Spin-doctoring the 1992 arbitration agreement
Both AMD and Intel make reference to the 1992 arbitration agreement that settled a long-running dispute between them, but you'd scarcely know it from the quotations each company chooses.

According to AMD's complaint:

in a "deliberate[]" effort "to shackle AMD progress," Intel sent AMD information "deliberately incomplete, deliberately indecipherable and deliberately unusable by AMD engineers." The conduct was, in the arbitrator's words, "inexcusable and unworthy." And it was not isolated. Intel elsewhere tried to "sabotage" AMD products, engaged in "corporate extortion" and demonstrated a near-malevolent determination "to use all of its economic force and power on a smaller competitor to have its way."

When AMD petitioned to compel arbitration in 1987 for Intel's breach and bad faith, the arbitrator took notice of Intel's anticompetitive design: "In fact, it is no fantasy that Intel wanted to blunt AMD's effectiveness in the microprocessor marketplace, to effectively remove AMD as a competitor."

Intel, however, presents a different viewpoint on the situation—and a surprisingly different set of quotations:

Intel further states, that, among other findings, the arbitrator concluded that AMD was not the 'victim' of Intel's alleged plan, but was "victimized by its own inability to adjust to what it knew to be reality," and, with respect to AMD's delay in the development of competitive products, that "Intel's actions had very little to do with AMD's conduct."

And:

the arbitrator awarded AMD the remedies cited in paragraph 16 of AMD's complaint, including a financial reward of less than 1% of the amount sought by AMD, which was substantially less than the cost of litigation . . . in conclusion, the arbitrator found that: "most of the many claims which AMD has made have come to naught" and that AMD's claims (many of which are repeated in the present Complaint) had a "big problem, [namely] that AMD assumes a somewhat romanticized factual situation which, like Camelot, never existed"

AMD's version of the story reads as though the arbitrator sided firmly with them; Intel's version implies that AMD was granted nothing but a pittance. The truth, as it often does, lies somewhere in the middle—and in this case, is considerably more interesting.

J. Barton Phelps was the arbitrator who resolved the AMD-Intel dispute, and all available evidence indicates he believed both manufacturers had played each other foul. According to a 1990 New York Times story (reprinted here):

In his opinion, Mr. Phelps roundly castigated both companies.

He called Intel's conduct ''a classic example of the breach of the covenant of good faith and fair dealing: preaching good faith but practicing duplicity.''

He characterized Advanced Micro's behavior as ''unremitting vindictiveness accompanied by a large dollop of opportunism.'' He also said Intel's behavior did not excuse Advanced Micro from having to come up with acceptable products to trade. ''The problem is that A.M.D. assumes a somewhat romanticized factual situation which, like Camelot, never existed,'' he said in the ruling.

Phelps' disgust and castigation of both companies, however, should not be confused with his findings in the Intel-AMD case. His decision—and Intel's appeal of it all the way to the California Supreme Court—touched off a legal battle over how much leeway and power an arbitrator could exercise when determining appropriate remedial penalties.

The specifics of the AMD-Intel decision are best laid out by Harvey W. Berman, in the following excerpt from an article on arbitration remedies:

the arbitrator found that Intel had breached the implied covenant of good faith and fair dealing, as well as an implied covenant requiring the parties to negotiate reasonably to make their relationship work . . . Intel breached these covenants when it decided to frustrate the operation of the contract by taking no more products from AMD and by keeping this decision from AMD and the public.

AMD was partially responsible for its own damages because it had unnecessarily delayed seeking alternative ways to enter the 32-bit chip market . . . AMD should have sought arbitration or begun reverse engineering the 32-bit chip much sooner. Since AMD did not produce its own 32-bit chip until 1991, the arbitrator declined to award the company the hundreds of millions of dollars it sought from Intel in lost 32-bit chip profits.

The arbitrator nevertheless ruled that AMD had lost profits and goodwill as a result of Intel's conduct, that actual damages were immeasurable, and that nominal damages were inequitable. Accordingly, the arbitrator decided that the proper remedy was to relieve AMD from legal harassment by Intel over AMD's alleged use of Intel intellectual property in the reverse engineered AMD 32-bit chip. Therefore, in addition to other relief that was not in dispute, the arbitrator awarded AMD a permanent, nonexclusive, royalty-free license to any Intel intellectual property embodied in AMD's 32-bit chip, and a further two-year extension of certain patent and copyright licenses previously provided by Intel to AMD to the extent they related to the AMD 386.

Intel appealed the arbitrator's decision to award these licenses over the course of the next two years, until the California State Supreme Court elected to hear the case. In its decision, the court noted:

the challenged remedies were "rationally drawn from the arbitrator's conception of the contract's subject matter and the effect on AMD of Intel's breach." Thus, the award did not exceed the arbitrator's powers. [emphasis mine] There was nothing to indicate that the arbitrator resorted to an extrinsic source in fashioning the remedy.

The principles established by this case became a touchstone in California when determining whether or not an arbitrator had overstepped the bounds of his authority when determining remediation.

Intel's discussion of the 1992 arbitration, while factually correct, strives to create the inaccurate impression that AMD was repudiated and gained little of value. In reality, Intel spent the next two years in court, attempting to deny AMD the licenses on which its products, at that time, depended.

Intel and the Japanese FTC
AMD's initial complaint discussed the Japanese FTC's (hereafter referred to as the JFTC) findings and recommendation that Intel cease and desist from certain conducts that violated Section 3 of Japan's Antimonopoly Act. AMD listed five major Japanese OEMs (Sony, Toshiba, NEC, Fujitsu, and Hitachi), and followed the details of each specific allegation by stating: "In proceedings brought by the JFTC, Intel has accepted the JFTC charges of misconduct with respect to" (each OEM in turn.)

Intel's response to AMD's claim is as follows:

Intel denies that it has "accepted the JFTC charges of misconduct . . . " and states instead that Intel elected not to contest the JFTC's recommendation decision for purposes of that Japanese proceeding only. Intel did dispute the substance of the charges made by the JFTC and has stated publicly that it does not agree with all the facts underlying the JFTC's allegations and the application of law in the recommendation decision.

The distinction, in this case, is important. According to Hiroshi Yamada, director of the JFTC's third investigative division, "Intel is not required to accept the findings of fact when they accept the recommendations."

Intel's rejection of the JFTC's findings of fact will prevent AMD from introducing the JFTC decision as an open-and-shut example of Intel's illegal monopolistic behavior, and will allow Intel to contest any weight given to the JFTC decision.