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TI to pay Intergraph $18 million

The company says Texas Instruments will pay a one-time $18 million licensing fee as part of a settlement ending all patent litigation between the two.

Intergraph on Wednesday said Texas Instruments will pay a one-time $18 million licensing fee as part of a settlement ending all patent litigation between the two companies.

Under the agreement, TI will license three Intergraph patents that describe how a chip can process instructions in parallel. Intergraph had argued the technology was an essential component of TI's digital signal processors, its flagship product.

A TI representative was not immediately available to comment.

The settlement is the latest legal victory for Huntsville, Ala.-based Intergraph, which has won hundreds of millions of dollars in litigation from patents relating to its defunct Clipper microprocessor, a chip that was once touted for its technical capabilities but that failed to achieve market success.

Last year, Intergraph settled two suits with Intel, which resulted in a combined payment of $450 million. In one suit, Intergraph claimed that Intel's Pentium family infringed its patents, and in the other, it alleged that the Itanium chip infringed other patents owned by Intergraph.

Intel could also be on the hook for an additional $100 million, depending on the outcome of an appeal in the Itanium case.

Intergraph has subsequently gone after PC makers that use Intel's chips, filing suit in December 2002 against Dell, Gateway and Hewlett-Packard. In that suit, filed in federal court in Texas, Intergraph alleges that the three PC makers violated its patents because the companies sold computers containing Pentium processors. Trial is scheduled to begin Aug. 2, 2004, Intergraph said.

Similar suits may be pursued against other PC makers, the company has indicated.

Independent patent consultant Rich Belgard, who is not involved in the TI-Intergraph suit, said the settlement appeared to be a good one for both sides.

The technology claimed under the Intergraph patents is "very important to TI's DSPs," Belgard said.

At issue in the litigation were the same two patents that Intergraph has asserted against Intel's Itanium chips, relating to technology known as parallel instruction computing (PIC) or very long instruction word (VLIW).

The patents cover technology for speeding up calculations by simultaneously assigning various instructions to multiple execution units within a processor.

"A lot of bogus patents are coming out of the U.S. patent office these days," Belgard said. "These are not bogus."

George Schwab, an attorney with Townsend and Townsend and Crew in San Francisco representing Intergraph, said the work done on the Itanium case helped smooth the way for a rapid settlement.

"The fact that the patents have been through a trial and a decision, and through a claims construction, clarified things that normally you'd think would be big question marks," Schwab said.

Once a workstation manufacturer, Intergraph has come to rely heavily on litigation and intellectual-property licensing and has set up an intellectual-property division to better manage its legal affairs. In 2002, the company reported revenue of $501 million. Income from operations came to $10.4 million. Net income including legal settlements came to $377.1 million.

"The settlement with Texas Instruments continues to demonstrate the strength of our patents and the effectiveness of our IP division," Intergraph CEO Halsey Wise said in a statement.

Also on Wednesday, Intergraph said a judge had dismissed a countersuit from HP, although Belgard said he believed the company has leave to amend and refile its suit.