AMD-Intel dispute over patent licensing heats up

This post was updated at 8:23 a.m. PDT with comments from Intel and AMD and at 8:33 a.m. PDT with The Foundry Company's new name, Globalfoundries.

Advanced Micro Devices announced Monday that Intel plans to pull its 2001 cross-licensing patent agreement in the next 60 days, unless concerns surrounding AMD's joint venture chip foundry are addressed.

Intel's warning is an escalation of concerns it expressed more than five months ago, following AMD's announcement it planned to spin off its manufacturing assets to a joint venture with the Abu Dhabi government.

The joint-chip foundry, Globalfoundries, calls for the government's Advanced Technology Investment Co. (ATIC) to own a majority 55.6 percent stake, but AMD and ATIC will hold equal voting rights. The deal officially closed earlier this month.

Under the , restrictions exist regarding the transfer of licenses and patents. That agreement is in place until 2010, when it expires.

Intel said its opposition stems from a belief that Globalfoundries is not a subsidiary of AMD, under the terms of the chip companies' 2001 agreement. As a result, Intel does not view Globalfoundries as having licensing rights to its patents.

Bruce Sewell, Intel general counsel, said in a statement:

Intellectual property is a cornerstone of Intel's technology leadership and for more than 30 years, the company has believed in the strategic importance of licensing intellectual property in exchange for fair value. However AMD cannot unilaterally extend Intel's licensing rights to a third party without Intel's consent.

AMD, however, views Globalfoundries as a subsidiary of AMD and sees Intel's latest warning is an attempt to box in its rival, said Harry Wolin, AMD general counsel.

He added that ATIC, through the joint venture, will provide AMD with the capital needed to have state-of-the-art manufacturing technology, posing a greater competitive threat to Intel and its foundries.

AMD also views Intel's actions as a means to distract the public's attention from its recent antitrust battles with the European Commission, as well as in Japan, Korea, and the U.S.

For AMD, the 2001 Intel agreement allows it to manufacture chips using Intel's x86 design, while providing Intel access to its chip patents.

The companies have had a long-standing patent and licensing relationship, going back to 1976.

But this latest turn of events could result in a change in that relationship. AMD, in its filing with the Securities and Exchange Commission on Monday, said Intel sent it a letter that alleges AMD "committed a material breach of the Cross License through the creation of the company's Globalfoundries joint venture and purports to terminate the company's rights and licenses under the cross license in 60 days if the alleged breach has not been corrected."

AMD notes that the parties seek to resolve the issue through mediation and that both are currently taking the stance that the other has materially breached the 2001 agreement.

Under the 2001 deal, a party that has been found to be in material breach of agreement will no longer have access to the patents and licenses.

AMD, in its filing, stated that it "strongly believes that the company has not breached the terms of the cross-license and Intel has no right to terminate the company's rights and licenses under the cross license."

AMD shares rose 5.56 percent to $2.66 a share in morning trading, on a day when the Dow Jones Industrial Average was up.

[nicmart]

It's good to avoid doing business with companies that partner with governments. If they can't make it on money legitimately earned, let them go to ruin.

[Rolker]

I totally agree.
It just sounds to me illogical for a public company to partner itself with a government, especially when it is a foreign country (Just to be clear, I don't live in the US). Once you're are funded by a country, in some ways you have very very "deep pockets" (as in the case of Abu Dabi), thus drastically affecting the competition.
I don't understand how come that the regulator doesn't stop AMD's actions.
And people shouldn't forget that AMD owns ATI...

[smokified]

When you make a stupid blanket statement like "your an idiot" you may want to back it up with some solid reasoning for fear of being called an idiot yourself.

[sparrowhyperion]

Intel will do anything to hold on to it's market share. Including putting the screws to it's only major rival, and the only company that produces a better quality product.

[smokified]

Uhm, AMD is by far NOT better quality product hence the massive slide in their share of the market over the last couple of years. Instead of just pretending a product is better because you saved a few bucks when building your "rig" on an AMD processor, why not actually find out some real facts about both sides and then draw a conclusion. [CNET editors' note: Prohibited content deleted.]

[pithenumber]

@smokified
No, right now AMD is much better value in the low mid range cpu's (Ph2 720 BE)


the product is better in some cases, not all though

[woodie1950]

I'm done with AMD!!!!, partnering with a government leads to a direct source of American tech they should not have, not to mention the fact as these partner-ships lead to unfair subsidies against American company's . Especially an Arab nation of which we really have no idea of what they're real intentions are. All the while Intel is making large investments in the US.
SAVE JOB- BUY AMERICAN

[smokified]

Not to mention that people who actually know things about computer hardware were done with AMD 4 years ago when their entire strategy became chasing Intel.

[omnicronx]

You do realize that most big players in the tech industry have some kind of link to the UAE

[slickuser]

AMD should make the required info public! Why its hiding the info if there
is nothing to worry about??

[slickuser]

screw AMD!

[adasha76]

What irrational comments. When you're down and fighting for survival you do what you can. In AMD's case they spun off manufacturing into a separate company. Intel's response seems like they were just waiting for an excuse to screw AMD over some more - something that may be relevant in the antitrust case.

[smokified]

How is it an excuse to screw AMD over?

They habe an agreement that states that AMD can license use of Intel's patents. AMD is sharing that information with other people hence the violation of the contract.



AMD screwed itself. They might as well just roll over now, they have been working on it for the last 5 years.


[CNET editors' note: Prohibited content deleted.]

[Marcus Westrup]

A point on this article: As I understand it, Intel does not have rights to the 64 bit version of the x86 architecture now in common use. AMD holds that patent, and it would be a major problem for Intel if these cross patent agreements failed.

[smokified]

You understand incorrectly. there is x64 and x86. Intel does not need to bother with emulated 64bit technology in an x86 chip, they can just use x64 technology.

[Marcus Westrup]

No, that is incorrect - there in no "emulating" of 64 bit. AMD owns the rights to x86-64.
See: http://en.wikipedia.org/wiki/X86-64

[omnicronx]

Thats very incorrect, x64 is a subset of x86, nothing to do with emulation. All intel chips make use of x64, thus Intel terminating AMD's x86 license all but terminates their x64 license. Intel machines would be stuck with 32 bit for the next 5-10 years, (and the 4GB limit). This is nothing more than a scare tactic by Intel, they don't plan on actually following through, they just want to double charge for the x86 license, one from AMD, the other from Globalfoundries.

In fact the last thing Intel wants right now is to become a full monopoly in the market.

[Arbalest05]

This is probably just so much sound and fury. Globalfoundries is to be a manufacturer of chips, not an owner of intellectual property. The Apple iPhone is made by a Chinese company, Foxconn, but Apple owns the intellectual property that is the basis for the device, Foxconn does not become the owner of the iPhone design. American Micro Ddevices is simply contracting to a subsidiary, Globalfoundries, to manufacture their chips.

By the way Intel is more than 50 times larger than AMD, yet Intel is pretending that the much smaller company is some sort of threat to their international dominance in the CPU business. Both companies make good products and competition between the two has benefited the consumer greatly.

[Rolker]

But the difference is that the manufacturer, in the Iphone case, is not the Chinese government. I think that it would have been problematic if that was the case.
In this case another country will have access to Intel's intellectual property, and no one knows what they may do with it. Doesn't matter which country it is, I think that government support is not good for competition.

[woodie1950]

Since when do other countries respect intellectual property rights.

[kmarei]

does this mean that all banks and insituions who receive government money in the US right now have "deep pockets" and have an unfair advantage?
AIG, Citibank etc?

AMD needs all the help it can get to fight Intel which has had a monopoly since the begining of the PC age
the more competition to intel, the lower prices we as consumers will pay for better and cheaper CPUs

[Nataku4ca]

@kmarei

just a few notes with ur comment,
1st
"does this mean that all ..." comment, yes that is what is being argued by other countries and also as what ive
heard violates WTO agreement

2nd
all the help amd can get? doesn't that mean terrorist act on intel foundries will be allowed?

3rd
intel never really had complete dominance not to mention monopoly, think of athlon vs p4, amd definitely had the
upper hand

[thelemurking]

Wow, a lot of hatred towards AMD here... yet because of them, they brought down the price of chips and memory, they brought forth the multicore and 64bit revolution... without them, how fast do you think Intel would progress it's chip development?

Competetion is necessary. Perhaps if Intel avoided using it's monopoly tactics against manufacturers to keep them from using AMD, we wouldn't be in this situation. How many of you people had a problem with Intel offering huge price incentives to companies if they use Intel exclusively?

There once was a time when Intel needed AMD to help produce it's chips...

[smokified]

Times change, you either change with them or get dusty and die.

AMD has always had 2nd rate product to Intel and for that reason they are where they are today. This is called a consequence. Consequences are a concept that exist however are apparently completely invisible to Americans in their true form.

[pithenumber]

@smokified
yes, times have changed
I would much prefer a Phenom II 720 in my rig than a Core 2 Duo E8400
save myself some cash and get more performance at the same time

[i_made_this]

The timing of this inane action by Intel must be seriously questioned. There is little doubt that the action is inane - and we note with great interest that AMD immediately counter-sue'd. Tallying up the breaches done to the 2001 agreement, AMD is a hands-down winner - but they didn't bring the action because they know the whole action is simply inane. In another 9 months, the 2001 agreement dies anyway. And as AMD has inferred , if this goes to court, it ties up AMD's and Intel's attornies for at least another 12 to 15 months. The translation is: if Intel gets its way, it'll tie up their attornies and AMD's attornies in court over an issue that died in January. Thus, Intel knows they shouldn't have brought this action for the reasons stated. But Intel has friggin awesome attornies who've kept them out of jail too many times to name. AMD has just recently or is on the verge of releasing a new product that has Intel frothing at the mouth because it feels that its recent or soon-to-be-released product has been slamdunked by AMD. THAT would be the only reason I can see for Intel bringing this action at this time. In plain language, they're bullying AMD (for a change) because having nearly everything has never been good enough for Intel's top brass.

[mike_ekim]

Alot of the Intel design work is done in foreigh companies, most notably Israel. If you don't want 'foreign countries' to have access to American cpu tech, don't buy Intel!

On the flip side, a subsidiary does NOT have equal voting rights to it's parent company. If AMD's only way to bail itself out is to break a patent contract, then it's doomed to fail.

[pithenumber]

what's with the AMD hate


AMD keeps Intel's prices down, that's good for just about everybody

[fdunn3]

Well if Intel pulls out of the IP agreement they held jointly then Intel will have to stop manufacturing the new i7 series of processors since it has AMDs HyperTransport IP on them.

Lose lose for both sides.

[slickuser]

Intel has its own called QPI.

[slickuser]

AMD should make the agreement public it made with the Arabs.

Obviously, it is trying to hide something!

[cubicleslave1]

I think Intel has a very legitimate concern. The Abu-Dhabi govt. will have 55.6% ownership of ATIC, which gives them absolute and complete voting control. How can ATIC be viewed as an AMD subsidiary when it is completely out of AMD's control? If this deal is allowed to go through, then AMD effectively has the ability to grant the Intel x86 license to anyone they want. For example, the Intel vs Nvidia x86 license dispute could be easily resolved: AMD just has to "buy" Nvidia, then spin them off, retaining 1% ownership, and voila, Nvidia has an x86 license! They could even do the same thing with Samsung! This is just common sense, not "AMD hating" as some posters have alleged. Now, if you want to argue that competition is good and we need AMD, I agree with that statement. I just disagree that we should address AMD's current competitive disadvantage by allowing this contract breach. It basically is saying that "anything goes" since we need to help AMD, and even a terrorist bombing of an Intel fab would be ok!

[Marky101khjgy]

Basically AMD has the right to run after Intel. Knowing that a patent grants its owner the right to exclude others from practicing the patented invention, and it does not give the patent owner the right to practice the patented invention. <a href="http://www.generalpatent.com/services/patent-licensing">Patent Licensing</a> should be understood in this context.

[Marky101khjgy]

A patent grants its owner the right to exclude others from practicing the patented invention, and it does not give the patent owner the right to practice the patented invention. Licenses should be understood in this context.