U.S. semiconductor industry executives' spirits were buoyed yesterday by a legal victory over alleged unfair competition from abroad -- the International Trade Commission's first-ever ruling to ban imports of a foreign producer's semiconductors.
The commission ruled Monday that member companies of the Samsung group of South Korea had infringed on certain semiconductor patents owned by Texas Instruments Inc.
Paradoxically, the ruling seems unlikely actually to stop the flow of the Samsung chips for now. TI, saying it wants to avoid disruption, is issuing temporary licenses to Samsung customers to continue imports while it talks with Samsung about a licensing agreement and royalties.
Still, the ITC's decision is seen in the troubled U.S. chip industry as giving new strength to the protection of so-called intellectual property -- a diverse field that includes the writing of computer software, music composition and chip design. The United States is generally considered the leader in the area of intellectual property.
"One of the most important areas governing world trade in the future is going to be the rules protecting intellectual property," said Alan Wolff, an attorney who has frequently represented U.S. semiconductor producers. "This was a step making sure that intellectual property rights are upheld in the semiconductor area."
Foreign producers often contend that protection of intellectual property is a murky field open to interpretation and that many allegations of pirating are not true. Others, especially in developing countries like South Korea, say the United States should be more generous in sharing patent information.
Semiconductors are tiny electronic chips containing microscopic circuitry. They form the heart of advanced electronics goods, such as computers, and are also used in products like cars and microwave ovens. Maintaining a healthy U.S. semiconductor industry is considered a key to future economic prosperity.
For TI, the ruling will provide muscle in negotiating an agreement with Samsung for its trade in the chips at issue, a type used in computer memories and known as dynamic random access memory (DRAM) chips. Asked if TI might revoke the users' import licenses, which the company has tentatively made valid for 45 days, if talks with Samsung are not fruitful, TI spokesman Stan Victor said: "That's a fair assessment."
Victor said the licenses are intended "to minimize the disruption to Samsung customers" in the United States. An ITC official said that granting licenses to users rather than producers was unusual, but apparently within TI's rights.
Samsung spokesman Irwin Schwartz said yesterday, "It is our mutual expectation that this dispute will be settled very shortly." He declined comment on the ITC's finding that Samsung had infringed on TI patents.
The Commerce Department has issued a number of rulings against foreign chip producers, and the U.S. government has negotiated a long-term agreement on chips with Japan intended to protect the American semiconductor industry, which was thrown into a tailspin in 1985 and is recovering only slowly.
But ITC officials said this was the first time the commission had weighed in with an import ban, a weapon it has used before for other products. By law, implementation of an ITC ban is delayed for 60 days while the president decides whether to affirm, strike down or take no position on the ruling.
It grew out of an action TI brought 20 months ago under the Trade Act of 1930 alleging that Samsung and eight Japanese concerns were producing DRAM chips and importing them into the United States without proper licensing from TI. Earlier this year, TI settled with the Japanese companies, collecting $138 million in royalties in the first half of 1987, Victor said.
No agreement was reached with Samsung, however. Two of its companies, Samsung Co. Ltd. and Samsung Semiconductors and Telecommunications Co. Ltd., were named in the action.
The ITC ruling bans Samsung from importing circuit boards, computers, facsimile machines and other advanced electronic products that use the Samsung chips, as well as the DRAMS themselves.
Though DRAMs were pioneered here, foreign competition has driven all but two U.S. companies, TI and Micron Technologies of Boise, Idaho, out of the business of producing them for sale on the open market. U.S. producers allege that much of that damage has come through unfair practices by foreign producers, such as dumping and patent infringement.
According to Dataquest, a high-technology research company based in San Jose, Calif., Japanese producers account for 77.8 percent of the total world market in DRAMs. U.S. producers hold about 16 percent and South Korean, relative newcomers to the field, about 3.3 percent.