Intellectual Property - Intel vs AMD - Case Study Example

Intellectual Property Intel vs. AMD

Introduction

A patent is a permitted means of shielding intellectual property preventing unconditional and unrestricted imitation of the intellect fruits (Grandstand, 2015). There are different intellectual property rights which include plant patent, design patents and trademark law. For these licences to be valid, secrecy should be observed by companies who have patented the intellectual fruit. It should only be used by the organisation or person who has developed it. Secrecy can, however, be reinforced by other external bodies such as contract and labour laws. The degree of protection of intellectual property rights varies from country to country. In some countries, the level of protection has been enacted into the national law while others have to be reinforced by international agreements such as TRIPS and WIPO (Various, 2014). This paper shall look at Intel Corporation and the infamous patent that everyone was violating. The 338 patent

Intel Corporation

Intel Corporation has long been recognised for its tremendous work in the making of computers and CPUs. The company is well suited to making computer chips that add to the functionality of computers. The issue of the patent of intellectual property has been an issue to Intel for a long time. The business of CPUs has been tricky for them especially in licensing of the various small functions that a CPU undertakes to function. For instance, branch prediction, cache algorithm, handling of instructions and memory access. All these functions are intellectual property that is unique from each other (Somaya, 2012). Whether the role can be achieved by the use of another transistor structure, there still emerges the risk of patent rights. Intel had to be careful in keeping the desire and competition from violating the intellectual property patents. Also, it had to minimise incidences that would otherwise render the patents invalid (Varelius, 2014). For this reason, Intel opted to have some cases sorted in out of court settlement because they are costly and precarious to both parties.

Intel has been making computer chips and semiconductors for many years. However, in the 1970s to 1980s, companies did not have the capacities to produce the components as a whole so they would operate as two partner companies to produce the chips and other necessary gadgets under contracts (Bainbridge, 2016). Intel had partnered with IBM for many years to assist in the making and marketing of the chips. From this partnership, Intel benefited from AMD in many ways. Such kind of partnerships in the intellectual property rights business was very tricky and in most cases, there arose intellectual property violations.

AMD

In the 1980s, AMD was the company to beat in chip manufacture and distribution. In this period, there was a widespread practice in the licensing industry that two companies would contract with each other to produce their design (Archibugi, et al, 2014). It was so because demand for the chips was very high and a single company like AMD could not produce and still meet the demand hence; IBM would not purchase a component if two companies did not make it. For this reason, AMD had other companies to manufacture their products. It is business as usual because having other companies like Intel to manufacture for them their chips and other parts, increase their market share of the architecture (Kumar, 2013). For many years that AMD had been in contract with Intel, they licensed and made almost every Intel product. IBM also registered several computer chips to Intel, for instance, the 9511/2 FPU. As the market demand grew bigger, companies such as Intel and others in the same league began having the fabrication capacities to meet the demand for single source devices, thus, going solo. As Intel developed its market share by producing chips independently, other computer companies continue to make compatible products under the previous licensing at that time. However, In the 1970s, Intel has made license agreements with IBM, IMD Siemens and other companies but in this particular case, AMD made an x86 CPU that ate into Intel market of content addressable memory (Bainbridge, 2016).

The Crawford ‘338 patent by Intel

Intel being a well-known company having products that were trusted and used in every CPU across the globe was granted a patent in 1990 called the ‘Crawford patent’ named after its architect (Khan, 2014). The patent was “patent # 4972338: microprocessor systems memory management”. The patent was well known as the ‘338 patent. The patent dealt with content addressable memory such as page tables and much more that were applied in the memory processing of CPUs. It involved the cache of processes and reference to memory by efficiently using the microprocessor making the processors faster than before. During this period, the Pentium Pro and Pentium made good usage of the patent. It was a patent that was popular and Intel never fails to cite it in their P6 and P5 datasheets. It is however likely that many companies copied the Intel design whether legally or not but Intel intended to use the patent 338 to control the problem with its former allies in the business who were now it competitors (Archibugi, et al, 2014).

The patent war

AMD had its ways and always managed to have Intel give it its chips for use in the making of its computers. Their strategies were way beyond those of Intel because the company had grown big as a result of collaborating with other businesses in making microchip hence expanding its market share in every aspect of the microprocessors (Somaya, 2012). AMD had taken this advantage ad made patent licences which allowed many companies to give them their patent microchip for use in making of the x86 processor computer. Intel was no exception. However, Intel separated itself from the corporate partnerships of having IDM make its chips and licence them for sale (Bos, et al. 2015). They had gained the manpower and capabilities to fabricate the microchips and at the same time meet the demand of the processers. Unfortunately, they were not off the hook with AMD. Because of the long hands of AMD could still take their products and use them under the previous agreements and licences. For instance, AMD brought a suit against Intel in 1987 for breach of contract. Intel had refused to give AMD access to their micro processers because it was now independent but it was bound by the signed cross licence agreement of 1882 and they had to give AMD the microcode’s for their bestselling x86 processers (Somaya, 2012). It further worsened the relationships between Intel and IDM. It was during this period that Intel got the 338 patent for its microchips and microcode processers. Since the case had been a battle case between the two chip giants, the cases the cases went to the 1990s and Intel sued IDM for breach of the 338 patent.

The fact that the patent had been enacted way after the previous case had started made things even difficult for both parties (Archibugi, et al, 2014). They were both determined to get the best of fines out each other. Intel knew that its new patent rights were stronger and well placed so they insisted on suing AMD for using their products that they very well were patented. It was so because, at the beginning of the 1990s, AMD was still using Intel microcode chips for their X86 processers. After the new patent, Intel knew that the License that held them liable to IDM of 1882 would not hold anymore (Moser, 2013). The case had long been drawn out and resulted in the settlement between the two giants. The case was settled in 1995 when the broad cross-licence gave perpetual licence to AMD to the 486 and 386 microcode’s from Intel. Also, they were granted the usage of the 338 patent. However, Intel had to compensate AMD injuries worth $18 million for breach of contract while AMD paid $58 million for violating the 330 patent

Control

After the legal battles of the 1990s, Intel took over the x86 architecture and had since been selling it. It has catapulted it to being a global leading giant in the microprocessors (Dolfsma, 2011). As a result, there was a truce between the two companies, Intel, which the world leading semiconductor manufacturer and its core competitor Advanced Micro Devices, AMD. Currently, Intel commands 80 percent of the global demand for the microprocessor. It and further modified the x86 processer to be the only processer that is recognised and used in most home computers across the globe. Over 90% of computers understand the x86 language instructions for processing software commands. Due to the legal battles of the 1990s, it solidified the business ran by the two companies making them the only companies that deal with microprocessors. Intel has succeeded so far because of its aggressive business decisions and strategies and not forgetting the legal tactics employed in the intellectual property fields (Dolfsma, 2011). Intel has continuously adjusted to competition to keep it ahead of the competitors who are developing more sophisticated and competitive microchips.

Their legal battles have changed the way business is dome in the world of microchips and computers (Archibugi, et al, 2014). The patent has become an issue that has to be carefully looked into. The best thing about the legal battles is that they have taught other competitors on how to be creative rather than copy pasting the same products and architecture. The fact that every single aspect of the microcode’s and microchip has been patented makes it difficult for any company to make something close to that of Intel chips. Intel has however been using the patent 338 to catapult it to higher heights (Moser, 2013). The only company that cause the patent is AMD and that is why it is the only competitor making the x86 processors. Legal suits involving patents have followed suit among other prominent companies in the world (Mossoff, 2016). For instance, Apple and Samsung sue each other over patent rights in design and architecture. However, all these legal battles are bases on the fact that Intel and AMD set the paths for such action to be take. The notion that my intellectual property must be protected is what drives the multi-billion cases to courts. If it were not for Intel and AMD changing the face of patents rights and how the computer business would run, the computer business would be down the drain as companies would have sued each other billions of dollars leading to the collapse of most Campaniles.

Intel still uses it business tactics against AMD making it come at distant second. Intel has been pushing harsh strategies in the market against AMD making it inferior. No matter how AMD tries to computers with Intel even by offering higher quality processes at a lower price, Intel still manages to crumble it out of the market. Such actions by Intel has led to more court cases between the two giants. Its liberal use of legal force in business made Intel be fined by the European Commission 1.25 billion euros to settle cases with AMD (Khan, et al.2014). That not the end of it because in 2010, Intel still got into more legal battles and had to pay $25.4 million to settle the legal fines. It is estimated that by the end of 2009. Intel had spent at least $116 million in legal battles involving patent rights with various companies across the globe (Archibugi, et al, 2014).

Conclusion

The issue of patent rights has been an issue for Intel since the begging in the 1970s. However, it is their way of handling such matters that had placed them as the leading manufacturer of semiconductors. But separating itself from AMD in the 1980s to become independents and going for the 388 patent catapulted the company to the heights of manufacturing it is today. The fact that it had to share the macrocodes of the x86 computer with AMD in the 1990s did not deter them from becoming global giants. They have however spent a lot of money in legal battles with AMD making their patent battles the longest and most expensive. Over the years, it has still pushed AMD over the edge in business. However, they have changed the scope of business in the world of microchips and computers bringing forth creativity that threatens to one day make Intel ran for its money. Trust and respected for intellectual property is what drives the business of equipment in the world today (Waelde, et al. 2013).