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Jury Decides For AMD In Copyright Infringement Suit

March 10, 1994

SAN JOSE, Calif. (AP) _ A federal court jury in a closely watched copyright case decided today against computer chip giant Intel Corp. in its lawsuit against arch-rival Advanced Micro Devices.

Jurors, in their third day of deliberation, found AMD did have the right to copy Intel microcode - built-in software that controls a chip’s operations.

AMD attorney Terrence P. McMahon said his client was ″delighted justice prevailed. This was an intelligent jury that stuck to the facts and the evidence and found in AMD’s favor.″

Intel promised an appeal in the case, the second time the issue has gone to trial.

″We now have two distinctly different jury verdicts,″ said F. Thomas Dunlap, Intel vice president and general counsel. ″Therefore, the Court of Appeals must now decide which verdict stands.″

In the first trial, in 1992, a jury found in Intel’s favor, but a federal judge threw out the verdict and ordered a new trial, saying Intel had withheld key documents in the case, preventing AMD from making a fair defense.

Word of the verdict depressed Intel stock. In early afternoon trading, Intel shares were down $1.62 1/2 to $70 on the Nasdaq stock market. AMD shares were off 37 1/2 cents to $22.37 1/2 .

The chip industry has closely watched the case because AMD has been one of Intel’s few competitors in the $8 billion market for microprocessors, the ″brains″ of personal computers.

Analysts also say the verdict could affect several separate but related lawsuits between the Silicon Valley companies, allies turned enemies.

At issue in the just-decided case was whether Intel granted AMD the right to copy Intel microcode in a now-obsolete match coprocessor, a chip that speeds a computer’s ability to crunch numbers. Microcode is built-in software that controls a chip’s basic operations.

Intel claimed AMD copied the code illegally. But AMD argued that a 1976 cross-licensing agreement gave them the right to copy the software. It accused Intel of trying to renege on the pact to win and maintain its near monopoly.

Santa Clara-based Intel’s chips are in four out of five personal computers. AMD, based in Sunnyvale, is Intel’s leading competitor, selling lower-priced ″clones″ of Intel’s widely used x386 and x486 microprocessors.

In the 1970s, AMD was Intel’s favored ″second source,″ making Intel chips to ensure adequate supply.

In 1976, the companies entered into an agreement under which AMD made Intel’s 287 math coprocessor. In 1990, AMD announced it would produce a math coprocessor using Intel’s microcode, prompting the copyright infringement suit.

AMD later used Intel microcode in making its x386 and x486 clones, prompting other lawsuits.

The 1976 agreement said AMD had the right to copy microcodes in ″microcomputers″ and peripherals. The dispute centers over the meaning of the word microcomputer.

Intel argued AMD had the right to copy only the microcode in its ″microcomputer development systems,″ computers used by engineers to design small computer systems.

But AMD insisted the agreement includes computer microprocessor chips, which in past years sometimes were referred to as ″microcomputers.″

In closing arguments Monday, each side accused the other of deliberately misinterpreting the word out of greed.

Intel lawyer Charles De La Garza told jurors that AMD was after a ″pot of gold″ - part of the rich market that took off in the early 1980s, when IBM chose Intel microprocessors for its personal computers.

But AMD’s McMahon said Intel considered AMD ″excess baggage″ when it no longer needed its smaller ally, which posed a competitive threat.

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