A Startling Reversal

Few spectators at the hearings in Tulsa's federal court last week could make much sense of the proceedings. Even Presiding Judge A. Sherman Christensen seemed more than a little confused. Less than a month after finding International Business Machines Corp. in violation of antitrust statutes and ordering it to pay its struggling rival, Telex Corp., a record $352.5 million in damages (TIME, Oct. 1), Christensen developed second thoughts and sent the whole complex legal wrangle almost back to Square 1. Before the week was over, he changed course again and announced that he might be able soon to make a conclusion on the case after all. Christensen declared that "this has been agonizing for me."

Christensen had only himself to blame for his troubles. Instead of prudently issuing separate rulings on the merits of the suit and the size of the damages, he had attempted to settle the case all at once. In his original ruling, Christensen figured that certain "predatory" practices by IBM had damaged Telex to the tune of $117.5 million, a figure that he then tripled in accordance with antitrust law. But in this rush to judgment, he ruefully admitted last week, he had underestimated a crucial factor: much of Telex's potential business came from marketing disc drives and other "peripheral" computer components based on secret IBM designs. In his earlier finding that Telex had gained the designs by hiring away IBM employees, he had ordered Telex to pay $21.9 million in damages to its giant rival. Last week he further granted IBM's motion for a reduction--by an as yet undetermined amount--of the $352.5 million judgment against it.

What seems to have impressed the judge most was the argument of IBM's chief counsel, Thomas D. Barr, who contended that a failure to reduce the huge award to Telex would permit it to "claim damages which are effected by its unlawful plan to appropriate IBM's business to itself." Conceding that he faced an "almost unmanageable" problem in trying to rejigger the judgment, Christensen first plaintively requested the disputants to appeal to a higher court. But by week's end he had apparently recovered some of his old self-confidence and announced that he would "promptly" reset the damages himself.

Telex does not have much time to waste waiting. It has been counting heavily on collecting from IBM to rescue it from its deep debts. If the Tulsa-based company is forced to pay off the $21.9 million claim against it before collecting at least as much from IBM, warned Telex Attorney Floyd L. Walker, "there is no way Telex can stay out of bankruptcy and become any kind of viable competitor." Walker's plea provoked a charitable response from IBM, which agreed not to press for the money until the case is finally decided.

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