AMD, Intel Lock Horns Over Processor Patents

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Historically, there has been little love lost between chipmakers Intel and AMD, with the companies famously locked in battle over antitrust allegations and, of course, in a perpetual marketing war over whose processors offer more bang for the buck. Now AMD’s recent move to spin off its manufacturing plants into the new company GlobalFoundries has raised Intel’s ire, with Intel claiming AMD is violating a patent cross-licensing agreement by letting GlobalFoundries have access to its intellectual property. AMD says it considers GlobalFoundries a subsidiary company and, therefore, it is in full compliance with the agreement.

In 2001, AMD set up a cross-licensing agreement with Intel that enables it to design and manufacturer x86-compatible processors, although the specific terms of that agreement are not currently available to the public. According to Intel, the nature of AMD’s agreement with Abu Dhabi’s Advanced Technology Investment Company (ATIC) violates that agreement, presumably because ATIC is effectively the majority stakeholder in GlobalFoundries. Intel says it has asked AMD to make the relevant parts of the licensing agreement public, but that AMD has so far declined to do so.

For its part, AMD believes it is in compliance with the 2001 agreement and that Intel’s actions are merely a means to distract attention from the global antitrust scrutiny the company is facing. Furthermore, AMD believes that Intel’s actions constitute “bad faith,” and could therefore be grounds for Intel losing access to AMD’s patents under the 2001 agreement. If Intel were to be found to be acting in bad faith, AMD would not lose access to Intel’s patents covered under the deal.

AMD also says it would be fine with making the terms of the cross-licensing agreement public…if Intel is also willing to go public with evidence submitted in AMD’s 2005 U.S. antitrust case against Intel. So far, Intel has not responded to AMD’s offer; AMD’s case against Intel is currently scheduled for trial in 2010.

The terms of the cross-licensing agreement stipulate the companies must try to resolve the dispute through mediation; if negotiations fail, lawsuits will likely be both companies’ next step. According to industry sources, the cross-licensing agreement is due to expire on January 1, 2011.