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Intel wins Intergraph appeal

The chip giant wins an appeal in a long-standing suit with Intergraph, raising the possibility it can recover some of the $150 million it has already paid the rival chipmaker to settle the dispute.

Intel has won an appeal in a long-standing suit with Intergraph, raising the possibility the chip giant can recover some of the $150 million it has already paid the rival chipmaker to settle the dispute.

A federal appeals court on Wednesday vacated a district court verdict in the case that revolves around Intel?s Itanium processor. In the case, the court ruled that Intel's 64-bit Itanium chip infringed on intellectual property developed for Intergraph's now defunct Clipper processor and awarded the company $150 million.

Wednesday's ruling calls into question an unusual settlement, whereby Intel agreed to a nonrefundable $150 million payment to Intergraph if a court found that the Itanium infringed on Intergraph's intellectual property, with another $100 million possible if Intel chose to appeal and Intergraph prevailed on appeal. Intergraph also had a separate suit against Intel over its 32-bit processor technology, which it agreed to settle for $300 million as part of the same April 2002 agreement.

Under the terms of the settlement in the Itanium case, Intel agreed to pay the $150 million, but reserved the right to appeal the issue of whether infringement occurred. If it lost the appeal, it agreed to pay $100 million more to Intergraph. The terms stipulated that Intel would not receive the $150 million already paid even if it won its appeal.

The court did more than just side with Intel, however, finding that no infringement occurred. The appeals court completely vacated the trial court ruling. As a result, it is unclear what happens to the $150 million.

"We certainly are grateful that the appeals court agreed with our position," said Chuck Mulloy, an Intel spokesman. "It is premature to speculate on what will happen next. We?ve got a lot of analysis to determine how the ruling affects the framework."

Intergraph CEO Halsey Wise said in a statement that the company is still studying the ruling.

"The decision is being reviewed by Intergraph's counsel to determine its meaning in the context of the April 4, 2002, settlement agreement between Intergraph and Intel," Wise said.

Intergraph also has separate suits against several PC makers that the company says are not affected by the latest ruling.

"Today's ruling on the appeal of Intel's infringement of our 'PIC patents' relates to different patents and products than those involved in our ongoing lawsuit with Dell, Hewlett-Packard, and Gateway," Wise said.