TI makes cross-licensing deals with Vanguard, NEC

Electronic News, June 16, 1997 by Jim DeTar

The 10-year cross-licensing agreement with Vanguard, a manufacturer and marketer of DRAMs, represents TI's first patent licensing agreement with a Taiwanese company other than its joint venture with Acer Group. It is also a demonstration of the growing significance of intellectual property to semiconductor vendors, according to Thomas J. Engibous, president and CEO of TI.

"It is not surprising that they (VIS) respect and value intellectual property and have joined other major worldwide semiconductor companies who have licensed access to TI's patented technology. TI expects to receive value from the patented technology of Vanguard as well," Mr. Engibous said.

Under the TI/Vanguard agreement, VIS and TI will have the use of each other's patents involved in making semiconductor products. A TI spokeswoman said that approximately 5,000 TI patents are covered under the agreement. TI will receive royalty payments from VIS throughout the life of the agreement.

Commenting on the agreement, Morris Chang, chairman and CEO of VIS, said: "It is fair to both sides. It points to the significance of VIS and of Taiwan as a center for international semiconductor manufacturers."

Separately, TI signed a cross-licensing agreement with NEC, also for a period of 10 years, under which TI will receive royalty payments from 1996 through 2005.

In an interview with Electronic News, Fred Telecky, TI's VP of corporate staff and manager of the company's licensing program, said that TI and Vanguard had been negotiating since early this year, and that TI had been in discussion with NEC for about a year and a half. The agreement with NEC is a follow-on to an earlier agreement, he noted.

"NEC's agreement expired at the end of 1995. This was just a catch-up. They were part of a fairly large number of licensees. We have licensing programs that have gone in five-year cycles in the past. One of those major cycles ended at the end of 1995; NEC is one of those companies." Although TI will receive royalties from both Vanguard and NEC, it won't be paying any royalties for use of technologies covered under their patents, he noted.

Because it was a "catch-up" agreement with NEC, TI will receive retroactive royalties for 1996 and early '97 under terms of the accord.

Mr. Telecky said that negotiations in both cases were amicable. "Litigation is always a possibility. But I would have to say negotiations with both companies were on a friendly path." He added that TI is currently in similar negotiations with other companies, but declined to say when he expects the next patent licensing agreement to be announced.

Discussing what groups of patents are covered under the agreements, Mr. Telecky said, "The same group of patents are covered under the Vanguard and NEC agreements." They are general patent cross-licensing agreements that cover anything NEC and Vanguard can use to make and sell semiconductor products, he said. However, Mr. Telecky noted that: "We have certain exclusions. For example, we haven't been licensing our DMD, or digital mirror devices, technology. But that's the only major area that is unlicensed."

The agreements follow on the heels of a pact that TI signed in 1Q97 (EN, Jan. 13) with Raytheon for Raytheon to acquire TI's defense business. That transaction is expected to close in about 18 days, a TI spokeswoman said. TI has also reached a definitive agreement with Sterling Software to purchase the assets of that company's software business. That agreement is also expected to close by the end of this month.