleged that this conduct,
which spread over the course of ten years, allowed Intel to maintain an
unlawful monopoly in CPU markets and created a dangerous probability
that Intel would acquire a monopoly in GPU markets. 

In the CPU market, the FTC complaint alleged that Intel used unfair
methods of competition to foreclose or limit the adoption of non-Intel
CPUs by the largest original equipment manufacturers (OEMs), which
accounted for more than 60 percent of all personal computer sales.
First, Intel allegedly induced certain OEMs to forgo adoption of
non-Intel CPUs or sought to limit OEMs from purchasing significant
quantities of non-Intel CPUs. Among the incentives Intel offered these
OEMs were large rebates and lump sum payments, as well as guarantees of
supply during supply shortages. Second, Intel allegedly threatened OEMs
that considered purchasing non-Intel CPUs with higher prices and the
loss of technical support. Third, Intel allegedly also induced OEMs to
limit advertising and branding non-Intel CPUs. The FTC complaint also
alleged that Intel made changes to its compiler, a tool used to write
software, which Intel failed to disclose and which caused non-Intel
based computers to have a slower performance, which was mistakenly
attributed to the non-Intel CPUs. In the GPU market, the FTC complaint
alleged that Intel worked with another company to develop a GPU chip
that would interoperate with Intel’s CPU chips, but then took steps to
blunt the competitive threat posed by that company. 

Pursuant to the terms of the settlement, Intel will be prohibited from
conditioning benefits to OEMs in exchange for their promise to buy chips
from Intel exclusively or to refuse to buy chips from others. Intel will
also be prohibited from retaliating against OEMs that do business with
non-Intel chip manufacturers by withholding benefits from those OEMs.
The settlement also requires Intel to modify its intellectual property
agreements with competing chip manufacturers 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. Among the other provisions of the settlement agreement,
Intel will be required to extend a licensing agreement with one company
for five years beyond the current term, maintain an interface for at
least six years in a way that will not limit the performance of GPU
chips, and disclose to software developers that its computer compilers
discriminate between Intel chips and non-Intel chips. 

Analysis of Proposed Consent Order to Aid Public Comment, In re: Intel
Corporation, FTC Dkt. No. 9341, available 

at http://ftc.gov/os/adjpro/d9341/100804intelanal.pdf. 

Decision and Order, In re: Intel Corporation, FTC Dkt. No. 9341 (Aug. 4,
2010), available at http://ftc.gov/os/adjpro/d9341/100804inteldo.pdf. 

Agreement Containing Consent Order, In re: Intel Corporation, FTC Dkt.
No. 9341, available at
http://ftc.gov/os/adjpro/d9341/100804intelagree.pdf. 

-- 
James Love, Director, Knowledge Ecology International
http://www.keionline.org | http://www.twitter.com/jamie_love
Wk: +1.202.332.2670 | US Mobile +1.202.361.3040 | Geneva Mobile +41.76.413.6584





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