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Intergraph wins Intel injunction

The company wins a preliminary injunction against Intel as part of its federal lawsuit alleging patent infringement and antitrust violations.

Intergraph (INGR) said today that it won a preliminary injunction against Intel (INTC) as part of its federal lawsuit accusing the giant chipmaker of patent infringement and antitrust violations.

Intergraph said in a news release that a U.S. federal district court in Alabama on Friday prohibited Intel "from terminating Intergraph's rights as a 'strategic customer in current and future programs,' or from otherwise taking any action adversely affecting Intel's business relationship with Intergraph."

In addition to alleging that Pentium microprocessors infringe three of its patents related to memory functions, Intergraph accused Intel of threatening to withhold key technical information if the Huntsville, Alabama, maker of Windows NT-based workstation hardware and software did not agree to cross-license its intellectual property rights.

At a press conference this morning, Jim Meadlock, Intergraph's chief executive, said the decision squarely sided with Intergraph on both of those counts, adding that U.S. District Judge Edwin Nelson, who penned the preliminary injunction, also sided with Intergraph on allegations of anticompetitive conduct.

"We feel the monopoly power [Intel] has in the marketplace should force them to provide [technical] information to us," Meadlock said. "Judge Nelson basically concurred with the charges we had made that, under the Sherman Act, there was a high probability that we could receive protection from the court."

Intel vice president and assistant general counsel Peter Detkin said the company was exploring an appeal and other options it has in responding to the decision.

"Obviously, we're disappointed. We think the judge was erroneous in some of his analysis of the relevant law," said Detkin.

"We will certainly appeal," he added. "It's just a question of timing."

Additionally, Intel has countersued Intergraph, alleging that Intergraph's patents are invalid and charging Intergraph with breach of contract and misappropriation of trade secrets.

Intergraph is not alone in looking into potentially anticompetitive behavior by Intel. The Federal Trade Commission has been talking to numerous Intel competitors and partners to determine if the chipmaker uses its dominance in the market for personal computer microprocessors to exert an undue influence in other areas.

In addition, Intel faces allegations similar to those leveled by Intergraph from Silicon Storage Technology, which in November accused the chip giant of engaging in anticompetitive behavior after Intel sued it for patent infringement.

Meadlock said that he suspected Intel has attempted to coerce other companies into giving up valuable rights.

"I think it's clear that Intel does try to use patent cross-licensing [deals] and in return what they give them is access" to product information, he said.

Intel spokesman Chuck Mulloy said Intel has never used the promise of furnishing technical information as a bargaining chip when negotiating with other companies for cross-licensing deals. He added that Intel only withheld information from Intergraph after it became clear Intergraph was likely to name Intel in a lawsuit.

So far, the dispute appears to be taking a much bigger toll on Intergraph, which last year posted revenues of more than $1.2 billion. In January, Intergraph said the legal dispute had hurt its fourth-quarter operating profits and an Intergraph executive said today that the standoff is still affecting the company's productivity.

In contrast, Intel, which last year posted revenues of more than $20 billion in revenues, stated in a document filed last month with the Securities and Exchange Commission that it "does not believe that the ultimate outcome will have a material adverse effect on Intel's financial position or overall trends in results of operations."

Intel is an investor in CNET: The Computer Network.