Motorola and Hitachi End Patent Dispute Over Microprocessors

The Wall Street Journal

October 9, 1990

Motorola Inc. said it settled a patent dispute with Hitachi Ltd. that nearly forced the U.S. company to stop selling its flagship computer chip, a vital component for companies such as Apple Computer Inc.

Motorola and Hitachi said they agreed to drop all charges against one another in a battle of suits and countersuits that Motorola launched in early 1989 when it accused Hitachi of infringing on patents used in microprocessors, the "brains" of computers and other electronic equipment.

The agreement "settles all outstanding issues," a spokesman for Tokyo-based Hitachi said. "The conflict is completely finished," he said.

The out-of-court agreement clears away a cloud of uncertainty that has hung over Motorola since May, when a federal judge in Austin, Texas, ruled that Motorola had violated a Hitachi patent and ordered Motorola to stop making its 68030 chip, among other components. Hitachi was ordered in May to stop selling its H-8 processor chips.

The Motorola 68030 chip is at the heart of many of Apple's Macintosh computers and machines built by Hewlett-Packard Co. and others. The Texas ruling sparked a minor panic among computer makers fearful for their supplies of the chips. If enforced, the ruling also would have prevented Motorola from selling its new 88000 chip, which uses a new technology called reduced instruction-set computing.

The Texas judge quickly stayed injunctions against both companies' sales, so supplies to U.S. computer makers weren't interrupted. In June, Hitachi and Motorola began settlement talks after Motorola appealed the Texas decision.

Motorola and Hitachi wouldn't disclose details of the settlement, saying the accord called for the companies to remain quiet about the terms. But analysts say Motorola, based in Schaumburg, Ill., probably conceded some patent rights to Hitachi or agreed to pay nominal royalties in return for being able to continue using the Hitachi patents in its 68030 chips.

Hitachi was seen as having the upper hand because it sells almost none of its H-8 chips in the U.S., while the 68030 is a big money-maker for Motorola. "My guess is that Hitachi came out on the high side" of a patent-rights swap, said analyst Millard Phelps of Hambrecht & Quist. "They had potentially a lot more to lose."

Apple and Hewlett-Packard had no comment on the settlement.

Motorola stock closed at $59.75, down 75 cents in New York Stock Exchange composite trading yesterday. Hitachi's American depository receipts closed at $96.75, down 50 cents, also in Big Board composite trading.