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Intel, Via bury the hatchet

The chipmakers settle all of the lawsuits pending between them and enter into an agreement that will let Via make processors and chipsets and let Intel collect royalties.

Intel and Via Technologies have settled all of the lawsuits pending between them and entered into an agreement that will let Via manufacture processors and chipsets and let Intel collect royalties.

The settlement--which involves 11 cases filed in five countries--will essentially make it far easier for Via to sell processors and chipsets to PC makers. Intel claimed that the Taiwanese company's products infringed on its intellectual property and that Via did not have a valid patent license to make them. Under patent law, any PC maker that used Via's chips could have been sued on the same ground.

Via alleged that the fear of legal liability prompted customers to steer clear of its products. The company is one of the larger manufacturers of chipsets in the world, although sales of its chipsets for Intel-based PCs have shrunk in recent years. The company also makes microprocessors for the Linux-based PCs sold by Wal-Mart.

Via also filed countersuits, alleging that Intel's Pentium 4 infringed on its patents. In total, 27 patents were at issue in the various cases.

The carefully crafted settlement also lets Via make products that directly compete with Intel's, but it will eventually force the smaller company to develop its own technology.

Under the terms, Via has been granted a 10-year cross-license to the relevant parts of Intel's patent portfolio, which will let it make so-called x86 compatible chipsets and processors for the notebook and desktop market. That is, Via can make chips that will run Windows or Linux software or both and largely function like today's Pentium or Athlon chips.

Although functionally similar, Via's products ultimately must bear an original design. The company's chipsets must use an independently developed bus--the data path that connects the processor to main memory--and feature an independently developed pin structure, the array of tiny wires that lets a chip plug into a motherboard. The buses and pin structures can't be compatible with Intel products.

These two requirements will ultimately guarantee that Via's processors will work only with Via's chipsets and vice versa. Via

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chipsets that conform to the settlement will not work with Intel processors, once a large market for Via. These terms are actually similar to the terms of the Intel-Advanced Micro Devices settlement that allowed AMD to manufacture the Athlon processor. The Athlon runs the same software as the Pentium, but has a completely different bus.

The settlement, though, phases in over time. For the first three years, Intel has agreed not to sue Via for making processors that come with buses and pin structures that are similar to Intel's products. Similarly, Intel has granted Via a license to make chipsets that are pin- and bus-compatible with Intel products for four years, and has agreed not to sue Via or its customers for using pin- and bus-compatible chipsets for another year beyond that.

The two companies are familiar antagonists. In the late 1990s, Intel and Via fought an acrimonious lawsuit over a Pentium III chipset made by Via. Intel claimed Via lacked a valid license. Via claimed the suit came to clamp down on competition. At the time, Intel was trying to push customers to adopt Rambus memory. Via's chipset was compatible with standard memory and was gaining market share.

"Intel sued Cyrix five times, and they never won," Wen Chi Chen, Via's CEO and a former Intel executive, said in 1999. "Intel--they just love lawsuits."

The suit was largely settled in July 2000. In the interim, Via bought National's Cyrix division and IDT's Centaur division in an effort to get into microprocessors. The company also entered into a complex transaction with graphics maker S3 (which ultimately became Sonicblue). S3 possessed a license to manufacture chipsets because of the resolution of a separate legal matter with Intel. The S3 transaction gave Via legal cover to make a variety of Intel-compatible products.

Intel disagreed, and the current suits followed in September 2001. Until recently, sources close to the situation said that settlement was a fairly remote option. Both sides were far apart in their demands.