Intergraph Settles with Dell, Intel

Intergraph came out on top of two lingering patent
infringement lawsuits against Intel and Dell, the company said Tuesday.

As part of its out of court settlement, Santa Clara, Calif.-based Intel
is paying Huntsville, Ala.-based Intergraph $225 million to put to rest the
last few details of a patent infringement suit.

The complaint centered on
Intergraph’s Parallel Instruction Computing (PIC) patents, which a Texas
court ruled were
present in Intel’s Itanium server processors.

In a related deal, Intergraph
said it will dismiss its case against Round Rock, Texas-based computer maker
Dell and in turn sign a comprehensive licensing agreement with the concern that includes
Intergraph’s Clipper patents. The patents relate to computer system memory
management technology.

“We believe this settlement and the related licensing agreements are in
the best interests of our shareholders and will allow us to focus on our
remaining intellectual property enforcement efforts,” Intergraph CEO and
President Halsey Wise said in a statement.

Intergraph said it would continue to pursue its so-called “OEM
case” against Gateway and HP, including
the latter’s Compaq division. That case is set for trial on August 2, 2004.

The case began in December 16, 2002, when Intergraph filed suit against Dell, Gateway and HP in the
U.S. District Court for the Eastern District of Texas. Representatives with
Gateway and HP were not immediately available for comment.

In September 2003, Texas Instruments settled
its “Clipper” lawsuit with Intergraph, electing to prepay the royalty as a
one-time, lump sum of $18 million.

Intel became a party to the OEM case on June 21, 2003 when Dell filed a
counterclaim against Intel, alleging that Intel was an “indispensable party”
to the OEM case as a result of its April 2002 settlement agreement with
Intergraph.

In October 2002, the District Court found that Intel’s Itanium and
Itanium 2 microprocessors infringed on Intergraph’s parallel instruction
computing or “PIC” patents. While the Federal Circuit court affirmed the
trial court on four of the five points that Intel had appealed, it also
ruled that the lower court had erred in its construction of the term
“pipeline identifier.”

In summary, the appeals court concluded that a
“pipeline identifier” as defined in Intergraph’s patents must identify the
specific processing pipeline — not just a type of processing pipeline — to
which a computer instruction will be routed.

Now, Intergraph said Intel will receive a license to Intergraph’s PIC
technology and Intergraph promises not to sue any Intel customer for products
that include the combination of an Intel microprocessor, an Intel chipset
and an Intel motherboard.

Intel released a statement Tuesday saying it would pay Intergraph $125
million next month and $25 million in four subsequent payments but that
neither company has any further financial obligations under an earlier April
2002 settlement agreement.

This is not the first time that Dell and Intel have found themselves on
the end of a lawsuit. Last week, Santa Clara, Calif.-based MicroUnity
Systems Engineering filed its case in a Texas court accusing the two
companies of infringing on their 1995 patents that cover SSE (Streaming SIMD
Extension) and SSE2 multimedia extensions, as well as the HT
(Hyper-Threading) features currently being offered in Dell’s and Intel’s
products.

In February 2004, Patriot Scientific also set its
sights on Intel, accusing
the chipmaking giant and five PC
vendors of infringing on patents relating to its IGNITE family of 32-bit
RISC microprocessors.

IDC analyst Roger Kay says these kinds of suits have a tendency to slow
down the wheels of commerce and creativity on the OEMs and their developers.

“On the one hand you have to respect intellectual property,” Kay told
internetnews.com. “But the industry will stand up to these kinds of
suits. Every little company would love to say they got something that they
say was stolen from the larger companies. Some of these patent suits are
more frivolous than others. But I can tell you from my own experience with
Intel that they are very careful with how they handle intellectual property.
It would be very hard to prove that they stole something and knew about it
beforehand.”

Kay also said the recent barrage of lawsuits is not likely going to
change Dell’s “Intel only” strategy. Dell remains the only OEM that does not
support AMD processors. The company has publicly maintained
its stance despite a rogue posting last week showing a Dell system based on
an AMD chip.