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Source link: http://archive.mises.org/13481/can-lawyers-design-computer-chips/

Can Lawyers Design Computer Chips?

August 4, 2010 by

The Federal Trade Commission published its order against Intel today. Most of the order actually deals with intellectual property issues, a domain the FTC has progressively tried to wrestle away from the patent system and the courts. This order does bring the FTC one step closer to being the nation’s de facto IP regulator, but that is not the most noteworthy thing. That honor falls to this paragraph:

Respondent [Intel] shall not make any engineering or design change to a Relevant Product if that change (1) degrades the performance of a Relevant Product sold by a competitor of Respondent and (2) does not provide an actual benefit to the Relevant Product sold by Respondent, including without limitation any improvement in performance, operation, cost, manufacturability, reliability, compatibility, or ability to operate or enhance the operation of another product; provided, however, that any degradation of the performance of a competing product shall not itself be deemed to be a benefit to the Relevant Product sold by Respondent. Respondent shall have the burden of demonstrating that any engineering or design change at issue complies with Section V. of this Order.

Dan Crane commented, “It makes me nervous to think that the FTC is going to have an open-ended right to decide that Intel’s design changes are predatory because they do not provide ‘any actual benefit’ to the product.” Crane suggested, “Benefits, like beauty, are often in the eye of the beholder.” Wait, value is subjective? Where have I heard that before?

But seriously, this is the victory the FTC was after. It can now veto individual product-design changes in Intel products, for any reason and without any outside review. It does not matter if the FTC never uses this power; the mere threat will require Intel and its competitors to divert additional resources away from actually developing new products and towards paying more antitrust lawyers and outside “consultants” who can lobby the FTC, either to encourage action against Intel or keep the regulators at bay. Antitrust is nothing more than a welfare system for lawyers who cannot otherwise provide a marketable good or service. The Intel order will keep more than a few of these individuals in middle-to-upper-class luxury for years to come.

UPDATE: Joshua Wright—a former FTC hack himself—has some cogent thoughts on other provisions of the Commission’s order, which is looking more and more like an outright nationalization (FTC-ization?) of Intel. Wright thinks Intel would have (eventually) prevailed in litigation. I tend to think he’s right. If I’m an Intel shareholder, I’m demanding some answers from management and the board.

2ND UPDATE: Not surprisingly, the in-bed-with-Leibowitz Washington Post runs an unabashedly pro-FTC news article on the order, which misleads readers into thinking the FTC legally found Intel guilty of antitrust violations. There was no such finding. In a “consent order,” there is no finding of law by the Commission or admission of guilt by the accused. The Post knows better yet chose to mislead its readers.

{ 16 comments }

J. Murray August 4, 2010 at 12:58 pm

Effing lawyer speak. Is that saying Intel is not legally allowed to make a better product now? How does this help the consumer?

R. Fleming August 4, 2010 at 1:19 pm

Being in the IT field, what this was probably supposed to subdue was as a mildly technical example: in Intel’s C Compiler (icc), it would compile both heavily optimized code and very base generic code into the application the developer was compiling. “Very base generic code” means, purposely “taking the scenic route” or “taking the long way around”. It would do this in such a way that when the compiled application was ran on an Intel processor, then it would get all of the optimization benefits, however if it was not an Intel processor, then it would get the absolute slowest path, even if the processor partially or even fully supported the other path.

This description is very generalized, it’s probably much more complex and could be much more accurate than that, but it is just as a high-level description.

Of course, the paragraph cited, while it may cover the situation above, is of course sounded very general and expanded and could be applied to other items (or may have been intended to cover other items as well, I just know the issue above has been prominent.)

S.M. Oliva August 4, 2010 at 1:57 pm

Your comments are well taken, but I think the qualifier here is that you are “in the IT field.” The FTC is most certainly not in the IT field. And they are the ones enforcing this “agreement.”

R. Fleming August 4, 2010 at 2:35 pm

I fully agree, and the paragraph actually goes against my principles also, I just wanted to provide a possible context.

matskralc August 4, 2010 at 2:09 pm

Intel hardly has the only C compiler, though.

Not that even that should matter.

R. Fleming August 4, 2010 at 2:37 pm

And the free market works well in this case, because hardly anyone actually uses the Intel C compiler (except for certain edge cases where it’s in a controlled environment.)

Intel does use it though in creating their marketing benchmarks I believe, although that doesn’t really matter anyway, since competitors could make the customer base more knowledgeable about these things.

Shay August 4, 2010 at 1:36 pm

How about if a company first of all bought its own raw materials, so that it owned them, then formed them into useful products, and then (this is the important part), offered them in exchange for money, with the buyers being totally free to decline the transaction. This way, the buyers would have nothing to complain about, since they entered the transaction without coercion. I’d think if a company went to these lenghts, nobody should have any grounds for action against them.

Oh, wait…

Lee August 4, 2010 at 3:20 pm

This ruling doesn’t seem to be about Intel’s chip designs but about their software compiler’s. They are upset that Intel designs compilers that are optimized for Intel chips and not competitors. It doesn’t seem to matter that there are already third-party open source compiler’s that optimize for all chips…

Capt Mike August 4, 2010 at 5:48 pm

So the case was BASED on Intel’s compiler, BUT…. Does the consent apply to their hardware too?

pussum207 August 4, 2010 at 8:42 pm

Um, for those who are trying to follow along, what page are we at in the US government’s attempt to use Atlas Shrugged as a template?

Jim August 4, 2010 at 8:45 pm

Well pussum, considering how long Atlas Shrugged is we’d have to be in the triple digits.

GUILT August 5, 2010 at 5:44 am

I think this is a wonderful step: Perhaps now Intel will care about serving humanity rather than serving themselves.

matskralc August 5, 2010 at 9:03 am

I think the most distressing thing to me is that the tech-related news feeds I read and the people who comment on them are celebrating this as a victory for freedom.

We’ve got a long way to go.

Shay August 5, 2010 at 9:56 am

It seems that people view this as a battle against the bad guys, who keep causing us hardships. They don’t realize that it’s disrespect for property rights that lets the bad guys cause us harm in the first place (and that everyone can be a bad guy, if given undue power). Let Intel do whatever the hell it wants with its own molecular property, and we’ll be fine.

Joe Peric August 5, 2010 at 11:34 am

I first got into computers back in 2000/2001 when the Intel and AMD wars were very hot and in the news. I was very much in the AMD camp, and I never really cared to question the legitimacy of state laws. I just thought “we need the government to stop monopolies”

Since I’ve shown up here over a year ago, I’ve learned plenty, and don’t agree with the above anymore. Heck, the government is a monopoly and uses IP laws to hand out monopolies.

WizardNote December 4, 2010 at 2:45 pm

Property rights are very vague in that case. Don’t you think?

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