On June 13, 1994, IBM filed its Motion seeking the immediate termination of the 1956 Final Judgment. IBM also moved to disqualify the presiding judge, David N. Edelstein, so the motion for termination was held in abeyance pending resolution of the disqualification motion.

On June 24, 1994, ISNI filed its motion to intervene.

On July 28, 1994, Judge Edelstein denied the disqualification motion and IBM petitioned the Court of Appeals for a writ of mandamus.

On July 29, 1994, CCIA filed its motion to intervene.

On October 17, 1994, CDLA filed its motion to intervene.

On December 22, 1994, Sungard and ACS filed their motion to intervene.

On January 17, 1995, the Court of Appeals issued a writ of mandamus directing Judge Edelstein to recuse himself.

On February 2, 1995, the case was reassigned to Judge Schwartz.

On March 1, 1995, a hearing was held where the Court asked the parties to submit memoranda setting forth the issues raised by IBM's motion.

On May 25, 1995, the United States filed a Consolidated Opposition to Motion to Intervene stating that none of the Proposed Intervenors satisfied the criteria under Rule 24(a) or (b) of the Federal Rules of Civil Procedure for intervention of right or permissive intervention.

Click here for the text of the Consolidated Motion...

On June 6, 1995, IBM filed its Preliminary Statement of Issues.

On July 19, 1995, the Government filed its Preliminary Statement of Issues. In its filing, the Government expressed its tentative decision to join IBM's motion as to certain decree provisions and certain IBM products. For the remaining decree provisions and the remaining products -- IBM's S/360. . . 390 mainframe and AS/400 mid-range families of computer products and services -- the Government requested and was permitted a period in which to investigate the issues raised by IBM's motion in order to determine whether to join or oppose IBM's motion.

Click here for the text of the Preliminary Statement of Issues...

On August 4, 1995, in furtherance of the Government’s investigation as to the AS/400 and S/360. . . 390 products and services, the Government served upon IBM Interrogatories and Requests for the Production of Documents. IBM initially refused to respond to the Government's requests.

On August 21, 1995, the United States submitted a Memorandum in support of its motion for a protective order and in opposition to IBM’s motion for a protective order. The Memorandum discussed the three points that the government and IBM had not agreed upon. 1) IBM's business employees and in-house counsel should not obtain confidential information. 2) The protective order should provide a mechanism to allow third parties to provide meaningful assistance. 3) Government's right to retain and use confidential information for law enforcement purposes.

Click here for the text of the Memorandum on Protective Order Issues...

On September 11, 1995, the Government submitted a Memorandum in Support of Partial Judgment Termination tentatively consenting to terminate Sections V(b) and (c) (requiring IBM to offer used equipment for sale pursuant to certain conditions), Section VIII (service bureaus), and all other provisions of the decree as they applied to IBM's personal computer ("PC") and workstation products and services. As to these products and services, the Government concluded that the decree was no longer needed to serve the public interest in competition in any relevant computer service, personal computer or workstation market.

Click here for the text of the Memorandum in Support of Partial Judgment Termination...

On October 5, 1995, the Government submitted a Memorandum addressing the significance to the request for partial termination of the decree of United States v. IBM, 69 Civ. 200 (S.D.N.Y. 1969) (the "1969 case"). The Government also responded to several arguments of IBM, including its erroneous reiteration that, in ruling on a contested decree termination motion, the Court need not perform a competitive analysis in properly defined markets to assess the competitive consequences of terminating the 1956 Final Judgment ("Final Judgment" or "Decree"). The Memorandum showed that: (1) the 1969 litigation sought drastic relief against IBM going well beyond the Decree and based on conduct going beyond that proscribed by the Decree; (2) the 1969 litigation does not vitiate IBM's burden of establishing, by means of a forward-looking market analysis required by United States v. Eastman Kodak Co., 63 F.3d 95 (2d Cir. 1995) ("Kodak"), that the Decree's purposes have been fully achieved, or that changed circumstances have rendered the Decree incapable of accomplishing its purposes; (3) the Decree contains provisions designed to constrain the exercise of market power by IBM in computers (i.e., electronic data processing machines ("EDPM")); and (4) operating system software is covered by the Decree.

Click here for the text of the Memorandum on the 1969 Case...

On January 16, 1996, IBM agreed to produce some readily responsive information and some high level planning documents located at its headquarters. The Government accepted IBM's partial responses but expressly reserved the right to seek more complete responses as necessary to complete our investigation, and absent a consensual resolution of this matter, to prepare for litigation of IBM's motion.

On January 17, 1996, after a public comment period, and upon motion of the Government, the Court found that partial termination was in the public interest and entered an order terminating: (1) Sections V(b) and (c), which required IBM to offer to sell at no more than specified prices and to hold for a specified period used IBM computers that IBM acquired as trade-ins or as a credit; and (2) Section VIII, which specified conditions under which IBM could engage in "service bureau business," as defined by Section II(k) of the Final Judgment. The Court also terminated all other provisions of the Final Judgment as they applied to IBM's computers, other than the AS/400 and System/390 families of products and services.

Click here for the text of the Supplemental Memorandum in Support of Judgment Modification...

On April 19, 1996, the Government advised the Court that it would agree, after an appropriate sunset period, to terminate the decree as it applies to the AS/400 products and services.

On May 24, 1996, the Government submitted a Memorandum in Support of its Motion to Compel Discovery. The Government's discovery was aimed at obtaining evidence about IBM's ability to exercise market power. The Government argued that a market analysis was necessary to determine whether termination would further the public interest in competition, or to the contrary, whether it would undermine the public interest by freeing IBM from the decree's constraints on its ability to exercise market power in properly defined markets. The same evidence was relevant to determine whether eliminating the decree was equitable to consumers and other entities that relied on the marketplace conditions and practices that the decree long ago established. IBM disputed the Government's position as to whether a market power inquiry was necessitated by IBM's motion. The Government also argued that a market analysis was necessary because it would permit an assessment of the likely effects of decree termination. However, IBM's future conduct in the event of termination would depend on how termination would effect IBM's ability to avoid or undermine competition that currently is facilitated by the decree. The case law makes clear that this assessment of the likely effects of termination can only be meaningful in the context of standard antitrust analysis. The information and documents that IBM refused to produce because they are "market related" also were relevant to assessing the potential for harm that outright decree termination may have caused to IBM customers, competitors, or other third parties. General principles of equity required this assessment in considering IBM's motion to terminate the decree, even if it did not implicate matters of antitrust policy. In this context, the discovery sought by the Government would assist in determining whether and under what circumstances it would be equitable to grant the motion in light of the fact that many entities have relied on the competitive conditions created by the decree. IBM should have been ordered to produce all information and documents that it had withheld from the Government's discovery on the basis of its objections as to the relevance of market analysis, operating system software, or disclosures of interface information. In addition, IBM should have been ordered to produce all responsive information and documents that previously had been deferred from production.

Click here for the text of the Memorandum in Support of its Motion to Compel Discovery...

On June 28, 1996, the Government advised the Court on its view as to an appropriate sunset period for the AS/400 and informed the Court of its position on the merits of decree termination as it applied to IBM's S/360. . . 390 family of products and services.

On July 2, 1996, the United States and IBM stipulated to sunset periods for all remaining decree provisions as they applied to the System/390 and AS/400 families of products and services. The parties agreed to terminate Sections IV(b)(3) and (c)(7) and Section VII(d)(1) immediately upon entry of an Order by the Court. With respect to the AS/400, the parties agreed to terminate: (1) Section V(a) immediately upon entry of an Order by the Court; (2) Section IV (except Section IV(c)(3) as it may apply to the provision of operating systems) and Section VI(a) six months after entry of an Order by the Court; and (3) all other provisions of the decree as they applied to the AS/400, including Section IV(c)(3) as it may have applied to operating systems, on July 2, 2000. With respect to the System/390 and the remainder of the decree, the parties agreed to terminate all remaining provisions on July 2, 2001. Thus, after July 2, 2001, no portion of the decree remained in effect.

Click here for the text of the Termination of the Decree...

On July 11, 1996, the Government issued a Memorandum in Support of Judgment Modification. The Government tentatively concluded, subject to an opportunity to evaluate public comments, that modifying the Final Judgment to establish specific sunset periods for the remaining substantive provisions of the Final Judgment -- Sections IV, V, VI, VII, IX, and XV -- was well within the reaches of the public interest. The Government concluded that sunsetting the Final Judgment was appropriate given the major changes in the computer industry over the forty years that the Judgment was in effect and IBM's market position at that time. Determining the appropriate sunset period required the consideration of the consequences of termination on the public, including IBM. The Government considered the equitable and competitive interests of AS/400 and System/390 customers and competitors who have made decisions and investments in reliance on the Final Judgment. The Government also considered the costs and inefficiencies allegedly imposed on IBM by some provisions of the Final Judgment and any resulting harm to competition. Added to this analysis were the risks and uncertainty inherent in litigating the complex issues presented by IBM's Motion and the fact that any settlement required compromise by both parties. Because the consideration of these factors worked out differently for different provisions and different products, the Government agreed to sunset the Final Judgment in stages over a five year period. Generally, the Final Judgment as it applies to the AS/400 sunsetted in four years and sunsetted in five years with respect to the System/390.

Click here for the text of the Memorandum in Support of Judgment Modification...

On November 13, 1996, the government and IBM submitted lengthy responses to the public comments -- each supported by expert declarations and factual declarations and exhibits. That same day, the government and IBM formally filed their Joint Motion For Order Modifying 1956 Final Judgment (the "Joint Motion").

Click here for the text of the Joint Motion...

On December 18, 1996, ISNI filed a reply to the parties' responses to the public comments.

On February 13, 1997, Chief Judge Griesa held a hearing on the parties' Joint Motion. Only ISNI, participating as an amicus curiae, appeared in opposition, and its objections quickly became the focus of the hearing. ISNI's objections centered on aftermarket tying. In particular, ISNI claimed that IBM would stop selling parts to ISOs and would institute a tie between service and either of two elements -- parts or operating systems -- for the AS/400 or S/390, and thereby exclude ISOs from competing with IBM in the service aftermarket. At the hearing, as before this Court ISNI objected to the termination only of sections VI(c), VII(c), and IX(b)-(c) of the Decree. Section VI(c) requires IBM to sell repair and replacement parts on nondiscriminatory terms to IBM computer owners and ISOs for as long as such parts are available for use in leased machines; section VII(c) enjoins IBM from requiring any computer purchaser to obtain parts or maintenance from IBM; section IX(b) requires IBM to provide to computer owners at reasonable and nondiscriminatory prices the same technical manuals and informational documents it provides to IBM's own repair and maintenance employees; and section IX(c) requires IBM to provide to lessees and owners at reasonable and nondiscriminatory prices books of instruction and other documents pertaining to the "operation or application" of their computers.

On May 1, 1997, the district court entered its Order granting the parties' Joint Motion (the "May 1 Order"). In its accompanying opinion, the court sought to "determine whether that agreement is in the public interest" as framed by &167;&167; 1 and 2 of the Sherman Act. (relying on United States v. American Cyanamid Co., 719 F.2d 558 (2d Cir.1983), cert. denied, 465 U.S. 1101 (1984)). The district court recognized that the government and IBM had "amassed a great deal of information about the current competitive practices of IBM in the marketplace" for the S/390 and AS/400. Based on this "extensive record", the district court made specific findings. It found that "there is at the present time an active market in computer repair services, in which IBM competes with many independent repair companies." Further, the court found as "the salient fact that a market in IBM spare parts exists, and this market is largely independent of the need of buying such parts from IBM." Moreover, the court found that terminating section V(a) of the Decree (not challenged by ISNI on appeal) will further "increase competition in the spare parts market." With respect to consumers, the court found that IBM's S/390 and AS/400 customers are "well informed about the lifetime cost of a computer (including service)," that they could exert pressure upon IBM to ensure that ISOs continue to receive parts from IBM, and that the "market as it exists today" acts as a "powerful deterrent against IBM engaging in monopolistic tactics." The court also took specific notice of the fact that none of ISNI's customers joined in ISNI's objections to Decree termination. Based on these findings and the record as a whole, the court concluded that termination of the remaining Decree provisions would not only not present any "material threat of violation of &167;&167; 1 and 2 of the Sherman Act," but would increase IBM's efficiency and would "benefit both IBM and consumers." Under the May 1 Order, certain Decree provisions terminated immediately while others would be phased out. In general, the Decree would cease to apply to IBM's AS/400 mid-range family of products and services after July 2, 2000 (a four-year sunset provision), and would cease to apply to the S/390 mainframe series after July 2, 2001 (a five-year sunset). Thus, after July 2, 2001, no portion of the Decree would remain in effect.

On November 7, 1997 the Government filed a Brief in response to ISNI’s appeal of the May 1, 1997 Order. The question presented was, “Whether it was an abuse of discretion for the district court to review the uncontroverted evidence offered by the two parties to a forty-year-old antitrust consent decree, credit the reasoned views of the United States, and conclude that termination of the remaining provisions of the decree, subject to four- and five-year sunset provisions, was in the public interest.” The response was that the district court applied the appropriate standard and reviewed all of the evidence. The Brief supported its decision by stating that it was unlikely that IBM would profit from any attempt to raise parts or maintenance prices above competitive levels because IBM's mid-range and mainframe computer customers have the ability to migrate computer software applications to other equipment effectively protecting against any possible effort by IBM to charge supracompetitive prices for service by tying. The Brief also stated that the Sherman Act provided effective protection against any IBM effort to exercise market power anticompetitively. The Brief went on to add that “if, however, IBM should choose to engage in such conduct, it would face the powerful threat of liability under the antitrust laws. The expiration of the Decree, after all, does no more than release IBM from a 41-year-old consent decree that has outlived its usefulness. IBM is most assuredly not receiving any exemption from the antitrust laws. If, after the Decree terminates, IBM engages in any anticompetitive activity that would violate the antitrust laws, it would immediately be liable to suit. For example, should IBM engage in anticompetitive tying -- be it to parts or operating systems -- the United States could bring an action for injunctive relief both to stop the illegal conduct and to get other, broader prophylactic relief. Also, IBM would be liable to a host of potential private treble damage actions. Injured service competitors, such as ISNI, could sue. Equally important, IBM customers injured by the tying could also sue. Given the deep pockets and legal sophistication of IBM's mainframe and mid-range customers, this threat is particularly serious. Moreover, any plaintiff, whether government or private, would have the advantage of the Supreme Court's rulings that at least certain tying arrangements are not merely unlawful under the Sherman Act, but unlawful per se.”

Click here for the text of the Brief...

On December 30, 1998, the United States Court of Appeals affirmed the District Court’s May 1, 1997 order terminating the Consent Decree and denied Appellant ISNI’s argument that the district court failed to apply the correct standard in evaluating the motion to terminate the consent decree, and that there remained a possibility that the defendant IBM would commit future antitrust violations in the absence of the decree. ISNI contended that the district court failed to apply the standard doctrinal framework governing the relevant category of antitrust violation. In particular, ISNI noted that the court failed to cite Eastman Kodak Co. v. Image Technical Services, Inc. , 504 U.S. 451 (1992), the leading authority governing the antitrust issue presented in this case-namely, a seller's attempt to "tie" the sale of products and services by requiring purchasers of its products also to sign maintenance agreements. However, the Court of Appeals read the district court's ruling as having squarely decided that such tying was unlikely. ISNI also asserted that the evidence uncovered by the Government in the course of its investigation showed that current owners of S/390 and AS/400 machines were locked into their present systems. In particular, it argued that current users of those computer systems had invested over $1 trillion in software that was, for the most part, incompatible with machines produced by IBM's competitors. The Court of Appeal’s response was that the district court did not look to market dynamics to question whether IBM had the sort of market power that would allow it to lock customers into a given product, but whether IBM was likely to do so. It decided that whether or not IBM had substantial market power over the business computer market, the district court had sufficient evidence before it to determine that IBM was unlikely to use any such market power to effect an illegal tying arrangement.

Click here for the text of the Court of Appeal's Ruling...