California Computer Products v. Ibm Corp.

613 F.2d 727 (1979)

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Nature of the Case

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Facts

D is one of the largest industrial corporations in the world. It achieved technical leadership in the computer industry over other early entrants and pioneered the development of many electronic data processing products, including the disk drive products. P began manufacturing computer products and also entered the disk drive products market, manufacturing disk drives and controllers that were 'plug compatible' with IBM's and other suppliers' CPUs. P's formula was to reverse engineer and improve upon a D design and undersell D to its own customers. In 1971, D released a new line of computer products with dramatically more integration. Many of the peripheral elements that had previously been sold separately were not part of a single machine. D computers now featured integrated disk drives and memory. There was no longer a need for anyone to purchase P’s individual components. Worse for P, it was cheaper to buy D’s new machines than it was to purchase a CPU and add in P’s products. P sued D claiming a violation of §2 of the Sherman Act. The district court granted D's motion for directed verdict. P appealed.