See TI bid for piece of 386 action

Electronic News, March 16, 1992 by Robert Ristelhueber

SAN JOSE, Calif. -- Texas Instruments last week edged closer to entering the 386 microprocessor market by supporting Chips & Technologies in a defense against a patent infringement lawsuit recently filed by Intel.

While TI has thus far framed its interest in the case strictly in the context of its foundry relationship with Chips & Technologies, it is widely believed that it is hopeful of tapping the lucrative 386 microprocessor market by using designs created by Chips.

Intel is trying to prevent such a development with its lawsuit, contending that the Chips designs infringe Intel patents and should not be transferred to other parties.

The U.S. District Court here last week declined to impose a restraining order barring Chips from selling its microprocessors and coprocessors. It did against an outside party, called a special master, to investigate the case and report back to the court in 60 days.

The court also allowed TI to help defend Chips from the Intel suit, thus engaging two of the industry's largest and most experienced patent infringement legal staffs.

"Intel was not successful in depriving customers of Chips' innovative processor products," a statement issued by Chips said. "With our manufacturing partner, Texas Instruments, in the lawsuit, our customers can be assured that we both are committed to continuing a successful product launch."

In its filing in support of Chips, TI wrote that due to a 1976 cross-licensing pact with Intel, it can make and sell microprocessors using Intel's patents.

"It is TI's beief that its rights under the license with Intel permit it to make and sell to Chips the products encompassed by the Chips-TI agreement," the memorandum to the court reads. It adds that "The relief sought by Intel is overbroad and impermissibly interferes with the rights Intel licensed to TI over 15 years ago. Moreover, such relief would adversely impact TI's beneficial commercial relationship with Chips and deprive TI of income to which it is entitled...."

TI argues that it has "expended substantial sums to perform under the TI-Chips Agreement." It states that it "has spent tremendous sums and devoted thousands of hours developing manufacturing capability and ensuring the compatibility of Chips' designs with the process and design rules of the TI foundry. TI has also allocated substantial equipment to the Chips production."

TI also contends that it has, "in certain circumstances, an obligation to indemnify Chips with respect to claims by Intel that products encompassed by the Agreement made by or for TI and sold to Chips constitute infringement of Intel patents."

Tom Dunlap, vice president and general counsel for Intel, said that "TI essentially has sued Intel. We don't want them in the suit. We think the dispute is between Intel and Chips. They invited themselves into the lawsuit.

"TI is basically saying that by passing an infringing design through TI's foundry that cleanes it. We don't think so."

Mr. Dunlap said a U.S. Court of Appeals already rejected such an argument in Intel's earlier infringement case with Atmel, and that a District Court similarly dismissed ULSI Systems' claims that its foundry relationship with Hewlett-Packard protected it from infringement charges. The ULSI case is on appeal.

Asked if he thought TI was interested in becoming a second source for the Chips microprocessors and coprocessors, he responded "That's my guess. TI is definitely taking a more aggressive approach than HP did. HP said 'Leave me alone and go bother ULSI.'"

Mr. Dunlap added "It's somewhat surprising that TI is doing this because of their approach in protecting intellectual property. They're on the side of the infringer in this case."

While Intel doesn't dispute TI's right to use Intel patents as allowed under their cross-license agreement, the Chips designs carry the "disease of infringement" and shouldn't be used by TI, he said.

Mr. Dunlap said the appointment of the special master and the 60-day tmetable set by the court "was the most important thing that happened. It shows the court recognizes that this is an important case and wants to do something quickly, and not let it sit for years and years."

He noted that Chips and TI produced 16 lawyers at last week's hearing, compared to four representing Intel.

"So much for start-ups who can't defend themselves." In its recent suit, Intel claimed Chips was infringing on four Intel patents (EN, March 9). It asked the court to issue preliminary and permanent injunctions blocking Chips from further infringement, and from transferring the microprocessor designs to other parties.

Intel also asked for treble damages and other relief. It Also petitioned the court to declare four Chips patents unenforceable, adding that it believed Chips would charge Intel with infringing those patents. It denied any infringement.