When the chickens come home to roost: the licensed foundry defense in patent cases

In the 1970s and early 1980s, Intel and other large semiconductor companies entered into broad cross-license agreements which permitted their cross-licensees to make, use and sell devices covered by many of their patents. Recently small chip design companies have used some of these cross-licensees as foundries, providing them with their proprietary designs and buying manufactured products from them for resale to OEMs. To the surprise and chagrin of Intel, these products/spl minus/manufactured under 20 year old cross-licenses/spl minus/are now immune from suit under many of Intel's patents, since those patents were "exhausted" as to each chip sold by the licensed foundry at the time of that first sale. Thus, so long as the aging cross-licenses remain in effect, chip design companies can avoid many of Intel's/spl minus/and other large companies'/spl minus/patents simply by purchasing otherwise infringing products from a licensed foundry.<
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