Judge rejects TI's bid to end inquiry into patent dispute

Thursday, May 4th 2000, 12:00 am

By: News On 6

Texas Instruments Inc. has failed to stop an inquiry into a patent dispute by the U.S. International Trade Commission, clearing the way for the federal agency to resume the case this week.

TI had sought an injunction in a U.S. District Court in Los Angeles to stop the commission from pursuing a complaint from Tessera Inc. of San Jose, Calif. But Judge David O. Carter struck down the motion Tuesday, saying the court had no authority to interfere with the commission.

The commission also appeared before the judge to oppose TI's motion. The quasi-judicial body will set a 12- to 15-month timeline to resolve the dispute.

Shares of TI were down $7 at one point in trading Wednesday. They closed at $151.81, or down $3.69.

Christopher Pickett, a lawyer for Tessera Inc., said that the judge's decision is welcome because of the commission's reputation for moving cases quickly. "They are known for having a rocket docket," he said.

If the commission finds against TI, the Dallas-based semiconductor company could be barred from importing to the United States its digital signal processors (DSPs), forcing cell phone makers to find other suppliers.

TI, which dominates the market with a 60 percent share, said such a result was a worst-case scenario and very unlikely.

Officials at TI say that the company has not infringed on the Tessera patent and that TI engineers developed the technology in question on their own.

"The merits of this case have yet to be decided by the court. Regardless of the location, we feel that TI will receive the same favorable outcome once the merits of the case are examined," the company said in a prepared statement.

The chip-scale packaging technology is central to such hand-held devices as cell phones, digital cameras and MP3 players.

It allows manufacturers to "pack" more chips onto a smaller area, giving the device more functions.

Privately held Tessera licensed its packaging technology to TI and about 30 other semiconductor manufacturers four years ago.

TI was planning to use the technology in its memory division but sold that business in 1998, apparently ending Tessera's right to collect royalties.

But last year, Mr. Pickett said, Tessera employees heard TI engineers talk at a conference about using technology they recognized as Tessera's. "We contacted them immediately because this technology was covered by the same patent," he said.

Negotiations continued for 10 months but broke down, resulting in legal action by Tessera.

Mr. Pickett said the company is seeking compensation in unpaid royalties worth about 2 to 5 cents on every device that uses a TI chip with the technology in question.