Antitrust Measure Sparks Fight in Congress

The infotech industry is split over a bill that would ease bundling of software and hardware

The infotech industry has split over a congressional proposal to weaken antitrust laws that restrict the bundling of software, hardware and other products.

The Washington-based Computer & Communications Industry Association has taken the lead against the proposal, saying it will reduce competition, provoke lawsuits, hurt consumers and unfairly benefit the largest companies.

The bill, titled the Antitrust Intellectual Property Protection Act of 1995, is sponsored by Rep. Henry Hyde, R-Ill., chairman of the House Committee on the Judiciary, and is backed by several major companies that own intellectual property. These companies include Data General Corp., Westboro, Mass., and the Atlanta-based Coca-Cola Co., which often combines its well-known logo with other products.

If enacted, Hyde's bill would "change the burden of proof in litigation... about bundling," said one backer of Hyde's bill.

Because of a 1984 decision by the 9th Circuit Court of Appeals in California, a patent or a copyright is assumed to give a company economic power in the marketplace. If two companies combine patented or copyrighted products ? perhaps by selling all computers already loaded with a particular software product ? there is an increased likelihood of a guilty verdict in any antitrust lawsuit, he said.

Hyde's bill explicitly eliminates this legal assumption because copyrights and patents don't automatically ensure economic power in the real world, he said. Similar products produced by other companies weaken the market power of each copyright or patent and reduce antitrust concerns.

"This is very positive for people who develop integrated systems... and people who are technology innovators," said Jacob Frank, general counsel for Data General, which was a party in the 1984 court decision.

But according to a statement released by the CCIA, Hyde's law would "impede small companies, new market entrants and other dominant players' ability to compete in the high-tech arena." The association's members include Amdahl Corp., Sunnyvale, Calif., Sun Microsystems Inc., Mountain View, Calif., AT&T, NYNEX and Bell Atlantic.

Executives from small companies have long complained about the bundling of computers and software sold by Microsoft Corp., Redmond, Wash. These complaints helped trigger a 1993 antitrust investigation by the Justice Department, resulting in an agreement by Microsoft to change its marketing practices.

The CCIA is also using a recent report by the Federal Trade Commission as ammunition in its campaign against Hyde's bill. The FTC report, Competition Policy in the New High-Tech, Global Marketplace, recommends that government officials proceed cautiously when considering change to infotech antitrust law.

Participants in the fight over the bill said they don't know whether the bill might win approval in the House or Senate this year. Sen Patrick Leahy, D-Vt., has won Senate approval for similar measures in previous years.

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