Intel, the world's biggest semiconductor firm, has said it will pay $300 million (€340 million) to settle claims by Intergraph Corporation that its Pentium line of microprocessors infringes on five of its patents.
The firm, which employs about 3,300 staff in the Republic and is due to announce financial results today, will now license the patents from Intergraph for an unspecified period. Intergraph has also agreed to transfer ownership of certain unrelated patents to Intel.
Intergraph, an Alabama-based firm which now sells technical software and services, filed suit against Intel in November 1997 in the US District Court in Birmingham, Alabama.
It said it was forced to exit its microprocessor and computer hardware business because of the alleged infringement. At one point, Intergraph estimated damages at more than $2 billion, based on a small percentage of sales of Pentium processors.
The settlement, however, was reached during a court-imposed mediation session related to another patent infringement suit brought by Intergraph against Intel, in the US Federal District Court in Marshall, Texas.
In midday trading on Nasdaq yesterday, shares of Intergraph fell $1.50, or nearly 9 per cent, to $15.40. Intel stock fell 39 cents, or 1.4 per cent, to $28.00.
Intel, the world's largest microchip maker, said it would take a one-time charge on first-quarter earnings of about $150 million, representing about half of the $300 million payment.
The companies failed to resolve a separate suit brought by Intergraph in the Texas court. In that suit, Intergraph claims Intel's Itanium processor for computer servers infringes on its patents.
Intel and Intergraph did agree to cap the value of damages at $150 million should Intergraph prevail in that suit. If Intel should lose an appeal of an Intergraph victory, it could be liable for up to $250 million in damages.
The settlement of the lawsuit comes at a difficult time for Intel as analysts predict a slower-than-anticipated uptick in technology spending by corporates. Intel's results, which will be released at 9.30 p.m. Irish time today, may give a further indication of whether the company will restart plans to complete construction of a $2.2 billion fabrication plant in Kildare.
The company, which has delayed the restart of building work twice already this year, initially planned to employ an additional 1,000 staff at the new site.
