Issue of Dell's Indemnity Unresolved
Intel and Intergraph today announced the two firms have settled the remaining issues in a patent infringement suit pending in U.S. District Court in Marshall, Texas relating to Intel's Itanium microprocessors. Under terms of the settlement Intel and Intergraph will move for dismissal of the case with prejudice. As a result, neither company has any further financial obligations under an earlier April 2002 settlement agreement.
In addition, under terms of the current settlement Intergraph has granted Dell certain licenses to Intergraph patents and agreed to dismiss Intergraph's separate pending litigation against Dell. Intergraph sued Dell for patent infringement in December 2002.
This agreement gives Dell a license to all Intergraph-owned patents, and covers past, present and future Dell products. Dell has a unique indemnity agreement with Intel that Dell claims obligates Intel to indemnify the company from patent infringement claims in the litigation which relate to combining Intel microprocessors and other components in Dell systems. Intel disagrees with Dell's interpretation of the agreement, but has decided to remove the current dispute from the courts and resolve the disagreement privately.
The new settlement with Intergraph also includes a covenant by Intergraph not to sue any Intel customers for products that include Intel microprocessors, Intel chipsets and Intel motherboards in combination.
As part of the current agreement, Intel will pay Intergraph $225 million. Intel will pay $125 million to Intergraph by April 5 and $25 million in each of the next four quarters. The accounting treatment for the settlement has not yet been determined. However, Intel expects some portion or all of the $225 million will reduce earnings in the first quarter of 2004.
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