March 30, 2004 1:23 PM PST

Intel settles Intergraph suit for $225 million

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Intel announced on Tuesday that it will pay $225 million to Intergraph to settle a patent infringement lawsuit over its Itanium chips.

The agreement brings to a close all outstanding patent infringement litigation between the two parties, which has cost Intel a total of $675 million in settlement payments. It also reveals an unusual indemnification agreement between Intel and Dell, which also uses the chip giant's microprocessors, motherboards and chipsets and was sued by Intergraph for patent infringement.

"We're now done with Intergraph," said Chuck Mulloy, an Intel spokesman.

The latest settlement, involving Intel's 64-bit Itanium chip, marks the third one reached with its former rival.

In 2001, Intergraph filed a lawsuit in U.S. District Court, alleging that Intel's Itanium chip infringed on its defunct Clipper processor patents. Intel lost in the lower courts and agreed to pay Intergraph $150 million to settle some aspects of the case. That followed a $300 million settlement Intel paid Intergraph over a similar lawsuit in 1997, which involved the chip giant's Pentium line.

"Today's settlement demonstrates the effectiveness of our intellectual-property licensing and litigation actions to date. We believe this settlement and the related licensing agreements are in the best interests of our shareholders and will allow us to focus on our remaining intellectual property enforcement efforts," Halsey Wise, Intergraph's chief executive, said in a statement.

The settlement also resolves the litigation between Intergraph and Dell.

In 2002, Intergraph filed a lawsuit in U.S. District Court in the Eastern District of Texas against Dell, Gateway and Hewlett-Packard. The lawsuit centered on allegations the computer makers infringed on its Clipper system patents.

Dell later countersued Intel, alleging that the chip giant should also be named as a co-defendant in the case. Dell cited the 2002 settlement agreement reached between Intergraph and Intel and the indemnification that Intel had granted the computer maker.

As a result of the recent settlement between Intel and Intergraph, the company will remove Dell as a defendant in the case. However, HP and Gateway were not so lucky and will go to trial in August.

Intergraph will also grant Dell a license to all Intergraph-owned patents.

Intel declined to give specifics of its indemnification agreement with Dell, other than to note that it indemnifies all its customers and that Dell's agreement was "unique."

But, Intel and Dell are at odds over some of the terms in that agreement, according to the chipmaker.

"Dell claims (that the agreement) obligates Intel to indemnify the company from patent infringement claims....which relate to combining Intel microprocessors and other components in Dell systems. Intel disagrees with Dell's interpretation of that agreement but has decided to remove the current dispute from the courts and resolve the disagreement privately," Intel said in a statement.

The companies will resolve their differences without the aid of a courtroom or administrative law judge, Mulloy said. As a result, the case will no longer be heard in a public court.

Under the settlement, Intergraph also agrees not to file a lawsuit against any Intel customer whose products include a combination of an Intel microprocessor, chipset and motherboard.

 

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