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Intel and VIA are friends again

Peace in Our Time

Hear the wailing and gnashing of teeth of lawyers in five countries on three continents as Intel and VIA decided to stop suing each other over who owns what.

The two companies have battled since September 2001 over the rights of VIA to use Intel-patents in P4 chipsets and mobos. VIA has in turn sued Intel over alleged patent infringements and anti-competitive behaviour.

Having fought each other to an effective standstill, Intel and VIA are to settle all 27 patent infringement claims (and, we guess, the UK anti-competitive case) contained in 11 lawsuits. They have signed a 10-year cross patent licence with each other. Intel has also granted VIA rights to make X86 processors, so long as they are not pin or bus-compatible with its own C3 processors. Also, Intel will not assert patents on VIA bus or pin compatible microprocesors for a three year period. This hardly earth-shattering: the C3 barely registers a blip on Intel's radar screen, but for VIA, it's nice to dot the i's and cross the t's.

What else? Ah yes, Intel and VIA have agreed royalty terms over VIA's chipsets for the Intel platform. This is much more significant agreement, as it covers a sector where the two companies slug it out toe to toe.

In return, Intel has granted VIA a four year license to design and sell chipsets that are "compatible with the Intel microprocessor bus and agreed not to assert its patents on VIA or its customers or distributors on such chipsets for a fifth year". Phew! That's most of it, we think, except that S3, VIA's subsidiary, is not included in the agreement. Don't say we have to go through this again. Please.

Both sides are paying their own legal fees.

So who won? VIA may have won a moral victory, but Intel, we think, has won the war. By sending in the legal attack dogs on VIA, Intel has ensured that Taiwan's OEM sector will think very carefully before stepping out of line over royalties or disputed patents. VIA may have fought valiantly, but at the cost of falling sales in its core chipset business, as well as huge management time and legal expenses.

In the long-term, this may be of no great import: the chipset business is getting more competitive, and VIA is beginning to exploit its technology portfolio with, for example, OEM products for audio devices, and embedded processors for the consumer electronics sector. This is where the future of the company lies. But chipsets have been a nice cash cow for VIA in the past, and it makes sense for the company, to milk it for as much and for as long as possible. ®

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