Intel pays $225 million to end Intergraph case

Intel Corp. will pay Intergraph Corp. $225 million to settle a long-running patent dispute, the companies said Tuesday. Separately, Integraph said it has dismissed charges against PC maker Dell Inc. stemming from a related patent dispute.

Santa Clara, California-based Intel and Intergraph, in Huntsville, Alabama, have been tangled in litigation since 2001, when Intergraph sued Intel for alleged infringement of two patents on parallel-computing technology. A Texas court ruled in Intergraph's favor in late 2002, but an appeals court vacated that judgment in February, sending the case back to the lower court for further examination. Intel and Intergraph said Tuesday's settlement resolves their disagreement, and that they will move for dismissal of the case.

The settlement grants Intel a license for Intergraph's patented Parallel Instruction Computing technology, and includes provisions preventing Intergraph from suing any Intel customers over product combinations involving Intel's microprocessors, chip sets, and motherboards, Intel said.

That provision isn't retroactive, however, and Intergraph said it will continue its lawsuits against Gateway Inc. and Hewlett-Packard Co. for alleged infringements stemming from their combinations of Intel hardware with their own products. Intergraph expects trial on that case to commence in August.

Intergraph had also been pursuing a claim against Dell, but Tuesday's agreement with Intel includes a clause letting Dell of the hook. Dell has an indemnification agreement with Intel, which Dell said obligates Intel to shield Dell from any patent infringement claims arising from Dell's use of Intel's technology. Intel said it disagrees with Dell's interpretation of the indemnification pact, but will resolve the dispute privately with Dell.

Integraph Chief Executive Officer Halsey Wise hailed the Intel settlement as a demonstration of the effectiveness of Intergraph's IP (intellectual property) licensing and litigation strategy.

Integraph, which had revenue of $527.3 million in 2003, will net $203 million in IP income in the first quarter of 2004, the company said.

Intel will pay Intergraph $125 million on April 5, and make four further cash payments of $25 million each over the next year. Intel said expects some or all of the $225 million owed to Intergraph to count against its earnings for the first quarter of 2004, which ends March 27. In last year's first quarter, Intel reported income of $915 million on revenue of $6.8 billion.