From Computer Business Review, a sister publication.

Would a reputable company such as Intel Corp stoop to using other peoples’ technology without permission? Surely such a scenario is unlikely. Yet, as a result of patent infringement suits launched last month (CI No 3,161) against the company, attention is focusing on the way Intel, and others in the computer industry, conduct their business and source their technology. Intel, the world’s largest microprocessor manufacturer, has been involved in more than its fair share of patent and other legal actions over the years.

By Graeme Burton

Advanced Micro Devices Inc, Cyrix Corp, IBM Corp, SGS Thomson Microelectronics NV and VLSI Technology Inc, as well as its own employees, have all faced Intel’s legal department in court. So why after so long playing the role of the pursuer should Intel now become the pursued? Jonathan Retsky, a patent lawyer with Chicago law firm Brinks, Hofer, Gilson & Lione, was formerly an engineer with Motorola Corp and worked on the 68020 and 68030 microprocessors used in the Apple Macintosh and Commodore Amiga computers. He believes there are many pressures in the industry which can lead to corners, often inadvertently, being cut. It is extremely competitive in Silicon Valley right now and Intel, being the leader in sales, is under constant pressure to be more and more innovative, says Retsky. In the process, the pressure to cut the smallest of corners in order to achieve the desired result, in Intel’s case this is the doubling of processor power every two years and staying well-ahead of the snapping pack of clone-manufacturers, can be overwhelming.

Famously caught

Microsoft Corp was famously caught in 1994 when it agreed to pay Stac Electronics Inc $108m for using Stac’s hard disk compression technology (CI No 2,441). A year later, it paid $90m to settle a claim related to its OLE object linking environment technology, some of which was patented to Wang Laboratories Inc. Most fantastically of all, in the 1970s, IBM brought a massive damages claim against Fujitsu Ltd and Hitachi Ltd over an espionage plot to steal its mainframe designs. The plan was foiled when investigators broke into a vehicle in IBM’s car park to find the boot packed with top secret documents and microfilms. But could a company with the upright reputation of Intel stoop to illegally copying other peoples’ innovations. Surely that is improbable? Well it may not be, says Retsky, You are dealing with the industry’s biggest manufacturer. Anyone taking on Intel knows it is going to have to put an awful lot of money and resources into defending that law suit. As a result, says Retsky, The big players can use that type of understanding to their advantage and say: ‘What’s the likelihood of DEC, which has had some financial problems and is struggling with its own chip, trying to take us on?’ The use of other company’s technology is not, however, always deliberate. It’s common for the patent lawyers to keep a track of new patents and sometimes show them to the engineers. It is also common for the engineers to reverse engineer a product to find out more about it, says one patent lawyer who follows the computer industry closely. Most of the time the engineers have little idea whether the ‘new’ technology they may be incorporating into a new design belongs to someone else or not, he says. Former processor designer Retsky agrees. The technology moves so quickly and you’re using and incorporating stuff so quickly you don’t know. There’s seldom a lawyer at the front-end saying: ‘You can use this but you can’t use that’. I think the most reasonable and probably correct analysis is that they [Intel’s engineers] were given access to all sorts of technology and some people might have used some elements that weren’t cleared or weren’t theirs, unbeknownst to them and without any purpose or intent. But DEC chief executive Robert Palmer claims that Intel may have been tempted to lift its technology following talks between the two companies in 1990 and 1991, when DEC proposed a collaboration for a follow-up to the successful 80486 processor based on DEC’s Alpha technology. The talks collapsed and DEC produced the Alpha on its own in 1992 while Intel brought out the wildly successful Pentium a year later. There is also the pressure that Intel allegedly puts on its engineers. Intel chief operating officer Craig Barrett reputedly told stockholders last May, the half-life of an engineer… is only a few years. Pressure group FACE Intel, made up of former and current Intel employees claims that the company’s performance management system puts excessive pressure on employees and is used to ‘spring clean’ up to 10% of employees annually. They claim it is used to get rid of staff who do not fit the company culture and age profile.

Under pressure

Although Retsky discounts the school of thought that claims that Intel’s engineers, under pressure from management to perform, deliberately used some of the DEC technology they had appraised in 1990 and 1991 to achieve the company’s goals, disgruntled former staff tell a different story. In his book, ‘Only the Paranoid Survive,’ Andy Grove writes that if an employee loses his job, frankly, who will care besides you? And adds: Your career is your business. You own it as a sole proprietor… It is your responsibility to protect this personal business of yours from, and to position it to benefit from, the changes in the [work] environment. Such a sentiment from the top may well encourage some to succumb to temptation. Whatever the truth, DEC appears to have much to gain and little to lose from the action. Its personal computer business is barely profitable and its Alpha-based server business, already under pressure from Intel, will be further threatened by the arrival of the ‘Merced’ microprocessor, being developed by Intel and Hewlett-Packard Co, which will take on Alpha head-to-head. Many on Wall Street believe DEC’s real reason for the action is to try to persuade Intel to collaborate on microprocessor technology in the law courts, where it failed in talks six years ago. Asserting ten patents against any defendant is a complex, extremely time- consuming as well as a very expensive endeavor for both parties, said one patent lawyer. Retsky believes that Intel, sooner or later, could be forced to compromise. It’s unlikely that Intel will succeed in invalidating all of the ten patents that have been asserted against it so there is a good chance that DEC will prevail on one or more those patents, he says.