Both Sides Claim Victory in Ruling on 386 Chip : Technology: An arbitrator’s decision moves the lengthy fight between Advanced Micro Devices and Intel closer to conclusion.
The bitter 5-year-old legal battle between Intel Corp. and Advanced Micro Devices inched toward conclusion Monday when an arbitrator ruled that AMD had the right to build its current version of the popular 386 microprocessor, but declined to award the company significant monetary damages.
As has been the case at nearly every stage of the tangled dispute, both sides called Monday’s ruling a victory. Intel noted that the arbitrator, retired Superior Court Judge J. Barton Phelps, awarded AMD $15 million in damages for breach of contract, a fraction of the $2.2 billion that AMD had been seeking.
But AMD emphasized Phelps’ decision to grant it a permanent, royalty-free license to use Intel patents and copyrights in current and future versions of its 386 microprocessor, or computer on a chip. Intel said it would oppose enforcement of that portion of the decision, but legal experts said such an effort was unlikely to succeed.
The long-running dispute is rooted in a 1982 technology-exchange agreement between the two companies. Under that agreement, AMD had the rights to build Intel products, including early generation chips--the 8086 and the 286--that formed the brain inside IBM-compatible personal computers.
But Intel refused to give AMD the rights to the more advanced 386, which AMD said was a violation of the technology agreement. A provision in the contract called for any disputes to be settled by arbitration, and the arbitration proceeding--initially expected to take six weeks--began in 1987, with AMD seeking an order that would force Intel to turn over the 386 technology.
As the proceeding dragged on, however, AMD was developing its own “clone” version of the 386 without Intel’s designs, and it began to market the chip last year. AMD now controls as much as 30% of a 386 market that’s worth more than $1 billion annually.
The only Intel intellectual property used in the AMD 386 products is “microcode,” the tiny instructions that are written into the chips. AMD claims the right to use the microcode under a 1976 agreement, but Intel disputes that and has sued for copyright infringement over both the 386 and an earlier product, known as the 287.
If AMD were to lose the microcode case, it could be forced to withdraw its 386 and pay as much as $600 million in damages. But a company spokesman said yesterday’s ruling gives it a “bullet-proof” defense in the 386 microcode case, and thus constitutes a major victory.
Intel, however, says Phelps--who was critical of Intel’s conduct in his previous decisions--has exceeded his authority in granting AMD rights to Intel intellectual property. Intel will now ask the Superior Court--which must approve the arbitrator’s decision--to block enforcement.
But independent legal experts were doubtful that this strategy would succeed. William I. Schwartz, an attorney with the San Francisco law firm Morrison & Foerster, noted that the law generally grants broad authority to arbitrators to determine the scope of their own authority.
