Reversal of Fortune for AMD in Intel Case

The special master appointed to hear evidence from both parties in the AMD v. Intel antitrust case has recommended that Intel be compelled to produce documents for evidence that it had previously declined to submit. If Judge Joseph A. Farnan, Jr., agrees, Intel may be asked to produce evidence of what AMD alleges to be "foreign misconduct," and efforts by Intel to monopolize the US semiconductor market.

As Special Master Vincent Poppiti's filing with the court made clear today, he held a hearing two weeks ago to address the dispute over whether the documents AMD sought were relevant to the case. Last September, Judge Farnan had ruled that many of AMD's claims of Intel's misconduct could not be addressed by the court, since it fell outside the purview of US antitrust law.

When AMD tried to argue that Intel's alleged foreign misconduct directly impacted its domestic business, Judge Farnan dismissed that argument - along with its underlying claims - saying they were "full of twists and turns, which themselves are contingent upon numerous developments."

Since that time, AMD has tried to convince the court that, if it could only see the exclusive business transactions between Intel and German retailers that allegedly led to the loss of AMD's domestic business, it could defend itself against the "twists and turns" claims, which apparently the judge - perhaps inadvertently - laid upon the table for debate.

The Special Master declined to make rulings that were, in his view, matters of law in response to both sides' claims about these documents' relative value to the case. He relied instead upon procedural rules to make a determination that, in effect, there's no way to know whether the documents are valid or invalid until someone sees them.

First, Poppiti succeeded in getting both sides to agree that the documents AMD sought fall under any of six categories:
1.) Evidence that Intel precluded customers from purchasing AMD processors;
2.) Requirements that customers must purchase Intel processors, perhaps as a condition of a sales or marketing arrangement;
3.) Coercion or threats that Intel may have made against possible AMD customers;
4.) Requirements that only high quantities of Intel processors must be purchased at any one time;
5.) Any kind of foreign Intel conduct that was directly intended to harm AMD's US business; and
6.) Intel's internal communications that may substantiate any of the other five categories.

Poppiti then made the case that these six categories make AMD's request fall under the collective class of "broad discovery." Then posited that courts in antitrust matters have already established that a broad discovery might be necessary in order to prove intent.

Intel's own strategy for its argument in favor of dismissing the entire case - which Intel partially won - may have ended up being its undoing. Intel argued before Poppiti that AMD didn't adequately prove that its alleged foreign misconduct fell under the "export commerce" provision that is the sole exception granted by the Sherman Antitrust Act. Poppiti dismissed that argument today, saying Intel's opportunity to have made that case was during its motion to dismiss. Conceivably, if Intel had made the case at that time, Poppiti implied, it would not need to be making that case now.

As long as AMD's claims that Intel's foreign conduct is covered by Sherman remain on the table, Poppiti wrote, he has to presume they are viable. He does not have to presume they are valid, because he's not the judge.

"The Special Master concludes that the Foreign Conduct Discovery Materials are reasonably calculated to lead to the discovery of exclusionary conduct that would support a foreclosure claim in connection with the sale of American-made x86 microprocessors abroad," Poppiti wrote. "Thus, while it would be proper to deny discovery of the foreign conduct at issue in this litigation if it were only relevant to claims or defenses that have been stricken by the September 26, 2006 Order [by Judge Farnan], it is not proper to deny the discovery of the Foreign Conduct Discovery Materials because they are relevant to the export commerce claims."

In a statement this afternoon, an AMD spokesperson said, "We are encouraged that the Special Master recognizes the importance of obtaining all evidence of Intel's wrongdoing, regardless of where it occurs, to demonstrate the impact it has had on AMD's domestic and export business. We look forward to addressing this further in court and to Judge Farnan's final ruling."

Intel spokesperson Chuck Malloy told BetaNews this afternoon, "We are still evaluating the ruling from the Special Master. There is a briefing schedule available to the parties for further argument before a hearing with Judge Farnan on January 12. We have not yet decided what we'll do in this regard."

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