Intel pays $225M to end Intergraph case

IDG News Service - Intel Corp. will pay Intergraph Corp. $225 million to settle a long-running patent dispute, the companies said today. Separately, Intergraph said it has withdrawn charges against PC maker Dell Inc. stemming from a related patent dispute.
Intel and Madison, Ala.-based Intergraph have been tangled in litigation since 2001, when Intergraph sued Intel for alleged infringement of two patents related to parallel-computing technology. A Texas court ruled in Intergraph's favor in late 2002, but an appeals court vacated that judgment in February, sending the case back to the lower court for further examination. Intel and Intergraph said today's settlement resolves their disagreement, and that they will move for dismissal of the case.
The settlement grants Intel a license for Intergraph's patented Parallel Instruction Computing technology and includes provisions preventing Intergraph from suing any Intel customers over product combinations involving Intel's microprocessors, chip sets and motherboards, Intel said.
That provision isn't retroactive, however, and Intergraph said it will continue its lawsuits against Gateway Inc. and Hewlett-Packard Co. for alleged infringements stemming from their combinations of Intel hardware with their own products. Intergraph expects trial on that case to start in August.
Intergraph had also pursued a claim against Dell, but today's agreement with Intel includes a clause letting Dell off the hook. Dell has an indemnification agreement with Intel, which Dell said obligates Intel to shield Dell from any patent infringement claims arising from its use of Intel's technology. Intel said it disagrees with that interpretation of the indemnification pact but will resolve the dispute privately with Dell.
Intergraph CEO Halsey Wise hailed the settlement as a demonstration of the effectiveness of Intergraph's intellectual property licensing and litigation strategy.
Intergraph, which had revenue of $527.3 million in 2003, will net $203 million in intellectual property income in the first quarter of 2004, the company said.
Intel will pay Intergraph $125 million on April 5 and make four more cash payments of $25 million each over the next year. Intel said it expects some or all of the $225 million owed to Intergraph to count against its earnings for the first quarter of 2004, which ended March 27.
In last year's first quarter, Intel reported income of $915 million on revenue of $6.8 billion.