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AMD’s x86 license set to expire in 48 hours?

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Almost two months ago, we witnessed the open war of words between AMD and Intel, ending in Intel’s press release citing that AMD’s split to AMD and GlobalFoundries will lead to the termination of AMD’s x86 license. Wording was not exactly what you could say, “in gloves”:

“Intel Corporation today disclosed that the company has notified Advanced Micro Devices (AMD) that it believes AMD has breached a 2001 patent cross-license agreement with Intel. Intel believes that Global Foundries is not a subsidiary under terms of the agreement and is therefore not licensed under the 2001 patent cross-license agreement.”

“Intel also said the structure of the deal between AMD and ATIC breaches a confidential portion of that agreement. AMD’s breach could result in the loss of licenses and rights granted to AMD by Intel under the agreement.”

The 60-day license deadline is set to expire on May 15th, 2009 – and with less than 48 hours to go, we have asked both Intel and AMD about an update to this cross-license dispute. Bear in mind that the statements given during March were openly hostile between the two – getting to the point where Intel could ask for injunction on sales of all AMD x86-based products, and AMD could block the sales of every Intel processor that contains AMD’s technology.

Under current cross-license, AMD has the right to manufacture x86 microarchitecture- based products and Intel has the right to use AMD-developed technology in relation to the x86 license. If that license was null and void, both companies could become embroiled in a costly legal battle and we could end up buying old Power Mac G5’s, since x86 world would be locked out. This is of course, a disaster scenario that isn’t going to happen, unless you’re working in a tabloid magazine and think that the world is going to end… every morning. If the patent row between AMD and Intel escalated, it could get to the point of Obama’s administration stepping in and resolving the entire issue in a very troubled way for Intel.

In order to get to the bottom of this matter, we asked representatives of AMD, Intel and a non-biased representative of Department of Justice [under the condition of anonymity].

Intel’s PoV

Intel’s legal ace, Mr. Chuck Mulloy got back to us and stated that Intel has “nothing to report” on the subject of x86 cross-patent negotiations.

AMD’s PoV

AMD’s own Drew Prairie stated the following: “Not much to update on the cross license side. AMD and Intel are currently participating in dispute resolution procedures as required by the cross-license agreement.  Beyond that, we aren’t commenting.”

Comment from an attorney @ US DoJ

And here comes the kicker – we asked a representative from US Department of Justice familiar with patent-based litigations and got an answer that surprised us, to say the least. It looks like the Obama administration decided to swiftly deal with any “cartel-like behavior”. First of all, a comment between Intel and AMD mentioning “cartel-like behavior” shocked us, since that means that if the administration gets involved, this industry would go through a shake-up similar to “Will it Blend?” series on YouTube.

This is the statement of an e-mail in full – even though the source was anonymous, we have to state that this opinion is opinion of the source alone and not the comment of US Department of Justice:

“Hi Theo,
We are not actively investigating the x86 cross-license agreement between the two parties involved (or indeed, any party that has to do with x86-based patents originating from Intel Corporation), but I can tell you from our experiences that patents are not The 10 Commandments http://en.wikipedia.org/wiki/Ten_Commandments .
There were legal precedents in the past where market-limiting or market-damaging patents were pronounced “null and void” to the party that wanted to exercise its rights on the expense of the consumer. Example that you might use with your readers is the wheel. Even though there are than 10,000 patents about the wheel on a car, PTO [U.S. Patent Trade Office, Ed.] would not allow a patent that would result in inability to manufacture wheels by anyone else than the patent owner. If such patent was granted in the past, there are legal precedents that would allow PTO to safeguard market freedom.
Regards,”

This e-mail more confused us than cleared up the situation. Given that US PTO gave right Rambus to sue left and right over DRAM patents [under previous administration and the sued parties mostly weren’t US companies], we are not sure why would PTO act in a way that Intel’s own IP would get chopped to pieces, but nobody can deny that the current legal climate around Intel is not favorable. If the Bush administration was still in the Oval Office, then we could say that Intel’s patents are safe [or just about anyone else], but it looks like Obama’s administration will push for a lot of changes in order to clear the confusion. Obama’s action about the big three in the automotive industry and a personal involvement in forcing Chrysler into Chapter 11 was explained to us that “the cleanup time has arrived”.

Our take

This also might be the reason why after all the words that were spoken out, both sides are now negotiating in a low-key mode and nobody is mentioning any deadlines. The IT industry is the key ingredient to the American economy and if any side would act in a market-limiting way, the administration would probably get involved in a more radical and direct way than in the case of banks or automotive industry.

The situation is also a golden opportunity for companies that were involved in other cross-patent license disputes with Intel. If there is a way to pitch your dispute as market-limiting to DoJ, if DoJ or Administration itself would react – it could lead to serious ruffling of the feathers in the IT industry.

Original Author: Theo Valich


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