Applied Materials, Novellus settle patent infringement claims

September 27, 2004 – Novellus Systems Inc. and Applied Materials Inc. have signed an agreement that settles all pending patent infringement claims between the companies while reducing the prospect of future infringement lawsuits, according to statements from both companies.

Key terms of the agreement limit both parties’ ability to sue each other, each other’s customers, and in some instances, suppliers and distributors, for patent infringement in specific technology areas. For existing products, the covenant is binding for five years; for new products, the period is two years, and will be automatically extended for one additional year under certain circumstances.

Additional stipulations call for Applied Materials to make an $8 million payment to Novellus, and to release Novellus from all amounts owed or claimed to be owed from a settlement agreement dated May 4, 1997 regarding TEOS thin film deposition (“the TEOS Agreement”). The agreement further provides that the license under the TEOS Agreement is amended to be fully paid and royalty-free, said the Novellus statement.

“This agreement allows Novellus to focus its attention and resources where it matters most – creating value for our customers and shareholders,” said Novellus excecutive VP Wilbert van den Hoek. “We’re especially encouraged by its positive implications for our customers, who will now be able to make equipment purchase decisions on the basis of technical merit and productivity without concern about potential litigation.”

There is no new license of technology in the agreement, and the agreement ends all pending lawsuits between the companies without either party admitting any liability, added the Applied Materials statement.

“This agreement produces a positive result for both companies and demonstrates strong motivation not to infringe each other’s patents,” said Joseph J. Sweeney, group VP, legal affairs and intellectual property. “By putting these legal matters behind us, Applied Materials is able to better focus on customer requirements and to compete in the market based on the merits of our products and technology.”

Additional details of the settlement agreement are disclosed in Novellus’ Form 8-K and Applied Materials’ Form 8-K.


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