Chip maker battle heats up in lab and courtroom

Now that the engineers are about done jumping the technology hurdles so that competition to Intel Corp.'s Pentium II can ship, the lawyers are tossing stumbling blocks onto the track. In the past week, Intel and Creative Labs have filed suit against one or both of Intel's competitors, Advanced Micro Devices and Cyrix.

Now that the engineers are about done jumping the technology hurdles so that competition to Intel Corp.'s Pentium II can ship, the lawyers are tossing stumbling blocks onto the track. In the past week, Intel and Creative Labs have filed suit against one or both of Intel's competitors, Advanced Micro Devices and Cyrix.

Creative Technology Ltd. and its US subsidiary, Creative Labs, has filed suit against Cyrix and Cyrix OEMs that distribute computer systems using the Cyrix MediaGX processor. The lawsuit alleges that consumers are being misled as to the capabilities and the source of the computer audio solution provided by the chip.

"We brought this lawsuit ... because Cyrix's advertising falsely claims 'Sound Blaster compatibility' and a 'full feature Sound Blaster-compatible interface,'" says John Danforth, vice president and general counsel at Creative Labs. "In fact, Cyrix's MediaGX audio solution falls far short of compatibility with a genuine Sound Blaster audio product. MediaGX-based systems, as tested, also lack key audio functions that are standard in true Creative Labs and Creative Technology Sound Blaster products.

"As tested, a MediaGX-based computer system will continually tell end-users - through diagnostic programs and other utilities designed to identify the manufacturers of system components - that Creative is the manufacturer of its audio components," Danforth says. "This is untrue."

Although Cyrix has not yet received court papers and will not comment on the suit, the MediaGX is compatible with Sound Blaster software and passes Sound Blaster diagnostics, says Herb Miranda, general manager for integrated processors at Cyrix.

Last Friday, Intel filed suit against Cyrix and Advanced Micro Devices, claiming the companies infringe on Intel's trademark on MMX, which stands for the multimedia extension technology that is built in to Intel's latest microprocessors.

The suit alleges that AMD and Cyrix have designed and begun implementing strategies to improperly leverage Intel's investment in the MMX name, which Intel claims could result in confusion in the minds of consumers as they make buying decisions. Further, Intel received an injunction in German courts that last week prohibited AMD from using the MMX mark in signs, advertising, and promotional materials distributed at the CeBit conference in Hanover.

An AMD representative said that the company was prepared with signs, advertising, and other materials that complied with the court order.

"We put together a plan to make sure we were in compliance with German law," the representative said.

Intel filed the infringement suit because the company felt obligated to protect the MMX mark, said an Intel representative. Otherwise, the firm could lose the right to control the mark, and it could be used by anyone.

AMD will be launching its K6 processor on April 2, Cyrix will roll out its M2 a month or two later, and both firms have begun to expand their marketing efforts. The MMX mark is prominent in both product rollouts, the Intel representative noted, so the company was "left with no choice" but to act now. "If we didn't fight this, we would lose the mark."

The Intel representative said that Intel has invested tens of millions of dollars promoting the MMX moniker in television and print advertising, as well as collateral materials such as brochures and data sheets.

"We've made an investment in that brand," the representative said. "No one has spent nearly the amount of money we have."

The suit does not demand that AMD or Cyrix stop implementing MMX technology, just that they stop using the name, the Intel representative noted. After months of discussions among the three companies, he said, "There is no disagreement over what the disagreement is about."

This skirmish does not involve technology, just a term, echoed an AMD representative.

"We plan to vigorously defend our right to use what we believe is a generic industry term," the representative said. "We do not believe Intel's attempt to trademark the term is supportable.

"We have intellectual property rights to all x86 instructions through a cross-licensing agreement with Intel," the AMD representative noted.

Cyrix does not have such an agreement, but feels "the way MMX has been used over the past couple of years, MMX has become a generic term," says Russell Fairbanks, vice president and general counsel at Cyrix. He, too, notes that the suit does not involve technology or compatibility, and he says the suit will not impact the M2 product launch.

The suit will not delay the release of K6 either, AMD officials said. The initial iterations of the K6 series are expected to run at clock speeds ranging from 166 MHz to 233 MHz, with a 266-MHz version to follow later this year, sources say.

The timing comes none too soon, as computers based on Intel's MMX chip quickly seized 27% of US retail desktop PC sales in January, according to a market research company. In the retail channels tracked by the StoreBoard service of market researcher Computer Intelligence, MMX-based machines made up the largest category of desktop PCs purchased in consumer electronics superstores, where they accounted for almost two out of every five desktop machines sold in January.

In anticipation of such burgeoning sales, AMD is positioning the K6 as a viable competitor to Intel's Pentium II, which is expected to be announced in May and to initially run at clock speeds of 233 MHz and 266 MHz.

AMD is so committed to taking on Intel at the high end of the market that it will halt any future investment in its Pentium-class K5 series, says Dana Krelle, director of marketing in AMD's computation products group.

Cyrix, not to be outdone, will start limited volume shipments of its next-generation M2 chip in June, said Lew Paceley, Cyrix's vice president of marketing. This could give AMD a short window for boasting the fastest x86 chip on the market, although Intel is reportedly already shipping samples of a 300-MHz Pentium II to selected customers.

Intel should expect PC makers to give these MMX-oriented clone chips a close look, observers say.

Pentium II competition from AMD and Cyrix will put the two companies on a more solid competitive footing with Intel, said Michael Slater, founder and principal analyst at MicroDesign Resources, in Sebastopol, California. In addition, Digital Semiconductor has begun an aggressive push into the desktop PC market, with its upcoming 21164PC processor enabling US$2,500 systems with performance better than that of an Intel Pentium II.

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