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Message: RE: Auto Companies

RE: Auto Companies

posted on Jul 09, 2006 09:21AM
You may have seen a prior post of mine which basically dismissed the possibility of going after the US Gov`t as a user-infringer because I don`t believe the US Gov`t will accept a contract that does not contain a Patent Indemnification clause (releiving them of any patent infringement liability, placing that liability squarely on their suppliers, most of whom also use this clause in their subcontracts to their suppliers, and so on). In that post I further suggested that auto makers probably also use this clause extensively. Them, like the USG, ``consume mass quantities``, making the threat of a patent infringement suit intolerable - it could put them out of business in one mighty blow.

Further evidence of my conclusion re: auto makers? I worked for Hughes Aircraft during nearly the entire period its defense business was owned by General Motors. I was manager of Contracts Compliance at Santa Barbara Research Center, a subsidiary of Hughes. Our Standard Terms and Conditions - a boiler-plate basic foundation for all our contracts - contained a Patent Indemnification Clause. That was not only in all contracts ``going up`` to our customer (mostly USG/DoD) at their demand, but also all subcontracts to our suppliers. This was also true of Hughes Aircraft, and one would have to thereby assume it was also true of their master, General Motors. These kinds of basic contractual requirements one would think would be pretty universal throughout any large corporation, and industry for that matter. The threat of patent disputes is recognized. And most likely because of a ``bad experience`` in the past....you learn fast when you suffer.

Other corporations in other large industries may have also been taught this lesson, so this may limit the list of infringers. But all those industries use chips and they came from somewhere, so the bottom line is someones, somewheres is liable for each and every chip.

I have quite frankly been very surprised at the number of ``users`` (not chip makers) that we`ve nailed. Not that many really, but really big companies that you`d think would have their act together enough to contractually avoid liability. And you`d also think that all of them have ``bumped their head`` on this problem before. Go figure....

The first part I KNOW, the second part JMHO.

SGE

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