FW: Intel - DEC Letters

Joe Barrera (joebar@MICROSOFT.com)
Mon, 2 Jun 1997 11:28:54 -0700

[ forwards removed ]

Interesting reading.

May 15 letter from Intel to Digital

Thomas C. Siekman
Vice President and General Counsel
Digital Equipment Corp.

Dear Mr. Siekman,

In the past few days several of your senior executives have been quoted
as saying that DEC has "long-standing supply agreements with Intel."
(See, e.g., the message from Robert Palmer at www.dec.com/welcome.html).
We are not aware of any supply agreement between Intel and DEC with
respect to Pentium, Pentium Pro or Pentium II processors other than our
usual purchase order and ac-knowledgment process, which only covers
sales through Q3. Please let me know at your earliest convenience the
agreements to which DEC is referring.


F. Thomas Dunlap Jr.
Vice President, General Counsel and Secretary
Intel Corporation

May 20 letter from Digital to Intel

F. Thomas Dunlap Jr.
Vice President, General Counsel and Secretary
Intel Corporation

Dear Mr. Dunlap:

We were surprised by your inquiry regarding statements made by senior
Digital executives concerning long-standing supply agreements between
Digital and Intel. As you know, Digital has had a direct purchasing
relationship with Intel for over two decades. The terms under which
Digital acquires Intel products have been embodied in a Basic Order
Agreement ("BOA") between our two companies. In fact, the current BOA
was extended last year and will now expire on June 30, 1999. Purchases
are implemented through purchase orders issued by Digital and accepted
by Intel under the terms of the BOA. There have also been a number of
other arrangements in place over the years such as co-operative
marketing agreements, confidentiality agreements and alpha and beta
field test agreements.

Digital senior executives have also expressed their intent that the
patent infringement suit filed last week remain a technology dispute,
and that it not impact the commercial relationship between our
companies. Digital acquires over two hundred fifty million dollars worth
of Intel products annually. Intel acquires over forty million dollars of
Digital products annually for use in critical Intel manufacturing

In connection with our commercial relationship, I would like to bring to
your attention certain recent events which are inconsistent with past
practices between our companies. Since the filing of the lawsuit, Intel
representatives have canceled several meetings with Digital personnel,
including long arranged meetings between engineers to review data
connected with the "Deschutes" product introduction. Intel
representatives in Taiwan have requested return of "Deschutes Yellow
Book" materials. Ongoing review of this Yellow Book data is necessary to
facilitate delivery of a Digital Deschutes-compatible product at the
time of the official Intel product introduction.

Intel representatives have also requested return of prototype
motherboards which allow interoperability testing between Intel chip
sets and Digital's PCI to PCI bridge chips. Failure to continue this
testing will have negative results for both companies. The testing
enabled by the prototype motherboards allows Digital to determine
whether its bridge chips will operate in an Intel environment, and gives
both companies the opportunity to correct defects in their respective
products before public release.

We assume that these recent actions are aberrations and that it is your
intention to continue to supply Digital with access to the technical
resources, advance product samples and other relevant data necessary for
Digital to maintain competitive Intel-based product offerings. I believe
that this is in the best interests of both parties. Digital's senior
executives have stated both publicly, and privately to their Intel
counterparts, that it is our intention to maintain our commercial
relationship. Unless I hear otherwise from you, I will assume that it is
your intention as well not to alter the commercial relationship between
the companies. With that in mind, I will direct our employees to retain
the requested materials.

Very truly yours,

Thomas C. Siekman
Vice President and General Counsel
Digital Equipment Corp.

May 27 letter from Intel to Digital

Thomas C. Siekman
Vice President and General Counsel
Digital Equipment Corp.

Dear Mr. Siekman,

Intel is amazed that DEC continues to state that it expects the
relationship to remain the same as it was before DEC filed the ten
patent lawsuit. As part of the unprecedented publicity campaign
surrounding the suit, DEC's top executives went so far as to publicly
allege that Intel has "copied" and "stolen" DEC's technology. As you
well know, there are absolutely no allegations of copying or
misappropriation of any DEC technology in the complaint. It is
unreasonable to think that the relationship between the companies can
remain the same in light of these unfounded public statements attacking
Intel's integrity.

Certainly the companies are involved in what you characterize as a
"technology dispute" which DEC initiated by filing the patent lawsuit
without any notice to Intel. You apparently believe that Intel will
continue to transfer its technology to DEC by continuing to provide
Intel confidential technical information, technical resources advance
product samples and other data to DEC. These Intel assets are valuable
Intel intellectual property, and we certainly do not intend to provide
them to DEC while DEC is suing Intel on DEC's intellectual property and
accusing Intel of stealing its technology.

Accordingly, your assumption that Intel's request that DEC return
Intel's technology is an "aberration" is completely wrong. Intel has the
right under its non-disclosure agreements with DEC to terminate the
agreements at any time and to demand the prompt return of all
confidential materials provided to DEC under those agreements. The
corporate NDA, dated February 1, 1991, for example, specifically states:

"Either party may, at any time, cease giving Confidential Information to
the other party without any liability or request in writing return of
Confidential Information previously disclosed. . . . Either party may
terminate this Agreement at any time without cause on notice to the
other party. . . . In the event this Agreement is terminated, and the
disclosing party so requests, the receiving party shall promptly return
or destroy (and certify destruction of) all Confidential Information
which it received from the disclosing party along with all copies which
it made."

The other non-disclosure agreements between Intel and DEC -- including
the June 1, 1991 corporate NDA, the September 5, 1996 Restricted Secret
NDA, the October 9, 1996 Restricted Secret NDA, and the January 18, 1996
Merced NDA -- have similar language. In accordance with the terms of
these agreements, Intel is terminating all of the foregoing
non-disclosure agreements with DEC and requesting that all of the Intel
confidential materials received by DEC over the last several years be
returned immediately. Your direction to DEC employees to retain the
requested materials, and refusal to comply with our request, is an
instruction to disregard the clear provisions of the non-disclosure
agreements signed by the parties. I sincerely hope that you will
reconsider and that DEC will honor its obligations under the terminated
non-disclosure agreements. With that in mind, and to facilitate a prompt
and orderly return of confidential materials, I have attached to this
letter a list of documents transferred under non-disclosure agreements
that Intel wants to be returned first.

I would also like to call to your attention that the statements in your
letter of May 20, and the public statements of the DEC executives
concerning a "long term supply agreement" are false, or at the very
least misleading. It is readily apparent that the Basic Order Agreement
("BOA") covers certain products listed on Attachment A as agreed by the
parties from time to time. The question in my letter of May 15, 1997,
was what "long term supply agreements" apply to Pentium, Pentium Pro or
Pentium II processors, none of which are listed in that attachment. I
would appreciate your response to this question.

Intel intends to honor its existing contractual commitments to DEC. Due
to current circumstances we will not be transferring additional
technology to DEC. Please confirm that DEC will honor its obligations to
return the requested materials to Intel.

Yours truly,

F. Thomas Dunlap Jr.
Vice President, General Counsel and Secretary
Intel Corporation