Intel Wins Partial Dismissal of AMD Suit

U.S. Federal District Judge Joseph A. Farnan has dismissed a key portion of AMD's antitrust lawsuit against Intel, evidently agreeing with Intel's motion, stating that many of the claims for which AMD seeks redress take place on foreign soil, outside U.S. jurisdiction.

As a result, an AMD spokesperson told BetaNews today that the company is considering its options with regard to how the case should proceed. AMD is holding a status conference outside the District Court in Delaware, the outcome of which could determine how -- or whether -- AMD intends to proceed with its lawsuit. Further comment from AMD is expected later this afternoon.

In his opinion this morning, Judge Farnan wrote, "To establish standing to bring an antitrust claim, the plaintiff 'must have suffered an injury the antitrust laws were intended to prevent, and the injury must flow from that which makes the defendants' acts unlawful,"' citing from case law.

Earlier in his decision, the judge quoted from the Sherman Antitrust Act, stating that enforcement of the Act itself does not extend to the business of foreign trade, other than imports from foreign nations. One exception is when the defendant's conduct could substantially disrupt imports from foreign nations; in other words, prompt a foreign company not to do business with an American company.

A key claim of the original AMD suit was that Intel used its alleged monopoly power to prevent the company from doing business with foreign companies - essentially, export business. In its reply yesterday to Intel's motion to dismiss, AMD's lawyers wrote, "Because AMD's American-designed processors are currently imbedded in silicon in Germany (and inspected and boxed in Asia), [Intel] argues that any harm AMD might have suffered from lost business opportunities abroad is purely foreign harm, of no concern to the U.S. antitrust laws. And, naturally, Intel seeks to contain AMD's damages to lost U.S. business, even before AMD has fully developed and presented its theories of damages."

The AMD reply goes on to frame the microprocessor market as a global industry, rather than a segmented one, citing Intel's own language in framing semiconductors as a "world-wide" industry. AMD's lawyers asked the court whether it is considering whether evidence of exclusionary practices by Intel in the foreign part of a world-wide market, helps establish a monopoly position for itself in the U.S. portion of that same market.

Intel tore into that argument, in language cited by the Judge's opinion: "Thus, under AMD's logic," quotes the opinion, "a deal between Intel and a German retailer to promote Intel-based systems...directly affects U.S. commerce because it reduces AMD's German subsidiary's sales of German-made microprocessors in Germany, which in turn affects the profitability of the U.S. AMD parent, which in turn affects the funds that AMD has for discounting to U.S. customers, which in turn affects the discounts that it offers in particular U.S. transactions, which in turn affects its competitiveness in the United States, and which in turn affects U.S. commerce."

"Courts discussing the 'direct effects' requirement of the [Foreign Trade Antitrust Improvements Act]," wrote Judge Farnan, "have recognized that 'direct effect' means that there must be an 'immediate consequence' of the alleged anticompetitive conduct with no 'intervening developments...' In the court's view, however, AMD's chain of effects is full of twists and turns, which themselves are contingent upon numerous developments."

The judge later listed numerous "speculative and changing factors" that would weigh into AMD's claim, including costs of financing, the current state of semiconductor supply and demand, the relative success of R&D efforts, and the geopolitical state of the world at large.

"Because AMD has not alleged that Intel's conduct resulted in a substantial and direct domestic effect," Judge Farnan concluded, "AMD cannot demonstrate that any such domestic effect gives rise to its claim."

An AMD spokesperson told BetaNews today that the company continues to perceive the x86 microprocessor as key to "a global, indivisible market." In a statement today, the company's executive vice president for legal affairs, Tom McCoy, said, "Notwithstanding the judge's ruling today, Intel cannot escape antitrust scrutiny for its conduct...wherever in the world it occurs. As this U.S. litigation is joined by global antitrust investigations, it is clear that Intel cannot escape the consequences of its illegal monopoly abuses."

Intel spokespersons have yet to provide comment, perhaps pending the outcome of the AMD meeting.

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