The U.S. Supreme Court ruled Monday that chipmaker AMD
can request its archrival Intel to turn over documents
as part of a wider investigation by the European Union.
But the case does have the ability to set a precedent for a wider range
of discovery in cases outside of the United States.
In a 7-1 vote, the court dismissed a petition by Intel, which recently
asked the U.S. 9th Circuit Court of Appeals to reconsider its order forcing
the company to turn over some 600,000 pages of Intel documents to the
European Commission (EC).
The U.S. Supreme Court ruled that U.S. District
Courts may provide assistance to the Directorate General of Competition with
the EU. Justice Stephen Breyer provided the dissenting opinion, while
Justice Sandra Day O’Connor did not take part in the vote.
The Commission is investigating an antitrust complaint filed by AMD four
years ago, charging that Intel is abusing its dominant position in the
Windows-capable microprocessor market and violating anti-monopoly rules
(Article 82) in Europe. AMD wants certain information discussed during
Intel’s lawsuit against Intergraph to be unsealed.
In her opinion, Justice Ruth Bader Ginsburg said, “whether such
assistance is appropriate in this case is a question yet unresolved.” But
she did point out that, “a federal district court ‘may order’ a person
‘resid[ing]’ or ‘found’ in the district to give testimony or produce
documents ‘for use in proceeding in a foreign or international tribunal…
upon the application of any interested person.'”
The case now goes back to the lower court to determine what documents, if
any, will be released to the EC and to give further consideration to concerns
raised by Intel.
“This was a very narrowly focused ruling,” Intel spokesperson
Chuck Mulloy told internetnews.com. “The justices said that even
though the staff at the EU view themselves primarily as an investigative
agency, they also make judicial-type decisions, so they should be viewed under
U.S. law (USC 1782) as a quasi-judicial agency. It is worth noting that the
EU has told AMD and the U.S. Supreme Court it does not want this
information.”
AMD spokesperson Michael Simonoff told internetnews.com the case
has never been about intellectual property or AMD obtaining Intel’s trade
secrets.
“We believe that the European Commission is committed to ensuring that an
environment of fair and open competition is permitted to exist across member
states,” said Simonoff. “The fact that their investigation into Intel’s business practices is
still ongoing supports that. Our position is that documents AMD is seeking
are likely to demonstrate that Intel had misinformed the European Commission
about its practices. AMD simply wants the European Commission to have all
the relevant evidence available so that they can decide the case with a
complete understanding of the situation.”
In his opposing position, Justice Breyer pointed out the ramifications
for American companies with overseas business practices, pointing out that a
“foreign private citizen could ask an American court to help the citizen
obtain information, even if the foreign prosecutor were indifferent or
unreceptive… thereby opening up the possibility of broad American
discovery — contrary to the antitrust authorities’ desires.
“One might ask why it is wrong to read the statute as permitting the use
of America’s court processes to obtain information in such circumstances,”
Justice Breyer said in his opinion. “One might also ask why American courts
should not deal case by case with any problems of the sort mentioned. The
answer to both of these questions is that discovery and discovery-related
judicial proceedings take time, they are expensive, and cost and delay, or
threats of cost and delay, can themselves force parties to settle
underlying disputes.”
“This is an oddball legal situation where the EU has not requested
documents from a sealed Alabama litigation, but AMD wants a California court
to force their disclosure anyway,” Peter Kastner, an executive vice
president with research firm Aberdeen Group, said. “The Supreme Court now
says California gets to decide what is disclosed to Europe. There are broad
and troubling ramifications to this decision for multinational companies who
have competitors — which includes all the large tech companies.”
The EU renewed its investigation earlier this month following reports in
April 2004 that seven countries — Austria, Belgium, Finland, France,
Germany, Italy, and the Netherlands — ignored an EC mandated, open-bidding
process in favor of exclusively purchasing Intel-based computers.
Intel’s position in the world is huge with 80 percent of the market for
chips that run personal computers and 90 percent of the revenue share worldwide.
By contrast, AMD has about 16.8 percent of the market share and barely
registers in the double digits when it comes to worldwide revenue share.
Taiwan-based Via Technologies and Transmeta round out
the top four.
The case is Intel v. Advanced Micro Devices, 02-572.
