Intel Settles Patent Dispute With Nvidia For $1.5 billion

Under terms of the agreement, Intel will receive a license to Nvidia’s patents, while Nvidia will get a license to Intel’s patents as well as $1.5 billion from Intel over the next 5 years for future use of Nvidia's technology. The full amount will be paid in licensing fees payable in five annual installments, beginning Jan. 18, according to Nvidia.

Nvidia and Intel have thus brought all outstanding legal disputes between them, including litigation pending in Chancery Court in Wilmington, Del., to an end.

“This agreement signals a new era for Nvidia,” said Nvidia CEO Jen-Hsun Huang, in a statement. “Our cross license with Intel reflects the substantial value of our visual and parallel computing technologies. It also underscores the importance of our inventions to the future of personal computing, as well as the expanding markets for mobile and cloud computing.”

Nvidia and Intel are also dropping legal claims ensuing from the dispute, including claims that either Nvidia or Intel breached their previous license agreements.

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“This agreement ends the legal dispute between the companies, preserves patent peace and provides protections that allow for continued freedom in product design,” said Doug Melamed, Intel senior vice president and general counsel, in a statement. “It also enables the companies to focus their efforts on innovation and the development of new, innovative products.”

Intel will enjoy limited access to Nvidia’s full range of patents under the agreement, Intel said in a statement. Meanwhile, Nvidia will have access to Intel patents excluding Intel’s proprietary processors, flash memory memory technology and some of Intel's chipsets, which Intel did not specify in its statements.

A report in November had stated that Intel and Nvidia were close to settling their dispute, specifically so that Nvidia could gain access to certain patents in order to challenge AMD in the market for integrated graphics and parallel processing.

In December of 2009, the Federal Trade Commission filed a lawsuit citing anti-competitive practices against Intel, which Nvidia strongly supported. This came just a few months after Nvidia and Intel struck a licensing deal a>allowing Intel access to Nvidia's SLI technology. The two companies entered a feud, mainly fueled by Nvidia, that lasted for several months.

The existing agreement between Nvidia and Intel is to expire on March 31, 2011.