Intel Bursts Via's Balloon

Electronic News, Sept 17, 2001 by Alex Romanelli

Legal sparks fly as Intel attempts to deflate Via Technologies' Pentium 4 chipset

The recent legal skirmishes between Intel Corp. and Via Technologies Inc. over alleged patent infringements and destruction of property could be just a load of hot air.

Last week, Taipei, Taiwan-based Via filed a series of lawsuits both in the United States and in Taiwan against its main rival, Santa Clara, Calif.-based Intel (nasdaq: INTC). Via accused Intel of infringing patents related to its chipset for IBM Corp.'s Pentium 4 processor. Just three days earlier, Intel announced it had filed suit against Via and S3 Graphics Inc., Via's joint venture with Sonicblue Inc., in the U.S. District Court in Delaware, alleging Via's P4X266 and P4M266 chipsets infringe upon five of its patents relating to its P4 chipset.

Until last week, Intel's P4 chipset was only compatible with Rambus Inc.'s costly RDRAM. Via's chipset offers similar performance, at a fraction of the cost, by being compatible with double data rate (DDR) SDRAM, a feature not planned by Intel until the first quarter of 2002.

"If Intel can successfully prosecute for an average royalty payment, it's going to be a low percentage of a low-cost selling part that is not selling at high volume," said Jon Peddie, president of Jon Peddie & Associates, Mill Valley, Calif. "I don't know what Intel hopes to gain. They already have overwhelming market share. Even if they got punitive damages, it is still not going to be that much. I really don't think they are going to cover their legal costs if they win."

Via is maneuvering to broker a cross-licensing deal with Intel, said Kevin Krewell, an analyst with Micro Design Resources (MDR) of San Jose. MDR is owned by Cahners Business Information, which also owns Electronic News.

"(The major chip companies) wind up cross-licensing each other's patents just because they have enough patents to sue each other until they're blue in the face," Krewell said. "I think Via is trying to do the same thing."

Until now, Via has acquired licenses from Intel on an as-needed basis, he said.

"I think (Via is) angling for something a little broader than they have now that would allow them a little more flexibility to bring products to market without gaining an individual license for each and every product they bring out," Krewell said.

Richard Brown, Via's director of marketing, would not comment on the speculation.

"As far as we can see, there is no new IP (intellectual property) involved in the Pentium 4 bus," Brown said. "Why should Intel, every time it changes its CPU platform, impose a licensing structure on the industry, unless there is genuinely new IP involved? We have our own IP that, as far as we can determine, is being used by Intel in its products. Therefore it should be licensed by Intel from us. Intel does not have every patent in the universe."

He detailed the complaints Via has filed against Intel and confirmed Via is planning additional filings in the coming weeks.

"We're filing patent-infringement claims against Intel in Taiwan courts on their P4 845 chipset," Brown said. "Also, today in the United States we're filing a patent-infringement claim that the P4 infringes on one of our CPU patents."

Via claims Intel is infringing upon its U.S. Patent No. 6,253,311, "Instruction set for bidirectional conversion and transfer of integer and floating point data." Brown said this claim was flied Monday in the U.S Western District court of Austin.

"We've done a preliminary analysis on the single patent that they've claimed," said an Intel spokesman. "We believe their charges are without merit and, in that case, plan a vigorous defense."

Intel has always maintained that Via does not have a license to sell its chipsets. Via has repeatedly said it does not need a license from Intel because it is covered through a license granted by Intel to 53 Inc., the former graphics chip company now known as Sonicblue Inc., also based in Santa Clara.

Intel's spokesman confirmed the company has granted licenses to make P4 chipsets to other companies, including Taiwanese chipset designers Silicon Integrated Systems Corp. (SIS) and Acer Laboratories Inc.

"In the interests of fairness, Intel has to make sure everyone who is building these chipsets is on a level playing field," said Nathan Brookwood, an analyst with Insight4 in Saratoga, Calif. "Otherwise Intel would have a lot of trouble explaining to SIS and Acer why they are paying royalties when Via doesn't have to."

Via said it has also filed criminal motions against Intel representatives and its employees for willful destruction of Via's property during the Computex 2001 trade show in Taipei in June. For these complaints, Via said it is seeking damages. Brown said Intel's representatives destroyed large balloons used for promotional display purposes.

"The issue is they were our property and Intel destroyed them," Brown said. "If you've got a number of kids charging around a shopping mall ripping down stuff, that is vandalism and considered a crime. This is really not the kind of behavior one should expect from a multinational company."