*** Story of the Issue
WAVE Comments on Legal and Regulatory Morass
It is not that the courts have not been used in the past to gain
a market advantage over one’s competitors but the recent rain of
legal actions seems silly. One of the most bewildering was the
3Dlabs suit against TI. There were obviously deeper issues that
TI posting information on its web site but it all seemed odd
that such a spat went public. From the original press release
and the mum response from 3Dlabs, when asked, one can only
assume that two partners were in a quarrel and the best way to
force a settlement was to sue. From all external appearances
this was the end result.
The NVIDIA response to the SGI suit acknowledges that they are
under the assumption that SGI is seeking to stem the out-flow of
talent from SGI to NVIDIA. If this gets to the courts there are
many interesting ramifications for SGI. For example, if SGI
loses in the litigation being brought by Lockheed Martin will
this impact its position in the suit against NVIDIA? Further,
does the agreement between Microsoft and SGI indemnify Microsoft
in the event that SGI no longer has ownership of some of
technology which is incorporated into Fahrenheit – under the
assumption it loses to Lockheed Martin. This trial is not
scheduled to begin until September and this allows for plenty of
time for the lawyers to rack up their expenses.
The WAVE Report also has picked a partial motivation for the SGI
suit against ArtX. Apparently the company was founded by key
engineering talent responsible for the follow-on Nintendo
project. SGI perceives that it could lose this contract to ArtX
and the best response is another suit. However, to avoid a
disclosure of the vulnerabilities of SGI and the details of the
dispute the suit was sealed.
Certainly one of the more recent significant events was the
ruling by the US Federal District Court in Birmingham, Alabama
against Intel. There are many ways in which the concept of
essential facilities can be extended not only at Intel but to
Microsoft. For example, could this include the Slot 1 connector
and the core logic chip sets? Certainly, as Intel extends its
dominance in the PC market, including segmentation, which Intel
now speaks to, the definition of what technically is essential
is open to interpretation. Consider the radical thought that AGP
would become truly open.
There is also the morass that Microsoft finds itself in. The
combination of market power and sheer ineptness in dealing with
Washington results in a weekly soap opera that finds Microsoft
making more blunders in its relationships inside the Beltway.
One would like to think Microsoft will get it right but history
has not show much of a learning process. The WAVE Report
recently spoke with Janet Reno and she described Washington as
70 miles of Beltway surrounded by reality. In its dealings with
Washington Microsoft needs to better understand the rules of the
game played inside the beltway, no matter how disconnected they
may seem.
Unfortunately much of this is a diversion from the real task of
building the market be it the PC or 3D. What the last few weeks
has seen is the increasing involvement of the courts and
government into what has been a free market. However, the
actions of both Intel and Microsoft are partially responsible
for the situation they find themselves in.
Wave Issue 9810 4/20/98 Article 2-01