Intel to Pay Intergraph $300 Million to Settle Alabama Lawsuit

Intergraph says it reached an agreement with Intel for the Alabama case, following court-ordered mediation. The lawsuit pending in federal court in Birmingham, Ala., will be dismissed, and the companies have signed a cross-license agreement.

In addition, Intergraph agreed to sell certain "unrelated" patents to Intel.

The news sent Intergraph shares down $1.54, or 9.1 percent, to $15.36 on the Nasdaq Stock Market. Intel shares fell 2 cents, to $28.37, also on the Nasdaq.

In 1997, Intergraph, a Huntsville, Ala.-based maker of workstation computers, sued Intel alleging infringement of its Clipper patents. In 2001, Intergraph filed another suit in federal court in Marshall, Texas, alleging Intel infringes on two patents related to parallel instruction computing.

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Intergraph has claimed Intel uses its Clipper technology in its Pentium family of microprocessors that power personal computers, and sought royalties from the microchip maker.

The companies' litigation in Texas will go to trial this summer.

Separately Monday, Intel said it will post about half of its $300 million payment to Intergraph as a charge to first-quarter earnings.

A Thomson Financial/First Call survey of 23 analysts yielded a mean earnings estimate of 15 cents a share for the first quarter, compared with 16 cents Intel earned a year ago.

The Santa Clara, Calif.-based chip maker plans to report first-quarter earnings Tuesday. Intel said in March it expected to have first quarter revenue of $6.6 billion to $6.9 billion.

Intergraph says its Texas patent case against Intel will go to trial July 1, as scheduled.

The companies have agreed that liquidated damages in Texas will range from zero, if Intel prevails, to $150 million, if Intergraph prevails at trial.

Intergraph could get an additional $100 million if it prevails on appeal and Intel is unable to prove a workaround to the infringement. All other terms are confidential, Intel says.

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