AMD 1993 Annual Report Download - page 19

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microprocessors generate memory pages and page tables when combined
with external memory and multi-tasking software such as Microsoft(Registered
Trademark) Windows(Trademark), OS/2(Registered Trademark) or UNIX(Registered
Trademark). The action was subsequently removed to the Federal District Court
where AMD amended its complaint to include causes of action for violation of
the Lanham Act and a declaration of patent invalidity and unenforceability. The
complaint alleges that Intel is demanding royalties for the use of the Intel
patents from the Corporation's customers, without informing the Corporation's
customers that the Corporation's license arrangement with Intel protects the
Corporation's customers from an Intel patent infringement lawsuit. No royalties
for the license are charged to customers who purchase these microprocessors
from Intel.
8. International Trade Commission Proceeding. The United States
International Trade Commission Proceeding (the "ITC Proceeding") (Investigation
No. 337-TA-352) was filed by Intel Corporation on May 7, 1993, against two
respondents, Twinhead International and its U.S. subsidiary, Twinhead
Corporation. Twinhead is a Taiwan-based manufacturer which is a customer of both
AMD and Intel. Twinhead purchases microprocessors from AMD and Intel, and
incorporates these microprocessors into computers sold by Twinhead. Intel claims
that the respondents induce computer end-users to infringe on what is known as
the Crawford '338 patent when the computers containing AMD microprocessors are
used with multi-tasking software such as Windows, Unix or OS/2. Intel seeks a
permanent exclusion order from entry into the United States of certain Twinhead
personal computers and an order directing Twinhead to cease and desist from
demonstrating, testing or otherwise using such computers in the United States.
AMD's dispute with Intel in the Intel Business Interference Case (Case No.
C-92-20789, N.D. Cal) (discussed above) requests a declaration that the Crawford
'338 patent is invalid; accordingly, AMD intervened in the ITC Proceeding as a
real party in interest by filing a motion with the ITC to intervene on the side
of the respondents. On July 2, 1993, the ITC granted AMD's motion to intervene
in the ITC Proceeding on the side of respondents and to participate fully in all
proceedings as a party.
The Corporation has vigorously contested the relief Intel seeks. A hearing
date before an administrative law judge has been set for May 2, 1994. Any
decision by an administrative judge would then be confirmed or not be confirmed
by the International Trade Commission (ITC).
On February 4, 1994, the Corporation filed a motion to suspend immediately
and thereafter to terminate the ITC proceeding on the ground that Intel is
collaterally estopped from pursuing the relief it seeks by reason of a judgment
soon to be entered in favor of Cyrix Corporation, also an intervenor in the ITC
Proceeding, and against Intel in a lawsuit involving the Crawford 338 patent
trial in Texas federal court. Intel opposed the motion, and filed a motion of
its own requesting that the ITC proceeding be suspended, not terminated, pending
appellate review of the Cyrix Judgment. On February 22, 1994, ITC Administrative
Law Judge Sidney Harris granted AMD's motion to suspend, and indicated his
intent to terminate the ITC Proceeding upon entry of the judgment in the Texas
federal court as AMD has requested. Judge Harris denied Intel's motion to
suspend the ITC Proceeding until its appeal of the judgment in favor of Cyrix
has been resolved.
An unfavorable outcome before the ITC could have an adverse effect on the
Corporation's ability to sell microprocessors to Twinhead and other computer
manufacturers in Taiwan and potentially, other countries. An unfavorable outcome
could have a material adverse impact on the Corporation's trends in results of
operations and financial condition.
9. In Re Advanced Micro Devices Securities Litigation. Between September 8
and September 10, 1993, five class actions were filed, purportedly on behalf of
purchasers of the Corporation's stock, alleging that the Corporation and various
of its officers and directors violated Sections 10(b) and 20(a) of the
Securities and Exchange Act of 1934, 15 U.S.C. sec.sec. 78j(b) and 78t(a),
respectively, and Rule 10b-5 promulgated thereunder, 17 C.F.R. sec. 240.10b-5,
by issuing allegedly false and misleading statements about the Corporation's
development of its 486SX personal computer microprocessor products, and the
extent to which that development process included access to Intel's 386
microcode. Some or all of the complaints alleged that the Corporation's conduct
also constituted fraud, negligent misrepresentation and violations of the
California Corporations Code.
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Source: ADVANCED MICRO DEVIC, 10-K, March 07, 1994