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Appeared on: Tuesday, March 17, 2009
Intel Claims AMD Breached Patent Licensing Pact

Intel accused AMD of breaching the terms of a cross-licensing agreement between the two rival chip makers, a charge that AMD denied on Monday.

Intel disclosed that the company has notified AMD that it believes AMD has breached a 2001 patent cross-license agreement with Intel. Intel believes that Global Foundries is not a subsidiary under terms of the agreement and is therefore not licensed under the 2001 patent cross-license agreement. Intel also said the structure of the deal between AMD and ATIC breaches a confidential portion of that agreement. Intel said that it had asked AMD to make the relevant portion of the agreement public, but AMD had declined to do so.

"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," said Bruce Sewell, senior vice president and general counsel for Intel. We have attempted to address our concerns with AMD without success since October. We are willing to find a resolution but at the same time we have an obligation to our stockholders to protect the billions of dollars we've invested in intellectual property."

Intel also threatened to terminate AMD's rights in 60 days if the alleged breach is not corrected, according to the filing.

"AMD's breach could result in the loss of licenses and rights granted to AMD by Intel under the agreement," reads Intel's statement.

AMD, in a filing with the U.S. Securities and Exchange Commission, said it has not breached the agreement and insisted that Intel has no right to terminate rights and licenses covered by the pact.

The Globalfoundries spinoff, which closed last week, leaves AMD, a distant rival to Intel in microprocessors, as a "fab-lite" chip company, focused on design rather than production.

The plants that make AMD's chips are now part of the new company, a joint venture with Advanced Technology Investment Co (ATIC), an Abu Dhabi state-owned venture capital firm.

Intel said the parties would attempt to resolve the dispute through mediation.


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