Win for local company ends its disputes with computer giant
03/30/04
Huntsville-based Intergraph Corp. will receive $225 million from Intel Corp. to settle a patent dispute with Intel and resolve a separate patent lawsuit against computer maker Dell Inc.
The settlement was announced this morning and shares in Intergraph stock rose nearly $4 in response.
Intergraph will receive a $125 million payment from Intel by April 5 and then payments of $25 million per quarter during the next year.
"We're very pleased with the outcome," said Intergraph CEO Halsey Wise. "We think it continues to validate our intellectual property enforcement efforts and allows us to focus on improving and expanding our core business."
The settlement means Intergraph will have earned payments totaling $675 million from Intel to resolve patent disputes since April 2002.
"This resolves all remaining disputes between Intel and Intergraph," said Intel spokesman Chuck Mulloy.
As part of the settlement, Intergraph agreed not to sue any Intel customers who use microprocessors, Intel chipsets and Intel computer motherboards in combination.
The settlement comes out of Intergraph's patent infringement lawsuit filed in 2001 against Intel's line of 64-bit Itanium processors. Intergraph received $150 million for winning the patent trial in Texas a year later. But last month a federal appeals court ruled one of the trial judge's key rulings was in error and the appeals court sent the case back for reconsideration.
A case management conference between Intel and Intergraph was scheduled for March 17, but was postponed, suggesting the two sides were working to resolve the dispute. Today's resolution announcement also affects Intergraph's lawsuit against large U.S. computer makers Dell, Gateway and Hewlett-Packard.
That case stems from Intergraph's earlier victory over Intel. In 2002, the U.S. Court of Appeals for the Federal Circuit found that Intel's hugely popular line of Pentium processors used Intergraph-owned technology. The ruling led to Intel's payment of $300 million to Intergraph to resolve its Pentium claims.
Intergraph sued the three giant American computer makers in December 2002, alleging they were using the Pentium technology without paying Intergraph.
Today's settlement announcement includes Intel essentially covering the bill for Dell in the patent dispute, based on a "unique indemnity agreement" it has with Dell. Intel spokesman Mulloy said Dell believes the agreement requires Intel to protect it from the patent infringement claims made by Intergraph.
Mulloy said Intel disagrees with Dell's assessment, but wants to handle that matter privately. Intel's payment to Intergraph includes a license for Dell to use Intergraph patents and Intergraph will drop its legal claims against Dell.
Mulloy said Intergraph's agreement not to sue Intel customers using Intel's combined technology will limit Intergraph's ability to claim liability in its case against Gateway and HP, set to go to trial in Texas this August.
Wise said the settlement allows Intergraph to focus its efforts on that case.
"The removal of Dell from the case brings significant clarity and focus on HP and Gateway," Wise said.