October 10, 2002 5:15 PM PDT

Court: Itanium infringes patents

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A federal court ruled Thursday that Intel's Itanium processor violates patents owned by Intergraph and ordered Intel to pay $150 million in damages.

The ruling is the culmination of the trial phase of a bitter, multi-issue dispute, dating back to 1997. Huntsville, Ala.-based Intergraph, once a close ally of Intel's in the workstation market, alleged that Itanium, an Intel chip for servers, infringed on designs embodied in two Intergraph patents and in its Clipper processor, a microchip formerly used in Intergraph's workstations.

Years ago, a court threw out antitrust complaints filed by Intergraph, and this past April, Intel agreed to pay $300 million to settle claims that its Pentium lines of chips infringed on Intergraph patents.

As part of that settlement, the two companies agreed to limit damages in this final phase to $150 million. If Intel appeals the ruling and loses, Intel will pay Intergraph another $100 million.

Intel spokesman Chuck Mulloy said the ruling will not become final for 10 days and the company will ask the judge to reconsider his decision.

"Clearly we are disappointed, and we respectfully disagree with the judge's ruling," Mulloy said.

If the judge does not reconsider, Mulloy said, Intel plans to appeal, despite the potential $100 million penalty. If Intel were to win an appeal, it would not get the $150 million back, but it would free of having to pay Intergraph a license fee on future Itanium chips.

Currently, Intergraph says that for $100 million more, Intel can obtain a license to the disputed patents. Intergraph also says that Intel could redesign its chips, which is likely impractical.

"This ruling validates Intergraph's patents, and paves the way for Intergraph's Intellectual Property (IP) Division to actively pursue open licensing with others throughout the consumer-electronics and computer industries," said Intergraph chairman and CEO Jim Taylor in a statement. "We are pleased that the company's long-standing dispute with Intel has concluded with yet another significant return from the company's investment in innovation."

Intergraph is also alleging that other companies have infringed on the same patents. The company entered into a licensing agreement with Fujitsu over the patents a few weeks ago, said Intergraph general counsel David Vance Lucas.

"It certainly establishes the legitimacy and value of our patent portfolio," Lucas said in an interview.

 

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