Judge rules against Intel in patent dispute

Associated Press | October 10, 2002 | MATTHEW FORDAHL

[HAL9000]

SAN JOSE, California, Oct 10, 2002 (AP WorldStream via COMTEX) -- A federal judge in Texas ruled against chip-making giant Intel Corp. in a long-running dispute with Intergraph Corp. over patents involving the Itanium processor.

U.S. District Judge T. John Ward agreed Thursday that Intel's high-performance chip infringed on the patents invented by Huntsville, Alabama-based Intergraph, now a computer services company.

In the suit, Intergraph claimed Intel's Itanium processor infringed on two patents related to parallel instruction computing.

Intel's total liability is limited to $250 million because of a previous agreement reached as part of another patent fight between the companies.

In his 22-page ruling, Ward found the Intergraph patents to be valid and enforceable. He also said Intergraph is entitled to an injunction that would halt the sale of Itanium processors, which Intel spent $1 billion to develop over 10 years.

But under the deal reached in April, Intel agreed it would pay $150 million to stay an injunction if it lost the case.

If Intel appeals and loses, it would have to pay another $100 million to license the technology.

"If they fail to pay those amounts, then the injunction would prohibit the sale, manufacture or importation of Itanium products," said David Vance Lucas, Intergraph's general counsel.

Chuck Mulloy, an Intel spokesman, said the company is disappointed in the decision.

"We respectfully disagree with the judge's ruling," he said. "We intend to file a motion for reconsideration within the next 10 days. If the judge denies this, it's our plan to appeal."

In the earlier patent dispute involving technology used in Intel's Pentium chips, Intel paid Intergraph $300 million in April and took out a license from Intergraph.

Itanium is a high-performance processor that runs servers and other powerful computers.

Last month, at Ward's suggestion, Intel chief executive Craig Barrett and Intergraph chief executive James F. Taylor Jr. met in Texas in an unsuccessful attempt to hammer out a settlement.

Intergraph left the hardware business in 1999 and now sells engineering programs, mapping software and services. The company claims Intel tried to coerce a free license of the patented technology and later took actions that forced it out of the hardware business.

"This decision is validation of our hardware legacy and is ultimately a recovery for the shareholders of the losses that were sustained as a result of Intel's actions," Lucas said.

Shares of Intergraph closed up 48 cents, to $16.90, in Thursday trading on the Nasdaq Stock Market. Intel's shares rose 72 cents, to $14.18 on the Nasdaq.

[dighton]

Oh, well!

$250M is loose change for Intel.