The inability to renegotiate a crosslicensing agreement rather than possible competition created friction between personnel of International Business Machines Corp. and American Telephone & Telegraph Co. in 1971 and 1972, the executive then in charge of IBM sales to AT&T told a jury today.
In concluding a day and a half on the witness stand in Littion Industries' $600 million anti trust suit against AT&T, Dante Picone, now an IBM vice president, said the lack of such an agreement -- and not IBM's possible entrance into marketing telephone switchboard equipment in the United States in direct competition with AT&T -- was responsible for IBM employes' reporting tension between the two giant firms.
As part of their suit, attorneys for Litton are alleging that pressure from AT&T was a factor in a decision by IBM in March 1973 not to market Carnation telephone-switching equipment in the United States. The equipment had been tested in Europe, and IBM contends that the decision was based on difficulties encountered during those tests.
Litton attorneys are presenting evidence that they say demonstrates pressures from AT&T that forced IBM to abandon the business. Piccone said in testimony yesterday that AT&T bought about $500 million in computers from IBM between 1978 and 1971. Litton attorneys allege that the business relationship and a major computer contract AT&T awarded IBM in 1973 were related to the Carnation marketing decision.
Piccone, who was in charge of IBM sales to utilities during the relevant time period, repeatedly denied that the sale of the major computer system -- which he said was ultimately worth $50 million to $55 million -- was related to the Carnation situation. Piccone, in fact, said he had recommended that IBM sell Carnation in the United States.
Litton attorneys have alleged in papers filed with the court that the sale of the System 7 computers, which are used to record long-distance calls, could have been worth $353 million. AT&T and IBM have sharply disputed that figure.
Piccone testifed that IBM had been able to sell the computer system to all of AT&T's local and long-distance calling facilities, the contract would have been worth the $353 million figure cited by Litton. But Piccone said "we did not get that business."
He did ackowledge that one of the factors causing difficulties in negotiating the new crosslicensing pact, which would govern the sharing of patents between two companies, was the prospect of the domestic Carnation program.
During Piccone's testimony yesterday, Litton attorneys introduced a series of documents outlining the AT&T-IBM relationship.