Telex Corp. v. International Business Machines Corp.
| Citation | 367 F. Supp. 258 |
| Decision Date | 09 November 1973 |
| Docket Number | 72-C-89.,No. 72-C-18,72-C-18 |
| Parties | The TELEX CORPORATION and Telex Computer Products, Inc., Plaintiffs, v. INTERNATIONAL BUSINESS MACHINES CORPORATION, Defendant. |
| Court | U.S. District Court — Northern District of Oklahoma |
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Floyd L. Walker, Floyd L. Walker & Associates, R. B. McDermott, Boesche, McDermott & Eskridge, Tulsa, Okl., Daniel L. Berman, Salt Lake City, Utah, for plaintiffs.
Thomas D. Barr, David Boies, Cravath, Swaine & Moore, New York City, Truman B. Rucker, Rucker, Tabor, McBride & Hopkins, Tulsa, Okl., for defendant.
Finding 1. This case involves the electronic data processing industry—an industry based upon a concept and system of reckoning (binary) as simple as turning on and off a switch; in which transmissions are timed in billionths of seconds (nano-seconds), storage capacity (memory), measured by millions of combinations of bits of information (megabytes); in which numerous problems involving logic or arithmetic functions are separately but simultaneously worked upon and instantly solved within a single system; in which in their own peculiar language machines communicate with one another (multiprocessing) and then in words understandable by humans may present printouts of results at the rate of as much as 2,000 lines per minute; in which devices facilitate maintenance by the detection and isolation of their own malfunctions or mistakes (diagnostic programs); upon which most other industries of the country and countless businesses, as well as science and space explorations, vitally depend; in which product and market developments seem almost kaleidoscopic when viewed from the outside; which appears unique in monopoly context by reason of its youth and apparent dynamics, but which by the same token in this ultramodern setting may be unprecedented also because of increased inducements for, and vulnerability to, sophisticated submarket control on the one hand, and massive industrial espionage on the other.
F2. This is an action brought by the Telex Corporation and Telex Computer Products, Inc. ("Telex") against the International Business Machines Corporation ("IBM") in pursuance of Section 4 of the Clayton Act (15 U.S.C. § 15) to recover treble damages for alleged violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, and Section 2 of the Clayton Act, 15 U.S.C. § 13. IBM counterclaimed against Telex for alleged unfair competition, theft of trade secrets and copyright infringement in reliance upon state law and 17 U.S.C. § 101 with reference to the infringement of copyrights.
F3. Telex's initial complaint was filed on January 21, 1972, in the United States District Court for the Northern District of Oklahoma (Action No. 72-C-18), alleging IBM's monopolization of, and attempts to monopolize, the worldwide manufacture, distribution, sale and leasing of electronic data processing equipment since 1954, and seeking damages in the amount of $238,290,000, trebled, injunctive relief, attorneys' fees, and costs. With the consent of the parties the issues and discovery for the purpose of these proceedings were limited to the United States.
F4. Concurrently with the filing of its complaint Telex moved before the Judicial Panel on Multidistrict Litigation (JPML) in the matter entitled "In re IBM Antitrust Litigation", Docket No. 18, to transfer its case to the United States District Court for the District of Minnesota for coordinated and consolidated pre-trial proceedings with Control Data Corporation v. International Business Machines Corporation, 3-68 Civ. 312, and Greyhound Computer Corporation v. International Business Machines Corporation, 3-70 Civ. 329 (N.D.Ill. 70C 2203), both of which were then pending in that court.1 On February 1, 1972, Telex amended its complaint to describe in more detail its monopolization claims relative to the manufacture, distribution, sale and leasing of plug compatible peripheral products which could be attached to an IBM central processing unit. On February 25, 1972, Telex's motion to consolidate was argued before the JPML.
F5. On March 15, 1972, while its motion for consolidation was pending before the JPML, Telex filed a second complaint in the Northern District of Oklahoma (Action No. 72-C-89) alleging that IBM had violated Section 2 of the Sherman Act (15 U.S.C. § 2) by announcing its "Fixed Term Plan" in May of 1971 and its "Extended Term Plan" on March 1, 1972. Telex sought a temporary restraining order and preliminary injunction from the Oklahoma court. On April 19, 1972, the JPML issued orders transferring the Telex actions to the Minnesota court, Telex Corp. v. International Business Machines, Inc., D.C., 342 F.Supp. 200 (1972), and Honorable Philip Neville, United States District Judge for the District of Minnesota, was assigned to handle complicated discovery and other matters preliminary to trials. Under his able supervision millions of documents were discovered or exchanged and photographed, and various procedural rulings made. On June 12, 1972, Telex filed a supplement to its complaint, alleging violations of the antitrust laws by IBM in the then soon-to-be-announced IBM System 370/168 and 370/158 central processing units (CPU) with integrated CPU memory and integrated disk control circuitry and a lower priced incremental memory. Telex sought injunctive relief preventing IBM from integrating any memory or disk control circuitry into its System 370 central processing units and from lowering its prices for memory incremental to the CPU memory.
F6. On July 21, 1972, in partial response to a motion by Telex, the Minnesota court granted a temporary restraining order enjoining IBM from making any announcement of its 370/168 and 370/158 central processing units until the Minnesota court's decision on Telex's pending motion for preliminary injunction was entered. IBM sought relief from the Minnesota court's action in the Court of Appeals for the Eighth Circuit (Docket No. 72-1447) both by way of appeal and extraordinary writ. That court on July 28, 1972, determined that the temporary restraining order entered by the Minnesota court was tantamount to the issuance of a preliminary injunction because it exceeded the ten day limitation set forth in Fed.R.Civ.P. 65(b). The Telex Corporation v. International Business Machines Corporation, 464 F.2d 1025 (8th Cir. 1972). It was ordered that the preliminary injunction be dissolved because the district court had made no findings relative to the ultimate probable success of Telex on the merits or on Telex's claim of irreparable injury. On July 28, 1972, Telex moved for a second temporary restraining order to be limited to ten days. That motion was denied on August 1, 1972. On October 6, 1972, the Minnesota court, after the submission of affidavits, evidentiary appendices and briefs, denied Telex's motion for a preliminary injunction as well as IBM's motion for summary judgment. After extensive pre-trial discovery on both sides in the Minnesota proceedings, Telex finally amended its complaint on January 2, 1973, to demand damages in the amount of $416,100,000, trebled, and on January 8, 1973, filed an amended consolidated complaint.
F7. Telex moved on January 9, 1973, that its cases be remanded to the Northern District of Oklahoma for trial. On January 10, 1973, the case was assigned to this Judge for final pre-trial preparation and trial. Telex's remand motion was granted on January 15, 1973, and as of that date, subject to the Minnesota district court's retention of jurisdiction on certain privilege issues, which have now been finally resolved, this court obtained jurisdiction of these proceedings. On January 22, 1973, IBM answered Telex's amended consolidated complaint and filed two counterclaims—one alleging unfair competition and theft of IBM trade secrets, and the second alleging Telex's infringement of IBM copyrighted manuals.
F8. Pre-trial conferences were held before this court on February 20, March 30, and April 13, 1973. At the final pre-trial conference a jury, previously demanded on both complaints and the counterclaims, was waived by both sides. This court entered a final pre-trial order, based largely upon the March 30 conference, on April 12, 1973, which enumerated in detail the contentions of the parties, stipulated and disputed factual matters, the documentary evidence intended to be offered, and the witnesses to be called by the respective parties.
F9. Trial commenced on April 16, 1973, and the record was closed on May 24, 1973, after 29 days devoted to the taking of evidence. The expedition of the case consistent with full, fair and vigorous presentations was due in important measure to the ability, organizational talent, diligence and experience of counsel, together with the routine informal conferences held each morning before the convening of court among court and counsel where evidentiary problems were anticipated, presented and explored and the management of proceedings was otherwise charted from day to day. A brief post-trial conference was held on May 25, 1973. The parties submitted their separate proposed findings of fact and conclusions of law in compliance with the request of the court, and on June 18 and 19, 1973, oral arguments were had. Whereupon the case was submitted for decision and by the court was taken under advisement. On September 17, 1973, findings of fact, conclusions of law and judgment and decree were filed. On October 16-18, 1973, timely postjudgment motions for correction and amendment thereof were argued to the court and submitted...
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