Intel pays $300 million to settle patent suit

Intel has agreed to pay Intergraph US$300 million in return for a group of patents, cross-licensing agreements and a cap on damages in a second lawsuit that is still pending.

The settlement ends the first of two lawsuits that Intergraph filed against Intel for patent infringement and caps the maximum damages if Intel loses a second suit and appeal at $250 million, according to statements released by both Intel and Intergraph.

Under the terms of the agreement, if Intel loses the second suit, which is scheduled to be heard in June in U.S. District Court in Marshall, Texas, the most it would pay Intergraph is $150 million. If Intel appeals that award and loses the appeal, it is liable only for a second payment of an additional $100 million.

"We think this is in the best interest of Intel's and Intergraph's shareholders," Intel spokesman Chuck Mulloy said this afternoon.

Intergraph spokeswoman Jeannie Robinson said her company is also pleased with the settlement, which she said grew out of a mediation attempt by the Texas court. Robinson said Intergraph originally filed suit against Intel in 1997 in U.S. District Court in Birmingham, Ala., accusing the chip maker of infringing on Intergraph's Clipper microprocessors when it created the Pentium family.

Intergraph filed a second suit last year in Texas and alleged that Intel infringed on Intergraph's patents on its Parallel Instruction Computing (PIC) technology when Intel unveiled its Itanium processors. A U.S. District Court judge in Texas ordered the two to mediate their dispute. Instead, the pair managed to settle the earlier Alabama case.

"We were delighted that it worked out this way. We do take that as a validation of our patents and their value," Robinson said of the settlement.

Intel said the settlement wasn't an admission of guilt.

Mulloy said Intel will take about half of the $300 million settlement as a charge against its first-quarter earnings, which will be announced tomorrow.

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