AMD wins crucial discovery ruling in its antitrust case against Intel

January 1, 2007, 7:50 PM UTC
Fortune

You may have noticed puzzling squib items in the newspapers in the past couple weeks suggesting that microprocessor maker Advanced Micro Devices (AMD) had won some sort of sketchily described victory in its federal antitrust case against industry-leader Intel (INTC). Well, it did, and the court ruling was a big one.

It basically ensures that AMD will be able to require Intel (and dozens of third party computer makers, distributors, and retailers) to turn over documents relating to Intel’s business practices outside this country, which is where most of the computers containing the parties’ chips are now sold. AMD’s securing that right was crucial to its ability to prove its case, which accuses Intel of illegally maintaining a monopoly in the global marketplace for x86 microprocessors, the electronic brains that power almost all PCs that run Windows or Linux operating systems. Since 68% of the computers containing x86 processors are sold to customers abroad, evidence about Intel’s “foreign conduct” was “essential” to allowing AMD to make out its case, according to a December 15 ruling by Special Master Vincent Poppiti, who has been appointed to handle discovery disputes in the case.

Poppiti’s 23-page ruling then became binding on December 27, when Intel filed a letter with the federal court in Wilmington, Delaware, declining to appeal Poppiti’s ruling to U.S. District Judge Joseph Farnan, who is presiding over the case. (Poppiti is a former Delaware state court judge.)

Some readers might find it odd that AMD’s ability to seek such discovery would ever have been in doubt. But Intel had argued that AMD lost that right on September 26, when Judge Farnan ruled that a 1982 statute deprived the U.S. courts of jurisdiction over all of AMD’s claims stemming from any “foreign harm” it suffered from “foreign conduct.” However, Poppiti’s interpretation of that ruling–which Intel has no chosen not to appeal–indicates that Judge Farnan’s ruling will only affect the extent of the damages AMD can seek, not it’s ability to prove its case, which hinges on examining Intel’s conduct worldwide.

Though most U.S.-based exporters are totally unaffected by the 1982 law–they can sue in U.S. courts to recover for any harms to their export business regardless of where in the world their products are being sold–AMD has not qualified as such an “exporter” since 2002, Judge Farnan ruled in September, because that’s when it phased out the last of its U.S. silicon wafer fabrication plants (in Texas). Since then, all of AMD’s microprocessors have been made at its wholly-owned fabs in Germany. Intel argued–and Judge Farnan agreed–that since then AMD has no longer been a U.S. exporter of chips; instead, it’s simply been a foreign chip manufacturer. Accordingly, he concluded, unless those chips make it back into the United States (which most don’t), U.S. courts have no jurisdiction over any injuries AMD may suffer from Intel’s conduct abroad.

I wrote about Judge Farnan’s ruling in an earlier post, which is available here. (The post has sentimental significance to me, since it was my very first.) I also did a “big heave” on the AMD v. Intel litigation in the issue of Fortune cover dated August 21, 2006, which is available here.

The case has a ways yet to do go, which is probably why I’m one of the few reporters paying much attention to it. Judge Farnan has set it down for trial on April 21, 2009 (sic).