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Texas Instruments Sues Five Semiconductor Makers For Patent Infringement

July 10, 1990

DALLAS (AP) _ Texas Instruments Inc. filed suit Monday against five semiconductor makers, claiming they are violating a 13-year-old patent governing computer chip manufacturing.

The lawsuit is the latest in TI’s 4-year-old campaign to benefit from its technological advances, which are protected by more than 5,000 patents. Among the company’s breakthroughs was the invention of the computer chip in 1958.

″TI is taking these actions to prevent the unauthorized use of its technology and protect the significant investments the company has made in development of intellectual property that is used in integrated circuits around the world,″ said company general counsel Richard J. Agnich.

The lawsuit, filed in U.S. District Court in Dallas, accuses the five companies of illegally using a TI-developed process for covering computer chips with plastic. It asks for unspecified damages.

A companion complaint filed with the International Trade Commission accuses the five companies of importing and selling plastic-enclosed chips without a license.

″Texas instruments has been demanding some incredibly high royalty rates,″ said Jack Menache, general counsel at Integrated Device Technology Inc. in Santa Clara, Calif., one of the companies sued.

Menache said officials of his company met with TI representatives in December to discuss the patents, but no negotiations were held since.

Menache said the process TI claims rights to ″touches a process that’s been around for a long, long time.″

The other companies named in the suit were Analog Devices Inc. of Norwood, Mass.; Cypress Semiconductor Corp. and VLSI Technology Inc., both of San Jose, Calif.; and LSI Logic Corp. of Milpitas, Calif.

Officials at the four companies said they had not seen the lawsuits and would have no comment.

A TI engineer is credited with co-inventing the integrated circuit in 1958. Today, the company is the No. 2 U.S. manufacturer of computer chips behind Motorola Inc.

It wasn’t until 1986, however, that the Dallas-based computer company began enforcing patents. ″Prior to that you did not have a legal system whose environment was that conducive to intellectual property,″ said TI spokeswoman Terri West.

″In order to remain competitive, a company must receive a fair return on a research and development investment and that means protecting your intellectual property,″ she said.

Since 1987, TI has earned $574 million in royalty income from its patents. Its efforts to increase royalty payments are viewed as one of the company’s best bets for short-term profitability.

Most of the royalty income so far has come from the patent covered in the lawsuits. In 1986, TI won claims that one Korean and eight Japanese semiconductor manufacturers were illegally using the process.

In addition, TI last year won a Japanese patent on the 1958 integrated circuit. One estimate puts income from that patent as high as $290 million in 1991 alone.

In addition to the plastic-encapsulation patent, the lawsuit claims the five companies are violating a related patent and that VLSI and Cypress Semiconductor are violating two other patents.