FTC sues patent reformer Intel for damage done to innovation and consumers


The Federal Trade Commission sued Intel today, accusing the company of using its dominant market position to stifle competition. The agency's complaint alleges that Intel used a variety of anticompetitive tactics "to put the brakes on superior competitive products that threatened its monopoly...."

Specifically, the Commission claims that Intel used threats to coerce computer manufacturers into buying Intel chips instead of those of rival manufacturers, and to block the marketing of machines that contained non-Intel chips.

What has been the impact of Intel's behavior? According to the Commission, the company's actions over the last decade have damaged "competition, innovation, and, ultimately, the American consumer."

Intel, of course, has been a vocal leader in the patent reform debate over recent years. The company is a member of the computer/software industry's Coalition for Patent Fairness and has publicly called  for changes that would curb litigation it views as "abusive." A Promote the Progress reader has even speculated that Intel was the invisible hand behind several letters offering support for the failed rules package that would have placed arbitrary limits on an applicant's ability to file continuation applications.

The company's policy blog assures us that its efforts to change the patent laws are aimed at encouraging innovation and helping consumers:
...we believe that good faith manufacturers should be able to innovate and develop new products for consumers without having to worry whether they are going to lose the “patent lottery”, where speculative companies that do not produce or sell anything are able to reap large rewards in court for small sums invested in buying up patents and suing on them.
Today's lawsuit reveals an interesting dichotomy. On one hand, the company appears willing to use its own monopoly power to block competition and protect its position. On the other hand, as its patent reform efforts show us, the company objects when others assert against it the monopoly power provided by patents.

The first half of that dichotomy is illegal, which explains the Commission's lawsuit against the company. The second half, however, is not. A patent owner, whether she be the original inventor, a speculator, or even the fabled patent troll, has an exclusive right to practice the claimed invention. And, yes, she can sue a company, even a "good faith manufacturer," that she believes is infringing her patent. Perhaps this explains the company's efforts to change the patent laws.

That dichotomy also leaves Intel in a difficult position. The company must now reconcile its assurances that it seeks patent reform in order to foster innovation and to protect consumers with its alleged anti-competitive tactics, which the FTC claims has had precisely the opposite effect.

Color me skeptical.

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