Intel and Via bury the hatchet

By Michael Kanellos, CNET News, 8 April, 2003 07:36

NEWS

Intel and Via Technologies have settled all of the lawsuits pending between the two companies and entered into an agreement that will let Via manufacture processors and chip sets and let Intel collect royalties. The settlement -- which involves 11 cases filed in five countries -- will essentially make it far easier for Via to sell processors and chip sets to PC makers. Intel claimed that the Taiwanese company's products infringed on its intellectual property and that Via did not have a valid patent licence to make them. Under patent law, any PC maker that used Via's chips could have been sued on the same ground. Via alleged that the fear of legal liability prompted customers to steer clear of its products. The company is one of the larger manufacturers of chip sets in the world, although sales of its chip sets for Intel-based PCs have shrunk in recent years. The company also makes microprocessors for Linux-based PCs sold by Wal-Mart. Via also filed countersuits, alleging that Intel's Pentium 4 infringed on its patents. In total, 27 patents were at issue in the various cases. The carefully crafted settlement also lets Via make products that directly compete with Intel's, but it will eventually force the smaller company to develop its own technology. Under the terms, Via has been granted a 10-year cross-licence to the relevant parts of Intel's patent portfolio, which will let it make so-called x86-compatible chip sets and processors for the notebook and desktop market. That is, Via can make chips that will run Windows or Linux software or both and largely function like today's Pentium or Athlon chips. Although functionally similar, Via's products ultimately must bear an original design. The company's chip sets must use an independently developed bus -- the data path that connects the processor to main memory -- and feature an independently developed pin structure, the tiny wireless that let a chip plug into a motherboard. The buses and pin structures can't be compatible with Intel products. These two requirements will ultimately guarantee that Via's processors will work only with Via's chip sets and vice versa. Via chip sets that conform to the settlement will not work with Intel processors, once a large market for Via. These terms are similar to the terms of the Intel-AMD settlement that allowed AMD to manufacture the Athlon processor. The Athlon runs the same software as the Pentium, but has a completely different bus. The settlement, though, phases in over time. For the first three years, Intel has agreed not to sue Via for making processors that come with buses and pin structures that are similar to Intel's products. Similarly, Intel has granted Via a licence to make chip sets that are pin- and bus-compatible with Intel products for four years, and has agreed not to sue Via or its customers for using pin- and bus-compatible chip sets for another year beyond that. The two companies are familiar antagonists. In the late 1990s, Intel and Via fought an acrimonious lawsuit over a Pentium III chip set made by Via. Intel claimed Via lacked a valid licence. Via claimed the suit came to clamp down on competition. At the time, Intel was trying to push customers to adopt Rambus memory. Via's chip set was compatible with standard memory and was gaining market share. "Intel sued Cyrix five times, and they never won," Wen Chi Chen, Via's chief executive and a former Intel executive, said in 1999. "Intel -- they just love lawsuits." The suit was largely settled in July 2000. In the interim, Via bought National's Cyrix division and IDT's Centaur division in an effort to get into microprocessors. The company also entered into a complex transaction with graphics maker S3 (which ultimately became Sonicblue). S3 possessed a licence to manufacture chip sets because of the resolution of a separate legal matter with Intel. The S3 transaction gave Via legal cover to make a variety of Intel-compatible products. Intel disagreed, and the current suits followed in September 2001. Until recently, sources close to the situation said that settlement was a fairly remote option. Both sides were far apart in their demands.

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