Motorola And Hitachi In Accord

By Andrew Pollack
The New York Times

San Francisco -- June 25, 1990 -- Motorola Inc. and Hitachi Ltd. said today that they had reached an agreement in principle that should lead to a settlement of their disputes over computer chip patents.

The preliminary agreement should remove the threat that Motorola faced of having to halt shipments of its 68030 microprocessor, which serves as the central chip in computers made by Apple Computer, Hewlett-Packard, Next Inc., NCR and other companies. The chip is a key product for Motorola.

Hitachi and Motorola said they would jointly ask the United States Court of Appeals for the Federal Circuit in Washington to stay a lower court's ruling that would have banned Motorola from selling the 68030 and Hitachi from selling its H8 microcontroller.

If the court grants the stay, the companies will continue selling the disputed products until they hammer out the final settlement, which could take two to three months, said Osamu Naito, a spokesman for Hitachi in Tarrytown, N.Y.

Cross-Licensing Accord Seen

Spokesmen for both companies said that terms of the tentative accord were being kept confidential but that customers of the two companies would not be inconvenienced. This seems to suggest that a cross-licensing agreement may be involved that would permit both companies to continue to ship the disputed products. It was unclear whether one company would have to pay royalties or penalties to the other, or whether both would have to pay.

Judge Lucius D. Bunton of the United States District Court in Austin, Tex., ruled in March that the Motorola 68030 infringed a Hitachi patent and ordered Motorola to halt shipments. He also ordered Hitachi to stop selling its H8/532 microcontroller, saying it infringed Motorola patents.

The ruling surprised the computer industry because the 68030 is the core of the more expensive models in Apple's Macintosh line. Earlier this year, Apple told the court that it had only an eight-day supply of the chip.

Judge Bunton stayed his injunction the next day, so supplies were never interrupted. But last week the Judge lifted the stay and reimposed the order.

An Emergency Stay

Motorola immediately appealed, and last Tuesday the Washington court issued an emergency stay. But that stay might have been ended by the court this week. However, with the two companies asking for the stay to be prolonged, it is now likely that will be done.

Motorola, based in Schaumburg, Ill., is a leading provider of microprocessors and related but somewhat simpler chips known as microcontrollers. Hitachi, based in Tokyo, has for years been making and selling such chips under license from Motorola.

But with the H series of chips, Hitachi tried to develop its own designs. In January 1989 Motorola sued Hitachi for patent infringement concerning the H8. Hitachi countersued.

Analysts had said Hitachi was in a stronger position than Motorola in bargaining for a settlement because the 68030 is more important to Motorola than the H8 is to Hitachi. But last week Motorola bolstered its position by asking the Patent Office to overturn the Hitachi patent that Motorola was ruled to be infringing. Motorola said a prior patent invalidated Hitachi's patent.

Licensing Deal Expected

Michael Slater, editor of the Microprocessor Report, an industry newsletter, said he thought it likely that the two companies would reach a cross-licensing agreement. ''They are shooting each other in the foot, and no one's interest will be served if they both can't ship products,'' he said.

There has been speculation that Hitachi would demand from Motorola the right to produce the 68030, which Motorola has not licensed to others. But Mr. Slater said it would be ''out of character'' for Motorola to allow that.

Several other patent lawsuits are pending between Motorola and Hitachi regarding other microprocessors and microcontrollers. Mr. Naito said the companies might settle or drop those suits as part of a final settlement.

In his March ruling, Judge Bunton chastised the companies for taking up the court's time with a dispute that he said should have been settled privately. The two companies have held discussions on and off since then, although the talks were given a new sense of urgency last week after Judge Bunton lifted his stay and decided to reimpose the ban on sales of the 68030 and H8.

Copyright 1990 The New York Times Company