Applied Settles Varian Suit; DOJ to Investigate Licensing Practices

Electronic News, Oct 16, 2000 by Jeff Chappell

LAST WEEK WAS A BUSY ONE ON THE legal front for Applied Materials Inc. The company said it had settled patent disputes over physical vapor deposition (PVD) technology with Varian Semiconductor Equipment Associates Inc. The announcement came a Week after Applied announced that the U.S. Department of Justice (DOJ) was investigating the Santa Clara, Calif.-based equipment company's technology licensing practices. In its tiff with Varian, Applied said it would drop all outstanding lawsuits between the two companies. In return, Varian has abandoned all of its counterclaims in the patent violation suit as well as the antitrust lawsuit it filed against Applied. The legal wrangle has been ongoing for the last three years, dating back to when Novellus Systems Inc. acquired Varian's PVD interests in 1997. Right after Novellus settled other legal disputes with Applied over chemical vapor deposition technology and announced the Varian deal, Applied filed suits against both Novellus and Varian. The suit against Novellus i s ongoing.

As for the DOJ investigation, it isn't clear yet what exactly federal authorities are looking for, but Applied said it isn't worried. "(Licensing) is a miniscule percentage of our business. It is not part of our core business," said a company spokesman. "This appears to be a routine inquiry into a small part of Applied Materials' business, licensing of intellectual property (IP), including patents," said Joseph J. Sweeney, Applied's group vice president of legal affairs and IP. "We anticipate that following an evaluation of the facts, the department staff will conclude that no further action is warranted and the investigation will be closed."

"We believe our technology licensing practices are in full compliance with the law. We intend to fully cooperate with the DOJ," Applied's spokesman said.