Cyrix Corp. v. Intel Corp.
| Decision Date | 24 July 1992 |
| Docket Number | No. 4:90cv264.,4:90cv264. |
| Citation | 803 F. Supp. 1200 |
| Parties | CYRIX CORPORATION, Plaintiff, v. INTEL CORPORATION, Defendant, v. SGS-THOMSON, Intervenor. |
| Court | U.S. District Court — Eastern District of Texas |
COPYRIGHT MATERIAL OMITTED
Richard Edward Harrison, Joseph Wilbur Wolfe, Henderson Bryant & Wolfe, Sherman, Tex., Harry M. Reasoner, Vinson & Elkins, Houston, Tex., Robert C. Walters, Vinson & Elkins, Dallas, Tex., Albert E. Fey, Fish & Neave, New York City, for Cyrix Corp.
James Patrick Bradley, Dale B. Nixon, Richards Medlock & Andrews, Frank Finn, Thompson & Knight, Dallas, Tex., David T. Pritikin, Thomas D. Rein, Sidley & Austin, Chicago, Ill., Raphael V. Lupo, Jack Q. Lever, Jr., Sandra A. Sellers, Willian, Brinks, Olds, Hofer Gilson and Lione, Washington, D.C., Peter J. Thoma, Richards Medlock & Andrews, Dallas, Tex., for SGS-Thomson Microelectronics, Inc.
Stephen D. Susman, Susman Godfrey, Paul Martin Janicke, Patricia Newman Brantley, Wayne Manford Harding, Arnold White & Durkee, Houston, Tex., J. Thomas Rosch, Daniel M. Wall, Jordan C. Budd, Terry J. Houlihan, Jared W. Huffman, McCutchen, Doyle, Brown & Enersen, San Francisco, Cal., Clyde Moody Siebman, Siebman & Reynolds, Plano, Tex., Terrell W. Oxford, Ophelia S. Camina, Thomas A. Adams, IV, Susman Godfrey, Dallas, Tex., for Intel Corp.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
The above entitled and numbered cause was called for trial before the Court without a jury on January 20, 1992, in the United States Courthouse in Sherman, Texas, and the Court having heard all the testimony and considered all admissible evidence, as well as the argument of counsel and their proposed findings and conclusions, hereby enters its findings of fact and conclusions of law as to the patent licensing issues in this case in conformity with Fed.R.Civ.P. 52. Any finding of fact which constitutes a conclusion of law shall be deemed a conclusion of law and any conclusion of law which constitutes a finding of fact shall be deemed a finding of fact.
1. Plaintiff, Cyrix Corporation ("Cyrix"), is a Delaware corporation with its principal place of business in Richardson, Texas.
2. Defendant, Intel Corporation ("Intel"), is a Delaware corporation with its principal place of business in Santa Clara, California.
3. Intervenor, SGS-Thomson ("ST"), is a Delaware corporation with its principal place of business in Carrollton, Texas.1
4. This is a civil action originally commenced by Cyrix against Intel. ST has
intervened in this action seeking a declaratory judgment that it is the successor and assignee of the Intel-Mostek license at issue. Only the patent licensing issues are before the Court at this time. These issues are whether 1) ST is the successor and assignee of the Intel-Mostek license agreement, 2) whether Intel is barred from challenging ST's ownership of the Intel-Mostek License Agreement under the doctrine of ratification, waiver, laches, and/or equitable estoppel, and 3) whether the Patent Exhaustion Doctrine bars Intel from bringing a patent infringement action against Cyrix.2 Intel has stipulated that, if ST is the owner of the Intel-Mostek license, the FasMath coprocessors made and transferred to Cyrix by ST are "Licensed Products" within the meaning of the Intel-Mostek agreement.
5. The patent at issue is the "Numeric Data Processor," United States Patent No. 4,338,675 ("the '675 patent"), which was originally issued to Intel in July 1982. United States patent Re. 33,629, entitled "Numeric Data Processor", is a reissue of the '675 patent. The reissue patent issued July 2, 1991, based on an application filed June 1, 1990. The reissue patent has five claims (claims 1, 5, 7, 8 and 10), having the identical wording as corresponding claims 1, 5, 7, 8 and 10 of the '675 patent.3
6. The products at issue in this action are math coprocessors designated as Cyrix's FasMath CX-83D87, CX-83S87, CX-82S87, and the AutoMath coprocessors (jointly Cyrix's "FasMath" coprocessors). The FasMath coprocessors are used in personal computers to speed up mathematical operations that would otherwise be performed by the microprocessor of the computer.
7. Each FasMath coprocessor is a tiny silicon "chip," or "die," less than one-half inch on a side and containing more than 200,000 transistors. It is packaged in a protective housing having an array of metal pins that are used to plug the chip into a computer circuit board.
8. In March 1977, Intel and Mostek entered into a cross-license agreement (the "License Agreement"), the terms of which provided that each party granted to the other a license "to make, to have made, to use, to sell (either directly or indirectly), to lease and to otherwise dispose of Licensed Products." The original term of the License Agreement was ten (10) years, but the agreement was extended to twenty-two (22) years pursuant to an amendment in November 1982.
9. Under the License Agreement, "Licensed Products" are defined as "any product including Intel's '675 patent manufactured, used or sold by either party covered by patents of the other party." The express written terms of the License Agreement do not restrict or limit in any way the manner or method by which "Licensed Products" may be manufactured, used, or sold.
10. Under the License Agreement, each party released the other from any past patent infringement, and Mostek agreed to pay to Intel a one-time royalty payment of $100,000 on March 1, 1987.
11. The License Agreement provides that the license may be assigned, without the other party's consent, to a successor in ownership of "all or substantially all the assets of the assigning party," provided the successor expressly assumes the assigning party's obligations under the License Agreement. The License Agreement also provides that Delaware law governs its interpretation.
12. Intel received notice of the sale of Mostek assets to ST, the assignment of the License Agreement to ST, and the assumption of the obligations of Mostek under the Agreement by ST. Robert E. Caldwell of ST, by letter dated November 15, 1985, notified Intel that ST had acquired substantially all of Mostek's assets and had been assigned the License Agreement. By letter dated December 9, 1985, Ross E. Evans of Mostek and Robin Sears of ST jointly notified Intel of the sale and assignment. Furthermore, Mostek's sale of assets to ST was widely publicized in major newspapers, periodicals, and trade publications within the semiconductor industry which were regularly read by Intel employees, officers and directors.
13. Numerous publications that reported the sale of Mostek's assets to ST stated that not all of Mostek's assets were sold, and many reports included the nature of the assets not sold to ST.
14. Intel had the ability to conduct its own independent investigation of the Mostek-ST sale and ST did nothing to prevent such an investigation.
15. By letter dated April 21, 1988, ST notified Intel that ST was the successor by merger to TSI and had assumed all of the obligations, terms, and conditions of the License Agreement.
16. ST has fulfilled all its obligations under the License Agreement including the payment of the $100,000 royalty.
17. At the time of the Intel-Mostek License Agreement, Intel and Mostek were both engaged in custom product manufacturing.4 Custom product manufacturing, which today is known as "foundry" work, refers to arrangements in which a semiconductor company makes and sells to its customers integrated circuit products, the designs for which were developed or owned by the customers. At this time, about 15% of Mostek's business was foundry work. One of Mostek's foundry customers at that time was Zilog Corporation ("Zilog"), for whom Mostek made the "Z80" microprocessor. The Z80 was sold in competition with Intel's microprocessors.
18. Intel was aware of Mostek's relationship with Zilog at the time the Intel-Mostek Agreement was negotiated, and that Mostek was making and selling microprocessors to Zilog. This was a matter of public knowledge that was reported in the trade press. Moreover, the Mostek-Zilog relationship was specifically brought to Intel's attention during the license negotiations. Mostek's President, L.J. Sevin, informed Intel's Chairman, Robert Noyce, about the Zilog relationship and Sevin understood from Noyce that the Z80 would be a "Licensed Product."
19. Intel also was acting as a foundry for its customers at the time the Intel-Mostek License Agreement was negotiated. One of those customers was Reticon, for whom Intel made integrated circuits, the design of which Reticon had developed and owned. At the time of the Intel-Mostek Agreement, Mr. Sevin also was aware of Intel's foundry relationship with Reticon. Intel has also engaged in its own foundry activities with other companies, such as Weitek, Unisys, Reticon, Altera, Analog Devices and others, pursuant to which Intel agreed to make and sell integrated circuits wafers or dice that had been designed by those companies. Those agreements provided that Intel was "manufacturing" and "selling" integrated circuits in wafer or packaged form that were the subject of those agreements.
20. Intel was also acting as a foundry in November 1982, when the Intel-Mostek Agreement was amended and extended by 12 years to 1999, and at this time it had begun foundry-type operations at its Chandler, Arizona facility.
21. The License Agreement was drafted, negotiated, and executed on behalf of Intel by Roger Borovoy, then Intel's Vice President, Secretary, and General Counsel. L.J. Sevin, then Mostek's President and CEO, acting with Mostek's lawyer Merlyn Sampels negotiated and executed the License Agreement on behalf of Mostek.
22. The Intel-Mostek License Agreement was intended by...
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