Texas Instruments has dropped patent infringement charges against Sharp and Fujitsu as part of a settlement that was hailed Friday as a boon to the U.S. computer chip industry's attempts to recoup some of its losses to foreign competition and strengthen its intellectual property rights.
The settlement establishes new patent licenses between TI and the two Japanese firms. Officials of the U.S. firm said the agreement calls for Sharp and Fujitsu to pay "significant" royalties, plus a lump sum for past use of patents whose licenses had lapsed.
TI declined to disclose the financial details of the settlement.
Industry analysts, however, interpreted "significant" to mean perhaps tens of millions of dollars over the next several years--a far cry from the paltry sums that U.S. chip makers have received in the past for licensing technology to Japanese companies.
The new patent licenses also are among the first to include a per-chip royalty fee. In many previous licenses, royalties were one-time, relatively small payments. In fact, industry analysts said the agreements amounted to giving away the technology.
In the last two years, the U.S. industry has withered in the face of increasing competition from the Japanese and a worldwide recession in demand for chips. In the process, American companies have become more stringent about protecting their intellectual property and recouping "fair value" for their hefty investments.
TI's general counsel, Dick Agnich, said: "We believe the (settlements) are recognition of the great value that TI and these Japanese companies place on intellectual property." Texas Instruments last year filed a civil suit against Sharp, Fujitsu, six other Japanese chip makers and one Korean firm, claiming they infringed on its computer chip patents. Each of the nine companies had once been licensed to use TI's patents, but TI said they continued to make and sell chips based on the patents after the license agreements expired.
As part of the settlement announced Friday, Sharp and Fujitsu tentatively have been dropped from the patent infringement case against the nine firms that TI brought under U.S. tariff laws; the International Trade Commission is expected to make a final decision in that case by September.
TI is pursuing its patent infringement cases against the other firms--Hitachi, NEC, Oki, Mitsubishi, Matsushita and Toshiba--all Japanese chip makers--and Samsung, the Korean company. Industry observers said the settlement with Sharp and Fujitsu bodes well for settlements with the other firms.
Although Fujitsu is an important factor in the worldwide chip market, Sharp is a relatively new, lesser player. NEC is the world's largest chip maker, closely followed by Motorola, Hitachi, TI and Mitsubishi.
The settlement, and an early ruling in a copyright case that Intel has filed against NEC, "point to an important and positive trend to give priority to the owners of intellectual property," said analyst Daniel Klesken of Montgomery Securities in San Francisco.