http://www.businessweek.com/news/2013-02-15/intel-wins-x2y-patent-case-said-to-threaten-u-dot-s-dot-jobs

Bloomberg News

Intel Wins X2Y Patent Case Said to Threaten U.S. Jobs

February 15, 2013

Intel Corp. (INTC:US) won a patent- infringement case some U.S. lawmakers said could have threatened jobs at the chipmaker’s U.S. manufacturing plants.

The U.S. International Trade Commission upheld, with modifications, trade Judge David Shaw’s findings that Intel didn’t violate the patent rights of closely held X2Y Attenuators LLC. Hewlett-Packard Co. and Apple Inc., which use Intel chips, were also named in the ITC complaint. Notice of the decision was posted yesterday on the agency’s website.

X2Y asked the trade agency to block Intel’s chips using its technology from entering the U.S. The case drew the attention of lawmakers from both political parties who said a loss for Intel could harm U.S. jobs, because Intel does initial manufacturing work in the U.S. and final assembly in other countries.

The X2Y patents cover ways to overcome electromagnetic interference that can damage electronics. The company, which develops methods for improving the performance of circuits, licenses its inventions to Samsung Electronics Co., the world’s biggest maker of computer-memory chips. It doesn’t make any chips of its own.

Shaw said Intel didn’t infringe the three patents and two are invalid. The commission altered the judge’s interpretation of some patent terms without changing his underlying finding. The commission said it would more fully explain its reasoning in an opinion to be issued later.

Overseas Assembly

Intel has facilities in Arizona, California, Oregon, Massachusetts and New Mexico. X2Y’s complaint centers on Intel’s activities at test and assembly plants in Costa Rica, Malaysia, the Philippines and China.

Since the chips originate in the U.S., any disruption in the supply chain could hurt American jobs, Intel has said in ITC filings.

Oregon’s congressional delegation, including Senator Ron Wyden, a Democrat, said in an Aug. 8 letter that, because X2Y doesn’t make competing products, a loss for Intel “could have serious implications for the numerous U.S. industries that rely on a steady supply of Intel microprocessors and the Apple and Hewlett-Packard computers that use them.”

The ITC, whose job is to protect U.S. markets from unfair competition, has tightened its standards, requiring patent owners to have “significant licensing activities” while weeding out complaints from some with no real business operations.

Shaw found that X2Y met the threshold requirement of having a domestic industry worthy of protection based on its engineering and research activities.

Civil Lawsuits

Two civil suits that X2Y filed in federal court in its hometown of Erie, Pennsylvania, were put on hold pending the outcome of the ITC case. Those cases, which include additional patents, seek cash compensation from Intel.

“We’re gratified they upheld the judge’s opinion and now we can focus on defending ourselves in federal court in Pennsylvania,” said Chuck Mulloy, a spokesman for Santa Clara, California-based Intel.

Anne Standley of Edelman, a spokeswoman for X2Y’s law firm Alston & Bird, said the firm and company had no immediate comment.

The case is In the Matter of Microprocessors, Components Thereof, and Products Containing Same, 337-781, U.S. International Trade Commission (Washington).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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