Intel accuses AMD of license breach

Who wins when Intel and AMD fight over chip licensing? Lawyers, that's who.

Please sit down if you are not already, but the long long long telegraphed patent license spat between Intel and AMD over Global Foundries is edging closer to a hot war. Intel sent AMD a letter saying it is breaching the agreement, and AMD is shooting back.

Word of this tiff first leaked out when AMD filed an 8-K form this morning saying that Intel thinks the Global Foundries deal breaches the 2001 patent cross-license agreement between the two companies. It gives AMD 60 days to rectify this breach or its rights under the agreement would be terminated.

This does not mean that Intel's rights would be terminated, however. For that, Intel would need to breach its side of the agreement. That is why AMD sent Intel a 'please get stuffed yourself' letter basically accusing Intel of interfering with AMD's business. This gives Intel 60 days to rectify that problem or its rights get terminated.

According to the agreement, the two sides had to meet, and that was done. The next step is to send letters, which as you can guess, is now done. Mediation follows, and if the two sides don't see eye to eye, then the licenses terminate... sort of.

From there, it will get ugly, and end up with lawyers in court. AMD says that it is in full compliance with the agreement, and Intel obviously disagrees. Given the glacial speed of the courts, this looks to be settled long after the sun dies a heat death somewhere around the year 5 billion.

Ironically, that is after the AMD antitrust trial is set to go forward in early 2010. The next 12 months or so look to be very lucrative for AMD and Intel legal staff, outside counsel, and local pizza joints that deliver late at night.

One interesting side note is what the breaches are. Intel says there are two breaches, one is in the definition of 'subsidiary'. Basically, Intel alleges that AMD does not have enough ownership for Global Foundries to be a real subsidiary, and that means AMD is fabbing too many wafers 'externally'.

That particular issue should be pretty cut and dried, there are legal definitions of such terms. It would shock us greatly if AMD didn't very carefully tap dance around those definitions when it did the Global Foundries deal. We don't see this as going very far, but it makes good headlines.

The second issue is a bit more touchy. The agreement which can be found here has a bunch of things redacted. Intel alleges that AMD is in violation of one of the redacted parts, but neither side can comment on what that bit is, or why AMD is not living up to it. Supposedly. Lets hear it for censorship, three cheers, one, ***, three!

Intel is saying that if AMD says it is in the clear, why not make the document public? On the phone this morning, AMD sort of agreed to do so, provided that Intel makes public the antitrust documents.

When asked about this, Intel didn't seem to mind as long as AMD opened up its side as well. Since there isn't a big company out there that doesn't have snotloads of embarrassing emails stuck on compliance-mandated WORM media, this should be fun to watch.

In the end, we are at step two of a four or five-step process, and that doesn't count appeals, counter-potshots, and general legal manoeuvering. This is unlikely to be settled for years, and will drag on and on and on, with only mild flashes of interest until then.

For now, we have legal posturing, position staking, and general FUDding of the press and markets. With any luck, both sides will agree to open the agreement, and then open the antitrust documents, then things will be fun.
How about it guys?