"The Case of the Century"

On the last working day of the Johnson Administration in January 1969, the Justice Department filed suit against International Business Machines, accusing it of monopolizing the "general purpose" computer business. Specifically, IBM was charged with trying to force customers to buy entire IBM systems for commercial use, and with keeping competitors out of the market. A decade later U.S. vs. IBM is still droning on, a costly monument to the law's delay. The frustrating case, Yale Professor Robert Bork told TIME'S conference, is the antitrust division's "Viet Nam." Thomas Barr, the Cravath, Swaine & Moore attorney who is leading the IBM defense, explained at the meeting why he sees no light at the end of the tunnel.

For three years after its complaint was filed, Barr recounted, the Government did almost nothing. Pretrial "discovery," which allows lawyers to search for facts and find out what evidence the other side plans to use, did not begin until 1972. For the next two years, each side deluged the other with paper, 30 million pages worth. After several delays, the trial began in 1975 in U.S. District Court in Manhattan. It took the Government almost three years to present its case; one witness alone testified for 78 days.

Yet, Barr said, the case is now "almost dead in the water." Reason: the Government insisted on yet another round of discovery starting last year. Federal attorneys began deposing IBM witnesses again and requesting even more documents. Queried by TIME, the Government's chief lawyer in the case, Robert Staal, insisted that in order to cross-examine IBM's witnesses, the Government needs to know what IBM has been doing in the computer industry since 1974, when the first round of discovery ended. But Barr contended that since the case started, the Government has brought in a whole new team of lawyers, who had to educate themselves. Scoffed Barr: "This is a continuous reinvention of the wheel."

The case has also been a. man-eater for IBM and its law firm. In order to recruit top law school graduates, Cravath has constantly had to boost starting salaries (this year: at least $30,000); the grads fear becoming stuck on the IBM case, which is widely seen as a black hole for fledgling legal careers. Those who are assigned to the case get up to $5,000 extra combat pay annually.

Assistant Attorney General John Shenefield has repeatedly told Congress that his antitrust division is trying to speed the case. But it is difficult to see how. This winter, Barr recounted, the Government subpoenaed IBM Chairman Frank Cary to produce virtually every document relating to computers accumulated by the company since 1973. That amounts to 5 billion pieces of paper, said Barr, who claims that to comply would take 100 lawyers 620 years working full time. Staal, however, called Barr's figures "grossly exaggerated" and contended that the parties could easily work out a compromise, but that IBM refuses to negotiate.

John Diebold, the noted computer consultant, who was asked by IBM to be a witness, gave the TIME conference "a peasant's view of what it is like to have the Justice Department's B-52s drop napalm on me." First, at Government request, he turned over 300,000 pages of documents from his company, the Diebold Group, relating to the computer industry. Said Diebold: "That is a minor ripple in the ocean of paper that has been delivered by IBM, but I wasn't even a party to the case!" Then he was tied up full time for two months giving depositions to the Government. Diebold was asked not only about the fees IBM paid his firm but about his personal net worth. Finally, Diebold reported, the Justice Department lawyers told him to produce more than 1,000 lengthy and confidential reports that Diebold's consulting company had made for its clients, including some plans for IBM's competitors to compete with IBM.

At that point, Diebold withdrew as a witness rather than disclose reports to clients "on things genuinely unconnected with the case for the sake of a fishing expedition on the part of the Justice Department." As he told the TIME conference:"Gradually, I realized that the Government lawyers don't understand what they're doing." For example, according to the Government's definition of the "general purpose" computer market, there were only eight competitors in 1969, said Diebold. "Since that date, we have clocked something on the order of 300 new players in thegame-- Japanese, French, American. During that time, has the Government changed its definition of the industry? Indeed they have. Today they no longer maintain there are eight competitors; today they say there are four. Yet the reality is that there is very wide-scale competition in that industry, ease of entry and rapidly declining costs to customers."

Staal, who says Diebold dropped out rather than produce more evidence damaging to IBM's case, responds that the other companies do not make general purpose computers; they manufacture smaller or specialized computers or parts.

But change in technology and the computer market is a major obstacle to the Government's case. None of the IBM computer systems that were on the market when the Government filed suit are still being made by the company. The trustbusters claim that the same pattern of IBM monopoly persists, but they must constantly seek new facts to prove it.

The Government has never spelled out just how it wants to break up IBM to foster competition. Any "relief that the court eventually may grant must be based on up-to-date information. So last January--ironically on the tenth anniversary of the case--the Government made yet another discovery request for current information and IBM's plans for the future. IBM is resisting; it argues that this third round of discovery would bare its trade secrets, and further delay the trial.

IBM has also been sued 20 times on antitrust charges by private companies since 1969. So far, none of the plaintiffs has won, though many cases are on appeal or still pending. None of the private cases got bogged down during trial like U.S. vs. IBM. If that case is ever definitely resolved, it could be a legal landmark. Not only might it dismantle the seventh biggest U.S. industrial corporation, but it might also set new limits on the way that big companies grow internally. The IBM case is already "the case of the century," says Barr. The problem, he adds, is that it may also become the case of the 21st century.

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