September 15, 1997 2:05 PM PDT

Exponential sues Apple

Exponential Technologies, a now-defunct chip vendor that just a year ago represented the cutting edge in microprocessors, has filed suit against former ally Apple for allegedly breaking off a supply contract earlier this year and also interfering with sales to Apple clone vendors, a situation that ultimately forced Exponential to shutter most of its operations.

The suit, which was filed in Santa Clara County Superior Court in California, seeks $500 million in damages from Apple under nine causes of action. Michael Kalkstein, a senior partner at Graham & James, represents Exponential. News of the suit came via a note sent by Exponential to former employees.

Stephanie Dorris, Exponential's CFO, explained that the complaint contains causes of action for breach of contract, fraud, and interference with prospective economic advantage, among other causes of action.

The suit arises out of a series of development and purchase agreements between Exponential and Apple, Power Computing, and Umax Computing, the two most successful clone makers. Among other claims, Exponential alleges that Apple refused to license ROM code to the clone makers, which then made it impossible for the clone makers to adopt the Exponential chips.

Early this year, Exponential had been set to supply Apple with superfast PowerPC X704 processors running at speeds of up to 533 MHz. Gil Amelio, the former Apple CEO, at one point even demonstrated a system with the chip during a speech. Conceivably, chips based on an Exponential design would have expanded the amount of software that could run on Apple machines.

In May, however, Apple said it would not use the Exponential X704 chip in its computers. Former employees of the company said that signaled the demise of the company.

Phil Schiller, vice president of desktop and server product marketing for Apple, said at the time that Apple dropped Exponential because its chips did not provide significant performance advantages. "We will not ship an Exponential processor in our product line in the next year. We just didn't see any benefit to our customers," he said then.

Interestingly, technology pioneered by Exponential is similar to the designs Intel plans to incorporate into its next-generation 64-bit Merced chip and were the subject of an intensely competitive silent auction earlier this summer. An undisclosed purchaser picked up the patents for around $10 million, said various sources.

Katie Cotton, an Apple spokeswoman, reported that the company has not been served with the complaint yet and had no comment.

 

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