An Italian IT company with just 10 employees has won three rounds of a legal battle with Intel and is hoping to deliver the knockout punch when the bout resumes before a Rome judge later this year.
Marcello Console, a computer enthusiast who trained as an accountant, founded an information technology company in the southern town of Monopoli in 1993. Five years later, the company, Ditta Genesys di Marcello Console, began selling modified Intel microprocessors, named B52 after the Vietnam era bombers. Last year, the activity landed him in court.
The modification process, known as "overclocking," enabled Genesys to offer its clients savings of between 20 percent and 60 percent on processors offering the same performance as higher range Intel chips, Console claims. But the US chip maker took exception to the fact that Genesys was selling its product under the brand name B52 MMX and took out a preliminary injunction in a Rome court, seeking confiscation of the product and a ban on further production.
The first round was decided in February 1999, with Genesys coming out just ahead on points. A judge in a Rome civil court ordered the confiscation of all products bearing the B52 MMX brand name, banned Console from using the brand names MMX, Intel and Pentium and ordered the Italian entrepreneur to remove all such labels from the products he offered for sale in the future. The judge also rejected Console's definition of his activity as "assembly."
But, according to court documents posted on the Genesys Website, the judge ruled that Console's activity did not violate laws governing the use of trademarks or regulations on the correct conduct of business practices, provided Console was open in its activity and its use of the modified microprocessors was easily discoverable by purchasers of the product.
"The request of Intel that Marcello Console be prohibited from continuing the activity of manipulating the microprocessors of Intel is to be rejected, since such an activity is in itself lawful," Judge Nicolo Scaramuzzi wrote in his ruling.
"When we discovered that we had made improper use of the MMX trademark we immediately withdrew the product," Console says. "In any case, we sold very few of those microprocessors, only around 150."
A second round of the legal battle, last February, ended even more clearly in Genesys' favor. Judge Eugenio Curatolo's verdict defined overclocking as the "modification of the mother board, configured at frequencies different from those recommended to users by Intel."
He rejected Intel's appeal against the earlier verdict, saying the defendant had restricted himself to assembling base components built by other manufacturers "for the purpose of creating a more complex product, an activity in itself lawful and achievable by any user." The judge also rejected Intel's assertion that its reputation might be damaged by the poor performance of its modified microprocessors.
"Any problems resulting from the use of the product marketed by Ditta Genesys would be attributed by an expert user to the operation of overclocking," the judge wrote. Damage to Intel's reputation "appears entirely hypothetical."
A third hearing in June rejected another Intel appeal, on a legal technicality, and ended with the judge ordering the US company to pay costs of 3.25 million lire ($US1,480).
"After three verdicts we consider we can operate without problems," Console says. "We have always acted in good faith. We are open to any form of collaboration with Intel and continue to seek an amicable solution."
For Intel, the key ruling on the merits of the case will come when a Rome judge rules on its request for damages. A hearing is expected sometime in the next six months. Intel is seeking 2.4 billion lire in damages from the Italian IT company, while Genesys has filed a counter suit claiming 18 billion lire in damages for alleged public denigration by Intel and lost revenue, Console says.
"It's a complex issue. You always have people who, as individuals, decide to modify the product they are buying. You can do it. There are several Websites explaining how to do it," says Benoit Philippe, a UK-based lawyer for Intel.
Genesys' commercial activity constituted an exceptional case and amounted to unfair competition, he says. "We do not want our product used outside the specification. If we set a specification for our product it is because it has been tested and we warranty the product in consequence."
If a car is safe to drive at 130 kilometers an hour it may not be safe at 180 kilometers an hour, Philippe says. Modified microprocessors might fail, causing computers to crash and resulting in discredit for Intel's products, particularly if the processors were used in critical applications, such as hospital computers, he says. Other Intel sources say the preliminary injunction hearings were based on limited data and did not go deeply into the merits of the case.
Console however is optimistic that the next round will go his way as well. For one thing, he says, it will be heard by Judge Curatolo, who has already found in his favour. "I don't think he is going to change his mind and contradict himself in the final judgment. The principle has been established that our activity is lawful and we are continuing with it on that basis," he says.
Genesys' products are recommended for home and office use, but Console is confident in their reliability. "Genesys can confirm that the temperatures of the functioning microprocessors are equivalent to those of the Intel originals. Our laboratory tests have shown that," he says.
Console is satisfied at the outcome so far in his battle against the Goliath of the microprocessor industry but says it has cost him dearly in stress and anxiety.
"On the first day in court I was there with my lawyer and there was a team of eight lawyers representing Intel. It makes you feel really small," he says. "The real winner is my lawyer. These judgements are creating legal precedent."
In the long term, he admits, his overclocking activity is doomed. The latest generation of Intel chips have their multiplication factor fixed inside the processor and cannot be modified from outside.
"With the Pentium 4, Intel will ensure that our work ceases," he says. "We are an uncomfortable competitor and it's in their interest to eliminate us."
But the businessman from the heel of Italy has not given up hope and is currently looking for technology partners, particularly in Asia.
"My dream has always been to have a microprocessor of my own," he says.
Genesys can be contacted at http://www.genesys-b52.com.
Intel can be contacted at http://www.intel.com.