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AMD settles Intergraph patent claims

Advanced Micro Devices avoids a lawsuit by agreeing to pay Intergraph a maximum of $25 million over the next four years.

Advanced Micro Devices on Monday settled a patent infringement dispute with Intergraph, avoiding a lawsuit and ending claims against AMD's customers.

Under the settlement, AMD will pay Intergraph a maximum of $25 million over the next four years. In return, AMD said, Intergraph will grant AMD a license to its Intergraph Clipper processor patents and will drop its patent claims against AMD.

AMD will pay Intergraph $10 million, plus 2 percent of the profits from its processor sales for the three-year period beginning in 2005 and ending in 2007. The royalty payments are capped at $5 million per year, AMD said.

Intergraph developed its Clipper processor for use in workstations that the company used to sell. Workstations are heavy-duty desktop computers generally designed for jobs such as mechanical design.

Intergraph switched to Intel chips in 1993. But the patents that Intergraph obtained when designing the Clipper chip have become the basis for a number of patent infringement suits filed by Intergraph against companies such as AMD, Dell, Gateway, Hewlett-Packard and Intel.

Huntsville, Ala.-based Intergraph is now out of the hardware business. The company focuses instead on services and software.

Intergraph's agreement with AMD comes in the wake of a series of settlements with Intel for larger sums. In 1997, Intergraph sued Intel, claiming its Pentium chips infringed on the Clipper patents and that Intel also violated antitrust regulations. Although a judge threw out the antitrust portion of the case, Intel eventually settled the patent infringement claims for $300 million.

Later, Intergraph sued Intel over its Itanium server chip. After court battles and a partial settlement of $150 million, Intel said last month that it would pay Intergraph an additional $225 million to settle the remaining claims.

That agreement brought all outstanding patent infringement litigation between Intel and Intergraph to a close. It also brought the total amount of settlement money promised to Intergraph by Intel to $675 million.

Intergraph had also filed suit against Dell, Gateway and HP, claiming that they also violated its Clipper patents. The latest Intel settlement resolved the dispute with Dell, which has an indemnification agreement with Intel. The disputes with Gateway and HP are ongoing. The case against Gateway and HP is expected to be heard in August.

AMD said that its agreement carries through to its customers and that Intergraph will drop all claims of infringement against computers that use AMD chips, including those in Intergraph's pending lawsuits.

Thus, Intergraph's pledge to discontinue legal proceedings against AMD customers should help HP and might also help Gateway in their Intergraph suits, the AMD representative said, as both companies have offered AMD chips in their computers. Right now, HP sells several different PCs and servers with AMD processors, while Gateway sold them for more than a year, ending in September 2001.