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Experts: Patent dispute with Intel won't choke supply of AMD chips

AMD adamant that Global Foundries subsidiary meets cross-licensing deal

By Eric Lai
March 16, 2009 12:00 PM ET

Computerworld - Intel Corp.'s threat to pull its cross-licensing deal with Advanced Micro Devices Inc. is unlikely to result in a shortage of AMD processors in the market, experts said Monday.

"Gosh, I'd worry more about a meteor slamming into the Earth," said Nathan Brookwood, a longtime analyst at Insight64, noting that very few patent lawsuits in Silicon Valley result in either party being forced to halt production.

Even as both Intel and AMD amp up their legal posturing and rhetoric, they will also "go on their merry way making their products," he said.

One reason is the terms of the 2001 deal struck by AMD and Intel, which spell out that any dispute must be settled in state court or federal court in Delaware (see Clause 9.8).

It would take at least three years for Intel to get a court order to force AMD to stop making processors, according to Mark Walters, a patent lawyer in the Seattle office of Darby & Darby PC.

To hammer home how long such cases take, AMD sued Intel for broad antitrust violations in 2005. The case is expected to go to federal court next year.

Besides the propensity of patent cases to drag on for years, many end up being settled out of court or are used as negotiating leverage in other cases, Walters said.

"This is done all of the time, especially with big companies that have multiple legal positions that are somewhat conflicting," he noted.

Intel did not respond to a request for comment.

But AMD argues that its spin-off of Global Foundries doesn't violate what appears to be the key clause in the 2001 contract, Clause 1.22, which states that patents may be shared with subsidiary companies, provided the subsidiary satisfies two requirements:

  • It owns, controls or originally contributed (either directly or indirectly) at least 50% of the tangible and intangible assets of the subsidiary.
  • Through voting shares or seats on the board, it has 50% control of the subsidiary and also gets at least 30% of the profits and losses.

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