The timing of any Justice intercession – as requested by IBM in the battle between IBM and Judge Thomas O’Neill’s ruling in the suit brought by Allen-Myland Inc against IBM (CI No 1,602) is impossible to foresee; it could occur in the present case or as the decision is appealed. The present case will not be concluded for several weeks; damage awards must be set and added to the initial rulings which cover the concepts of the case. The technical nature of the intervention would most likely be in the form of an amicus curiae memorandum. IBM’s arguments to Justice put forth more than one reason for intervention. Because the decree on which Judge O’Neill based his decision does not specifically mention microcode, IBM asserts that the court took excessive liberties in interpreting the consent decree.

Vegetable

The decree is a contract, not a law, and therefore not subject to interpretation. However, in his ruling the judge did not really think it important whether microcode was hardware (mentioned in the 1956 decree) or software (which was not included in the decree). The judge focussed on the effect of IBM’s policies on an outsider’s ability to reconfigure machinery. Whether microcode is hardware, software or vegetable, it is an intrinsic part of a mainframe. For all practical purposes, IBM makes it part of the hardware by keeping mainframe microinstruction architecture secret. The worst possible outcome for IBM might not be a refusal of Justice to accept IBM’s assertion that microcode is software, but rather an attempt by Justice to put the microcode into the competitive arena. Justice could ask IBM to publish the internal specifications of its machines so that others might be able to write alternative microcode. This would raise the possibility that IBM might be compelled to maintain mainframes that had non-standard microcode – and make IBM rue the day it first said microcode wasn’t part of hardware. Another argument against the court’s finding is based on a seminal case called Tempo Music. That case infolved the owner of a jukebox who refused to pay royalties on all the tunes his customers played. ASCAP owned rights to some of the tunes but wanted royalties on every play, ASCAP tune or not. Tempo said it would pay royalties only if ASCAP could accurately say which songs were under its control. Because ASCAP would not provide Tempo with the information needed to compute the correct royalty payment, a court held that Tempo owed ASCAP nothing from an economic standpoint, ASCAP had forced Tempo to act as it did. The connection between this case and the ruling against IBM’s assertion of damages comes from IBM’s pricing for microcode. By charging a huge sum for the microcode, IBM’s adversaries assert, the manufacturer has compelled (in economic terms) those that wish to split big mainframes into small ones to violate IBM’s copyright. IBM believes that it offers an alternative that moots the Tempo argument: if a refurbisher turns a very small and old (and therefore inexpensive) mainframe plus a big one into two medium-sized ones, IBM’s charges for microcode are low. The 1956 consent decree isn’t static. –

By Hesh Wiener

It has been modified and modernised over time by agreements between IBM and the Justice Department, most recently in 1970. But it remains an annoyance to the manufacturer, and six years ago IBM tried to get Justice to scuttle it. At the time, the Reagan Administration’s Justice Department was trying to clear out old settlements that were creating work for the government but which had no practical benefit to the public. So IBM’s effort did not come from out of the blue, so to speak. Alerted to IBM’s mission, CDLA sent an emissary to Justice and helped persuade the government that the 1956 consent decree was best left intact. Not coincidentally, the very same outside attorney who helped CDLA in the mid-1980s prepared the amicus curiae brief filed by CDLA in the AMI case: Lawrence W Boes of Fulbright Jaworski & Reavis McGrath. These adversarial actions were mild compared with those that may soon occur. A numbe

r of leasing industry executives feel that their firms could be forced to leave the IBM market because the manufacturer is bent on controlling its equipment from cradle to grave. They believe that this control is not only inimical to their secular interests but also a danger to the customer base that is wedded to IBM. Trapped by huge investments in software and know-how, say many lessors, American companies would be subject to enormous pressure from an unfettered IBM. On January 8, CDLA’s elected chairman Joe Kelly, its professional president Ken Bouldin and attorneys from Weil Gotshal went to the Justice Department. They want Justice to take a long, hard look at IBM and, if it sees what CDLA sees, to tell IBM to constrain its anticompetitive activities and withdraw to within the boundaries set out by the 1956 consent decree. Later that week, CDLA held a board meeting in Denver at which it reviewed its situation vis-a-vis IBM. There, a group of CDLA members created a trust called the Computer Leasing Industry Contingency Fund, ruled by a board of five or six trustees. The company at the heart of this process is Comdisco Inc, the largest and most respected independent lessor but, because of its size and diversity, not the lessor most vulnerable to IBM.

Contingency Fund

Lessors were asked to kick in $100,000 apiece. Some have pledged that amount, others have agreed to pay half that sum or less. Because the donors names and the sizes of their contributions have been kept secret, it is still impossible fully to characterise the trust’s composition and financial power. However, sources close to the matter reckon that $1m to $2m will soon be amassed. By comparison, CDLA’s budget for 1990 was about $1.4m, and the increase in the organisation’s legal expenses is now projected to increase that total by about 10% during 1991. For the moment, all CDLA’s legal activities will be funded out of the organisation’s budget. The Contingency Fund will be tapped, if necessary, to supplement CDLA’s regular funds. CDLA’s lawyers will survey the antitrust terrain, gather information to pinpoint transgressions by IBM and develop a realistic assessment of the options available to the organisation and its constituent members. With many CDLA members still ignorant of their trade group’s activities and others yet unsure exactly where they stand, the coming months could prove stormy. CDLA is likely to be split into hawkish and dovish factions – but in the end will arrive at an uneasy consensus. Along the way, other events, such as the lawsuit filed by IBM Credit Corp against Comdisco on January 24, could complicate matters, particularly for the smaller firms that have all they can do to run their businesses without going to war.(C) 1991 Technology News of America