March 16, 2009 / 1:41 PM / 10 years ago

UPDATE 2-Intel says AMD breached patent licensing pact

(Adds Intel comment, complaint details and background)

NEW YORK, March 16 (Reuters) - Intel Corp (INTC.O) accused Advanced Micro Devices Inc AMD.N of breaching the terms of a cross-licensing agreement between the two rival chip makers, a charge that AMD denied on Monday.

Intel alleged its rival ran afoul of a 2001 patent agreement when it created the Globalfoundries joint venture, the $4.3 billion semiconductor manufacturer spun off from AMD.

In a statement, Intel said it “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 is threatening to terminate AMD’s rights in 60 days if the alleged breach is not corrected, according to the filing.

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.

Despite their standing agreement to share intellectual property, Intel and AMD have butted heads in court for many years.

One lawsuit filed in 2005 in which AMD accused Intel of giving computer makers illegal discounts and retaliating against manufacturers who used AMD chips has been delayed until 2010.

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.

But that partnership between AMD and ATIC breaches a confidential portion of the cross-licensing pact, Intel said.

“AMD cannot unilaterally extend Intel’s licensing rights to a third party without Intel’s consent,” said Bruce Sewell, Intel’s general counsel, who added that the company is “willing to find a resolution.”

In addition, AMD asserts that Intel breached the agreement by its “purported attempt to terminate (AMD’s) rights and licenses under the Cross License.” That move gives AMD the right to terminate Intel’s rights and licenses.

Intel said it will attempt to resolve the dispute through mediation. (Reporting by Franklin Paul; Editing by Derek Caney and Brian Moss)

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