AMD 1994 Annual Report Download - page 16

"Processor Microcode Programs" and "Control Programs"; and (2) AMD's alleged
copying of 486 "Processor Microcode" as an intermediate step in creating
proprietary microcodes for the AMD version of the 486. Intel also sought a
declaratory judgment that (1) AMD had induced third-party copyright infringement
through encouraging third parties to import Am486-based products ; (2) AMD's
license rights to Intel microcode would expire as of December 31, 1995, and AMD
could no longer sell any products containing Intel microcode after that date ;
(3) AMD's license rights to Intel microcodes would not extend to In-Circuit
Emulation (ICE) microcode ("ICE Claim"); and (4) AMD would not be licensed to
authorize third party foundries to copy the Intel microcode. Intel also sought
damages and injunctive relief based on AMD's alleged copying and distribution of
Intel's "386 Processor Microcode Program" in AMD's 486 microprocessor.
Pursuant to the settlement, the parties agreed to dismiss all claims,
counterclaims and defenses raised in this action with the exception of the ICE
Claim. AMD consented to the entry of a permanent injunction prohibiting its
distribution of 486 products containing the ICE microcode after January 15, 1995
and agreed to pay $58 million to Intel for past damages relating to the ICE
Claim. AMD will have a fully paid-up, non-exclusive, world-wide, royalty-free,
perpetual license to the microcode in the Intel486 microprocessor product
family, excluding the 486 ICE microcode. AMD will have the right to use outside
foundries to produce Am486 microprocessors containing Intel microcode for up to
20 percent of its annual total unit shipments of Am486 microprocessors. The
parties have filed with the court a stipulation for the dismissal with prejudice
for this action and the entry of a permanent injunction relating to the ICE
Claim. The Corporation anticipates that the dismissal and the permanent
injunction will be entered by the court in accordance with the stipulation.
e. Antitrust Case Against Intel. On August 28, 1991, the
Corporation filed an antitrust complaint against Intel in the U.S. District
Court for the Northern District of California (Case No. C-91-20541-JW-EAI),
alleging that Intel engaged in a series of unlawful acts designed to secure and
maintain a monopoly in iAPX microprocessor chips. The complaint alleged that
Intel illegally coerced customers to purchase Intel chips through selective
allocations of Intel products and tying availability of the Intel 80386 to
purchases of other products from Intel, and that Intel filed baseless lawsuits
against AMD in order to eliminate AMD as a competitor and to intimidate AMD
customers. The complaint requested significant monetary damages, and an
injunction requiring Intel to license the 80386 and 80486 to AMD, or other
appropriate relief. Pursuant to the settlement, a stipulation of dismissal was
filed January 20, 1995 and all claims, counterclaims and defenses arising out of
this action were dismissed with prejudice.
f. Business Interference Case Against Intel. On November 12,
1992, the Corporation filed a proceeding against Intel in the Superior Court of
Santa Clara County, California (Civil Case No. 726343), for tortious
interference with prospective economic advantage, violation of California's
Unfair Competition Act, breach of contract and declaratory relief arising out of
Intel's efforts to require AMD's customers to pay to Intel patent royalties if
they purchased 386 and 486 microprocessors from AMD. The patent involved,
referred to as the Crawford '338 patent, covered various aspects of how the
Intel 386 microprocessor, the Intel 486 microprocessor and future X86 processors
manage memory and how these microprocessors generate memory pages and page
tables when combined with external memory and multi-tasking software such as
Microsoft Windows(TM), OS/2(R) or UNIX(R). The action was removed to the Federal
District Court (Case No. C-92-20789, (N.D. Cal.) 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 alleged that Intel was
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 protected the Corporation's customers from an
Intel patent infringement lawsuit. No royalties for the license were charged to
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Source: ADVANCED MICRO DEVIC, 10-K, March 07, 1995