Intel Settles Intergraph Suit

Giant chipmaker will pay at least $300 million to settle a patent infringement suit with the former workstation maker. Intel also faces potential payments of $250 million in another suit.

Intel Corp. has agreed to pay $300 million to Intergraph Corp. to settle an Alabama patent infringement suit involving its Pentium microprocessors, and up to $250 million more if it loses a related case in Texas involving its Itanium chip.

The settlement, under which Intel admits no guilt, was announced Monday by both companies and resolves a more than 4-year-old legal battle. It sets limits on penalties in an upcoming case.

Intergraph, a former computer workstation manufacturer in Huntsville, Ala., that now focuses on software and service, first sued Intel in 1997. Intergraph claimed the giant chipmaker illegally obtained technology Intergraph developed for its own C5 Clipper processor and integrated it into Intels popular Pentium architecture.

Intergraph also accused Intel, of Santa Clara, Calif., of abusing its monopoly power in spurring the workstation maker to abandon its own processor plans and switch to powering its hardware using Intel chips.

Although the settlement is far less than the more than $2 billion in damages Intergraph had initially sought, the company hailed the agreement as a victory that will enable it to enforce its patents with other unspecified vendors.

"We believe that this settlement demonstrates the validity and value of our patents," said Intergraph Chairman and CEO Jim Taylor, in a statement. "Now that we have resolved the Alabama litigation, we can realize additional value for our intellectual property through open licensing agreements with others in the computer and electronics industries."

Intel agreed to purchase selected patents from Intergraph and license other technologies from the company. More specific details of the settlement were not disclose.

The settlement also sets a limit on the amount of damages Intel might have to pay Intergraph in a lawsuit filed last year in Texas and scheduled to go to trial July 1. In that case, Intel is accused of illegally using Intergraphs parallel instructing computing technology in its 64-bit Itanium processors, which debuted last year. Under terms of the settlement, Intel will pay up to $150 million if the court rules against, and would pay an additional $100 million if it appeals the ruling and loses. Should it win the case, however, Intel will pay nothing to Intergraph.

The settlement ends a long see-sawing legal battle between the two high-tech companies. Since filing the suit in November 1997, federal judges have twice ruled against Intergraph, separately throwing out allegations that Intel violated antitrust laws and Intergraphs patents. But Intels victories were short-lived as an appeals court later overturned those rulings.

Since the case was first filed, Intergraph, which designed its first workstation terminal in 1972, has exited the computer hardware business, selling its workstation operation to SGI, formerly known as Silicon Graphics Inc., and its 3D graphics card business to 3D Labs Inc. Ltd. in 2000. Intergraph, which employs about 4,700, now defines itself as a provider of technology solutions, systems integration, software and services.