NEC case opened up market for cloning

There wasn't always a clone market. "Cloning" -- making a product that acted identically to a popular product already on the market -- became legal in the processor market as the result of Intel v. NEC.

In early 1985, Intel (INTC) targeted Japanese computer and electronics firm NEC (NIPNY) with a suit alleging that NEC's V20 and V30 processors copied the basic computer instructions -- known as "microcode" -- programmed into Intel's 8086 and 8088 microprocessors, the chips used on early PCs.

The case was legally significant because no U.S. court had yet ruled on whether microcode could be copyrighted.

Intel had previously sued NEC in 1982, claiming the Japanese giant's uPD 8086 and uPD 8088 processors were direct knockoffs of Intel's similarly designated chips. The case was settled out of court, when the PC chip giant licensed the technology to NEC for an undisclosed amount.

Initially, the 1985 suit was heard by U.S. District Court Judge William A. Ingram, who in 1986 ruled that Intel could copyright its microcode, also known as the x86 instruction set. After the revelation that Judge Ingram owned $80 of Intel stock through an investment club, Ingram removed himself from the case.

His successor, Judge William P. Gray, also ruled that microcode can be copyrighted, but stated that Intel had forfeited its copyright on the x86 instruction set when it sold more than 2.9 million processors without copyright notices. More importantly, Gray established that similar instructions sets do not violate copyright laws, even if a company reverse engineers the microcode to "clone" the processor.

The case was legally significant because no U.S. court had yet ruled on whether microcode could be copyrighted. While Gray ruled that a copyright could be granted for an instruction set, he allowed that competitors could create similar instruction sets without violating Intel's copyright.