Jury Awards Brooktree $26 Million in Damages : Technology: Judgment against Advanced Micro Devices is for infringing on computer chip design.
A U.S. District Court jury has recommended that Sunnyvale-based Advanced Micro Devices pay $26 million in damages to San Diego-based Brooktree for infringing on Brooktree patents that cover computer chips used to generate color graphics on computer screens.
U.S. District Judge William Enright Thursday prohibited AMD from making, using or selling any products which infringe on the three patents. Enright also gave AMD 10 days in which to appeal the injunction.
Attorneys described the case as the first test of the Semiconductor Chip Protection Act of 1984, which is designed to protect technological advances in the hotly competitive computer chip industry. The same federal jury on Sept. 10 determined that AMD had violated Brooktree’s patent rights for the chips.
In a prepared statement, AMD Chairman and Chief Executive Officer W.J. Sanders III said that AMD would comply with the order pending an appeal. “We are aghast at the implications of the verdict,” Sanders said. “If the jury verdict and damages are confirmed by the court and not overturned on appeal, a gross miscarriage of justice will have been done.”
The closely watched court case focused on patents covering microchips that are known as color palettes. They are used to control the display of colors on computer monitor screens. Industry analysts have set the fast-growing market for color palettes at about $70 million a year.
The case, which dates back to November 1988, pitted privately held Brooktree, which expects to report about $60 million in revenue during 1990, against AMD, a giant chip maker with more than $1.2 billion in annual sales.
The award covers three Brooktree patents that are used in graphics applications in engineering work stations and high resolution personal computers, according to Brooktree spokeswoman Cathy Batchelor.
“With their infringement, (AMD) had gotten about a 20% market share in the work station (segment),” said Brooktree President James Bixby. “With their exit, we’ll get that 20% back.” AMD’s retreat should boost Brooktree’s profits during the coming fiscal year beginning Oct. 1 by “about 10%,” Bixby said.
“The short-term importance for Brooktree is that AMD is enjoined from continuing to sell infringing products,” said David Monahan, an attorney with Gray, Cary, Ames & Frye, the San Diego-based law firm that represented Brooktree. “The short-term damage being done to Brooktree (by AMD) is not going to be perpetuated.”
Monahan said that the case should provide “long-term benefits” to Brooktree and the entire chip industry because the case “was the first time, to our knowledge, that anyone used” the 1984 act, Monahan said. “I don’t think that people really knew what to do with (the act),” Monahan said. “It’s been on the books for six years.”
Monahan said that the damages determined on Thursday should “have a result of upgrading the ethical standard in the semiconductor chip industry.”
The Brooktree case “proves that the 1984 act has teeth,” said John Allcock, another attorney who represented Brooktree. Protection provided by the act will “particularly help” small innovative companies that develop and bring to market important new chip products, Allcock said.
“I think (the award) is upholding the idea that you can make it in the world as a creative, inventive company,” Bixby said. “This is an industry that’s too full of companies that are willing to let the younger, smaller companies take the risks . . . and then simply duplicate what they do.”
Sanders, however, contended that his company “did not copy Brooktree’s designs. . . . Our own case against Brooktree concerning their infringement of AMD’s patents relating to color palettes has yet to be heard. . . . AMD is a victim here.”
“We were an early advocate of the concept of copyrighting (designs),” Sanders said. “We still are. . . . We are not copyists. . . . We are aggressive competitors within the law.”
