Intel, AMD each claim licensing agreement breach
Intel and AMD crank up the heat in a patent cross-license agreement dispute that could threaten AMD's manufacturing spinout GlobalFoundries.
By Suzanne Deffree, Managing Editor, News -- EDN, March 16, 2009
Intel Corp and Advanced Micro Devices Inc are each claiming the other has breached a 2001 patent cross-license agreement.
Intel has notified its rival that it believes AMD breached the agreement with Intel when it spun off its manufacturing to create GlobalFoundries earlier this month. If Intel's allegations are proven just, GlobalFoundries could be threatened.
Under the 2001 agreement, Intel allows its competitor to manufacture chips using its x86 design, while the agreement gives Intel access to AMD chip patents, with restrictions in place regarding the transfer of licenses and patents.
Intel said in a statement this morning that it believes GlobalFoundries is not a subsidiary under terms of the agreement and is therefore not licensed under the 2001 patent cross-license agreement. Intel has maintained this view since AMD first confirmed plans to separate its manufacturing operations in October 2008.
Intel also claimed the structure of the deal between AMD and ATIC (Advanced Technology Investment Company), the investment firm that AMD partnered with to form GlobalFoundries and that owns a more than 34% stake in the spin off, breaches a confidential portion of that agreement.
According to the now eight-year-old agreement, a subsidiary is any corporation, partnership, joint venture, limited liability, or other entity in which a Intel or AMD owns, controls, or originally contributed at least 50% of the organization's tangible and intangible assets. The agreement also states that a subsidiary may be an organization in which Intel or AMD owns or controls at least 50% of the shares needed to vote for the election of directors or similar managing authority and such entity is under no obligation to distribute more than 70% of its profits to a third party, or an entity in which Intel or AMD has at least 50% of the ownership interest needed to make decisions for the entity and an interest sufficient to receive at least 30% of the profits and/or losses of the claimed subsidiary.
"AMD cannot unilaterally extend Intel's licensing rights to a third party without Intel's consent," said Bruce Sewell, senior VP and general counsel for Intel, in a statement. "We have attempted to address our concerns with AMD without success since October. We are willing to find a resolution but at the same time we have an obligation to our stockholders to protect the billions of dollars we've invested in intellectual property."
Meanwhile, AMD is also claiming harm has been done. Maintaining its view that Intel's allegations are without merit, the Sunnyvale, Calif-based company responded to the notification by claiming Intel breached the agreement by notifying AMD of its alleged breach.
"Should this matter proceed to litigation, we will prove not only that Intel is wrong, but also that Intel fabricated this claim to interfere with our commercial relationships and thus has violated the cross-license," AMD said in an 8-K filing with the SEC today.
AMD also said "Intel’s action is an attempt to distract the world from the global antitrust scrutiny it faces." Intel currently faces antitrust allegations in Europe, Japan, Korea, and the United States.
Under terms of the license agreement, Intel's notification to AMD means the parties will attempt to resolve the dispute through mediation.
If either MPU maker is found to be in material breach of the agreement, it will no longer have access to the patents and licenses, according to the agreement.
The agreement expires in 2010.
