Intel to pay $225m to settle Itanic patent clash

Deal with Intergraph lets Dell of the hook, too

Intel and Intergraph have settled their remaining differences in the last of their numerous clashes over who really owns the rights to each others' patents.

The settlement also lets Dell off the hook. Indeed, the Texas PC maker gains a license to the Intergraph patents under dispute.

Intel and Intergraph today asked the US District Court of Marshall, Texas to dismiss the case with prejudice. If the court concurs, neither party will have any further financial obligations too each other, as per a separate settlement reached in April 2002.

The move follows an Appeal Court ruling made last February that sent the case back to the District Court. The case centres on Intergraph's Parallel Instruction Computing (PIC) patents, which the company claimed Intel infringed when it developed Itanium's Explicitly Parallel Instruction Computing (EPIC) architecture. Intergraph sued Dell for using allegedly infringing Itanium CPUs in a series of servers and workstations.

Intergraph sued Intel separately for alleged infringement of its so-called Clipper patents, which it claimed were violated by Intel's 32-bit Pentium processor family. Intel and Intergraph settled that case in April 2002, with Intel paying out $300m to license the Clipper patents. It also agreed to pay Intergraph $150m after the PIC ruling, along with the promise of a further $100m if it lost the appeal.

The Court of Appeal rejected the lower court's ruling that Intel had violated two Intergraph patents, but upheld judgements which stated that Intel had infringed other intellectual property. February's ruling doesn't necessarily amount to a lost appeal, but today's announcement is tantamount to an acceptance on Intel's part that Intergraph has come out on top.

Intel will pay Intergraph $125m by 5 April and a further $100m in quarterly $25m instalments. The chip giant hasn't decided how it will account for the payment, but a proportion of it - maybe even the full $225m - will reduce Q1 2004's bottom line.

In return for the payment, Intergraph has agreed not to sue any of Intel's customers who use the chips giant's processors, chipsets and mobos "in combination".

Hence the Dell deal. The PC maker claimed it "had a unique indemnity agreement with Intel that... obligates Intel to indemnify [it] from patent infringement claims in the litigation which relate to combining Intel microprocessors and other components in Dell systems".

Intel says that's not the case, but has "decided to remove the current dispute from the courts and resolve the disagreement privately". This may account for the extra $125m Intel has to pay Intergraph above the $100m earmarked in the April 2002 settlement.

The details of Dell's claimed indemnity against legal action against Intel will no doubt play a part in the legal action brought last week by MicroUnity against the two firms. That case alleges Intel's SSE and SpeedStep CPU technologies violate seven patents held by MicroUnity. ®

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