AMD, Intergraph Settle Patent-Infringement Dispute

Advanced Micro Devices Inc. and Intergraph Corp. on Monday said they have settled their patent-infringement disputes, with AMD agreeing to pay Intergraph a maximum of $25 million.

Under the settlement, Sunnyvale, Calif.-based, AMD agreed to pay $10 million by May 7, and 2 percent of the pre-tax operating profits of its Computation Products Group in 2005 through 2007. The annual payments have a cap of $5 million per year.

In return, AMD gets a license for Intergraph's Clipper processor patents and the right to use the technology is extended to AMD's customers. The agreement settles all patent disputes between the two companies.

The settlement stems from a "declaratory patent action" filed by AMD against Intergraph in January. In that action, AMD had asked a federal court in Northern California to declare the Clipper patents invalid or not infringed by AMD's chip products.

Intergraph, based in Huntsville, Ala., has filed several patent-infringement suits stemming from technology in its Clipper processor, which was used in Intergraph workstations. Intergraph no longer sells the high-powered computers often used in mechanical design, and is now a software and services company.Because of the settlement, AMD customers should rest a bit easier.

"Lawsuits always carry a degree of uncertainty and distraction about them," Gordon Haff, analyst for market researcher Illiminata Inc., said. "The affect on AMD's partners, however, is secondary. The impact really isn't huge for the partners as much as the chipmakers themselves."

In general, chipmakers indemnify customers against patent-infringement suits stemming from technology used in their microprocessors.

In 1997, Intergraph filed its first lawsuit against Intel, claming its Pentium chips infringed on its Clipper patents. Intergraph later made similar claims against Intel's Itanium server chip.

The two companies settled all litigation between them, but not before Intel agreed to pay a total of $675 million. Those settlements also ended a dispute Intergraph had with Intel customer Dell, which has an indemnification contract with Intel.Intergraph, however, has patent-infringement suits pending against Gateway Inc. and Hewlett-Packard Co., which Intergraph said is separate from the AMD and Intel settlements.

"We believe that HP and Gateway products that include an Intel microprocessor and other third-party mother boards and chipsets infringe on the Clipper system patents," Intergraph spokesman Reid French said.

The alleged patent infringements are related to memory management technology for computer systems, French said.