Intergraph Corp. v. Intel Corp.
| Decision Date | 05 November 1999 |
| Parties | (Fed. Cir. 1999) INTERGRAPH CORPORATION, Plaintiff-Appellee, v. INTEL CORPORATION, Defendant-Appellant. 98-1308 DECIDED: |
| Court | U.S. Court of Appeals — Federal Circuit |
William L. Jaeger, Townsend and Townsend and Crew LLP, argued for plaintiff-appellee. Of counsel on the brief were David Vance Lucas, Senior Counsel, Intergraph Corporation, of Huntsville, Alabama; and John G. Roberts, Jr., Hogan & Hartson L.L.P., of Washington, DC.
Marc G. Schildkraut, Howrey & Simon, of Washington, DC, argued for defendant-appellant. With him on the brief was Joel M. Freed. Of counsel on the brief were Peter N. Detkin and Thomas C. Reynolds, Intel Corporation, of Santa Clara, California.
Lars H. Liebeler, Thaler & Liebeler, of Washington, DC, amicus curiae for Computing Technology Industry Association-Technology Access Action Coalition.
Before NEWMAN, Circuit Judge, SMITH, Senior Circuit Judge,* and PLAGER, Circuit Judge.
Intel Corporation appeals the grant of a preliminary injunction by the United States District Court for the Northern District of Alabama.1 We vacate the injunction.
Intel is a manufacturer of high performance computer microprocessors. The microprocessors are sold to producers of various computer-based devices, who adapt and integrate the microprocessors into products that are designed and sold for particular uses. These producers are called original equipment manufacturers, or OEMs. Intergraph Corporation is an OEM, and develops, makes, and sells computer workstations that are used in producing computer-aided graphics. From 1987 to 1993 Intergraph's workstations were based on a high performance microprocessor developed by the Fairchild division of National Semiconductor, embodying what is called the "Clipper" technology. Intergraph owns the Clipper technology and patents thereon. In 1993 Intergraph discontinued use of Clipper microprocessors in its workstations and switched to Intel microprocessors. In 1994 Intel designated Intergraph a "strategic customer" and provided Intergraph with various special benefits, including proprietary information and products, under non-disclosure agreements.
Starting in late 1996 Intergraph charged several Intel OEM customers with infringement of the Clipper patents based on their use of Intel microprocessors. The accused companies sought defense and indemnification from Intel. Negotiations ensued between Intel and Intergraph. Intel inquired about a license to the Clipper patents, but the proposed terms were rejected by Intergraph as inadequate. Intel then proposed certain patent cross-licenses, also rejected by Intergraph. Intel also proposed that the non-disclosure agreement relating to a new joint development project include a license to the Clipper patents; this too was rejected by Intergraph. As negotiations failed and threats continued the relationship deteriorated, and so did the technical assistance and other special benefits that Intel had been providing to Intergraph.
In November 1997 Intergraph sued Intel for infringement of the Clipper patents. Intergraph also charged Intel with other violations of law, including fraud, misappropriation of trade secrets, negligence, wantonness and willfulness, breach of contract, intentional interference with business relations, breach of express and implied warranties, and violation of the Alabama Trade Secrets Act. Intergraph demanded that Intel be enjoined from infringement of the Clipper patents, and the award of compensatory and punitive damages and trebled damages.
Intergraph moved to enjoin Intel pendente lite from cutting off or delaying provision of the special benefits that Intel had previously provided to Intergraph. Following Intel's opposition to this motion Intergraph amended its complaint to charge Intel with violation of the antitrust laws. After a hearing, the district court held that Intel was a monopolist and had violated sections 1 and 2 of the Sherman Act or was likely to be so shown, and issued a preliminary injunction that included the following provisions:
a. Intel shall supply Intergraph with all Intel product information, including but not limited to technical, design, development, defect, specification, support, supply, future product, product release or sample data, whether existing in product data books, "yellow backs," Confidential Information Transmittal Records, email or other mediums . . . , whether it is on an advance basis for the development of motherboards, graphics subsystems or workstations utilizing Intel's existing, or future generation products (hereinafter "Product Development"), or current products as needed for support of such products. . . .
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c. Intel shall supply Intergraph with an allocation, and set aside a supply of microprocessors, semiconductors, chips, and buses (hereinafter "Chips") on an advance basis for product development ("Chips Samples"), in such quantities as forecasted by Intergraph in the same manner and the same terms as is done by Intergraph's similarly situated Competitors, . . . .
d. Within eleven (11) days of the date on which Intergraph posts the bond, as required by subsection (h) of this order, Intel shall supply Intergraph with 25 sets of Deschutes Chips Samples, together with all technical data needed to permit Intergraph to develop, design, and manufacture its products. . . .
e. Intel shall supply Intergraph with an allocation, and set aside a supply, of Chips which have been manufactured by or on behalf of Intel for distribution (hereinafter "Production Chips"), as well as all future chips proposed by, or available from Intel, including but not limited to 333mhz Pentium II, BX, Deschutes and Merced Chips, in accordance with a forecast supplied by Intergraph. . . .
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(ii) Intel shall supply Intergraph with Production Chips not yet available from Intel's authorized distributors ("Early Production Chips") in such quantities as forecasted by Intergraph, or in proportional quantities as supplied to Intergraph's similarly situated Competitors, . . .
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i. Intergraph shall maintain the confidentiality of all Information, Third Party Information, Chip Samples and Early Production Chips, in accordance with the terms, conditions and procedures of the applicable non-disclosure agreements as previously agreed to by the parties . . . .
Intel appeals, arguing that no law requires it to give such special benefits, including its trade secrets, proprietary information, intellectual property, pre-release products, allocation of new products, and other preferences, to an entity that is suing it on charges of multiple wrongdoing and is demanding damages and the shutdown of its core business. Intel states that its commercial response to Intergraph's suit is not an antitrust violation, and that this "garden-variety patent dispute" does not warrant the antitrust remedy here imposed. Intel also states that the scope of the injunction far exceeds the special benefits that had previously been accorded to Intergraph, and that it is unworkable, as well as unfair to Intel's overall business relationships, for the court to promote Intergraph to a disproportionately favored position.
Intergraph's response is that it can not survive in its highly competitive graphics workstation business without these services and benefits from Intel, and that the district court simply acted to preserve Intergraph's prior commercial position while the parties litigate unrelated patent issues. Intergraph states that the national interest requires that patentees be free to enforce their patents without risk of retaliatory commercial response from the accused infringer. Intel disputes these premises, and also points out the incongruity of Intergraph's statement that it is essential to Intergraph's business that it have the products for which it is demanding the shutdown of Intel's production.
On appellate review, except for issues within the Federal Circuit's exclusive jurisdiction we apply the discernable law of the regional circuit. See Mikohn Gaming Corp. v. Acres Gaming, Inc., 165 F.3d 891, 894, 49 USPQ2d 1308, 1310 (Fed. Cir. 1998) (); Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1067, 46 USPQ2d 1097, 1103 (Fed. Cir. 1998) (en banc) ().
In Lucero v. Operation Rescue, 954 F.2d 624, 627 (11th Cir. 1992) the Eleventh Circuit summarized the criteria for grant of a preliminary injunction as (1) the party seeking the injunction has shown a substantial likelihood of success on the merits, (2) there is a substantial threat of irreparable injury in absence of the injunction, (3) the balance of harms favors the party seeking the injunction, and (4) entry of the injunction does not disserve the public interest. These criteria apply to antitrust issues as to other areas of law. See DFW Metro Line Serv. v. Southwestern Bell Telephone Co., 901 F.2d 1267, 1269 (5th Cir. 1990) () The burden of establishing entitlement to the injunction is on the movant. Nnadi v. Richter, 976 F.2d 682, 690 (11th Cir. 1992).
The grant of a preliminary injunction is reviewed on the standard of abuse of discretion. This standard requires plenary review of the correctness of the district court's rulings on matters of law, including the correctness of the legal criteria used in evaluating the likelihood of success on the merits. See Bah v. City of Atlanta, 103 F.3d 964, 966 (11th Cir. 1997) (...
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