Court dismisses part of AMD’s claims against Intel

A district court judge in the U.S. state of Delaware has dismissed part of Advanced Micro Devices Inc.’s lawsuit against Intel Corp. The dismissed claims relate to alleged business practices of Intel that AMD claims affected sales of its own microprocessors.

Intel petitioned the court to have the claims dismissed because it said that while AMD is headquartered in the U.S. it manufactures its processors in Germany and assembles them in Malaysia, Singapore and China. AMD is already seeking damages through the Japanese courts, European Commission and Korea Fair Trade Commission for the same business practices that are alleged in the U.S. lawsuit. Because the alleged harm was suffered outside the U.S. and because AMD is seeking redress overseas, Intel argued that the allegations fall outside the jurisdiction of the U.S. courts, according to a memorandum opinion from the court.

AMD contended that it is not seeking such “foreign commerce claims” and that the x86 microprocessor market is a global market and that Intel’s conduct in overseas markets had an effect on its business in the U.S.

“AMD has not demonstrated that the alleged foreign conduct of Intel has direct, substantial and foreseeable effects in the U.S. which gives rise to its claim. AMD’s allegations, taken in the light of the most favorable to AMD, describe a foreign effect and a foreign harm that have had ripple effects for the domestic market, but have not had any direct, substantial or reasonable effect which would give rise to an antitrust claim within the jurisdictional reach of the Sherman Act. Accordingly, the court will dismiss AMD’s claims based on alleged lost sales of AMD’s microprocessors to foreign customers,” U.S. District Judge Joseph Farnan wrote in his conclusion.

Chuck Mulloy, an Intel spokesman, said, “We are pleased that the judge appears to have agreed with out legal argument to remove those aspects of the case outside U.S. jurisdiction.” He declined further comment until a conference with the judge takes place on Wednesday.

AMD did not see the ruling as a setback in its global legal battle to change Intel’s behavior.

“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,” the company’s Chief Administrative Officer and Executive Vice President of Legal Affairs Thomas M. McCoy said in a statement.

One industry analyst agreed, saying the ruling merely makes AMD’s case a little harder to prove.

“It’s clearly a narrower case now than when they started. But I don’t think what happened here is a body blow to the whole issue; they haven’t thrown out the whole case,” said Nathan Brookwood, an analyst with Insight 64.

“AMD would have preferred if the judge had kept those international issues in. Now their case will hinge more on whether they can say the things alleged to have happened in Japan and Korea are going on in the U.S.”

Even Intel agreed that both parties still have their work cut out for them as the case moves toward an April 2009 trial date.

“We’re pleased the judge struck that portion of the case. But nonetheless this is still a very serious case and we’re preparing a vigorous defense,” Mulloy said.

AMD, the long-time number two player in the microprocessor market, jolted the IT industry in June last year when it filed its broad lawsuit against rival Intel. The suit alleged Intel had managed to maintain a monopoly in the PC processor market by illegally coercing customers around the world into using its products.

The 48-page court filing identified 38 companies that, AMD alleged, had been coerced into using Intel processors at the expense of competing chips from AMD. Included are almost all of the large companies in the PC and server market, such as Dell Inc., Sony Corp., Gateway Inc. and IBM Corp.

Among the allegations, AMD said Fujitsu Siemens Computers (Holding) BV was offered a “special discount” on Celeron processors in return for hiding AMD-based computers on its Web site and removing references from its retail catalog. Also, at the 2004 Super Computing Show, an annual conference devoted to high performance computing, Intel offered computer makers money to remove AMD systems from their booths.

— Peter Sayer, in Paris, contributed to this report

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