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For Release: November 20, 2000
Editor Contact:
Scott Wylie
Altera Corporation
(408) 544-6996
swylie@altera.com
Altera to Ask Court to Reverse Patent Infringement Verdict - If Denied, Will File Appeal; Will Contest Any Xilinx Request for an Injunction
Affected Sales of FLEX® 8000 Programmable Logic Device
Estimated to Be About 2% of Expected Year-2000 Revenues
San Jose, Calif., November 20, 2000-Altera Corporation (Nasdaq: ALTR) said it believes a verdict by a jury in the US District Court for the Northern District of California that Altera's FLEX 8000 products infringed two Xilinx Inc. (Nasdaq: XLNX) patents is in error (US Patent No. Re. 34,363, "Freeman" and US Patent No. 4,642,487, "Carter"). Accordingly, it will file a motion with the court to reverse that verdict. The company said that it will file an appeal, should its motion be denied. The suit resulting in last Friday's verdict was filed by Xilinx in June, 1993.
The jury verdict, which follows the court's ruling that all claims made by Xilinx against Altera's MAX® family of products will be dismissed with prejudice, found that the company's FLEX 8000 Programmable Logic Device family infringed Xilinx's Freeman and Carter patents. In other rulings, the court found a number of claims in the Freeman patent to be invalid and that the main claim of the Carter patent is also invalid.
Statistically, since 1995, the U.S. Court of Appeals has overturned about half of the patent infringement cases that have come before it. The company said that it anticipates the appeal process could take as long as two years. Damages, if any, will be assessed in a separate trial. No schedule has been set for this trial and it is at the trial court's discretion to delay this phase of the trial pending any appellate court decisions.
Altera estimates that affected sales of its FLEX 8000 products, which were introduced in 1993, will account for $30 million, or about 2% of the company's total revenue for the current year. FLEX 8000 sales are expected to be flat or declining in 2001.
Additionally, Altera said it will contest any Xilinx motion seeking an injunction. The company noted that, even in cases where the trial court issues an injunction, the order is frequently 'stayed' pending appeal.
According to Del Bergere, vice president and general counsel of Altera, an injunction may be denied or stayed in situations in which irreparable harm to third parties would be suffered if the verdict was modified or reversed. Mr. Bergere noted that this year alone, roughly 1,700 Altera customers used FLEX 8000 devices in their products. He said that an injunction would result in many of these customers having to redesign and retool their products.
Altera said that it believes the judge should reverse the jury verdicts. Altera believes that the evidence demonstrated that Altera has not used the programming memory technology claimed in the Freeman patent and does not use the "special interconnect" of the Carter patent. Altera also believes that both the Freeman and the Carter patent should have been invalidated.
"Xilinx confused the jury by focusing on unpatented features common to both companies' products," said Mr. Bergere.
The company said that, in addition to considering Altera's motion to reverse the verdict, the trial court must still hold a non-jury trial to weigh the company's claim that the Freeman patent is unenforceable, because of inequitable conduct by Xilinx in the Patent and Trademark Office. No date has been set for the trial of that defense.
Altera currently has three patent infringement lawsuits currently pending against Xilinx. Its most recent lawsuit was filed in June of this year. In that suit, Altera alleges that Xilinx's Virtex product lines infringe three newer Altera patents covering the Embedded Array Block (EAB) technology pioneered by Altera and first introduced in the FLEX 10K family in 1995. Claim construction hearings in this lawsuit are scheduled for December 2000.
The company will host a conference call today, November 20, 2000 at 10:00 a.m. Pacific Standard Time to discuss these topics more fully. The call may be accessed by calling (913) 981-5523 and referencing confirmation code 738579. The call will be available for replay at 1:00 p.m. PST. The replay may be accessed by calling (719) 457-0820 and referencing the same confirmation code of 738579. A webcast replay of the call will be available later in the day on the company's web site at www.altera.com.
A fact sheet about this lawsuit is available in the investor relations section of the company's website.
About Altera
Altera Corporation, The Programmable Solutions Company, was founded in 1983 and is a leading supplier of programmable logic devices (PLDs). Altera's CMOS-based PLDs are user-programmable semiconductor chips that enhance flexibility and reduce time-to-market for companies in the communications, computer peripheral, and industrial markets. By using high performance devices, software development tools, and sophisticated intellectual property cores, system-on-a-programmable-chip (SOPC) solutions can be created with embedded processors, memory, and other complex logic together on a single PLD. Altera common stock is traded on the Nasdaq Stock Market under the symbol ALTR. More information on Altera is available on the Internet at http://www.altera.com.
Forward-Looking Statements
This press release contains "forward-looking statements" which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally written in the future tense and/or preceded by words such as "will", or describe an anticipated future event. Investors are cautioned that all forward-looking statements in the release involve risks and uncertainty, including without limitation the risk that the complex and evolving nature of such legal proceedings may alter the company's legal plans and that future court rulings cannot, by their nature, be predicted with certainty. For additional information, please refer to the company's Securities and Exchange Commission filings, copies of which are available from the company without charge.
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