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Will Intergraph legal battle be the next SCO?

The level of acrimony and hostility is considerably less, but the ongoing dispute between Las Vegas-based Intergraph – a worldwide provider of end-to-end technical solutions and systems integration – and the big PC and chip vendors has heated up.

In October 2002, the U.S. District Court ruled that Intel Corp.’s Itanium-based products infringed Intergraph Corp.’s patented technology for defining key aspects of parallel instruction computing (PIC). That decision laid the foundation for Intergraph to pursue open licensing with others throughout the consumer electronics and computer industries.

Late last year, Intergraph filed a separate suit against Dell, Gateway and Hewlett-Packard, alleging their use of Pentium chips infringed on Intergraph’s patent rights.

Fast forward to Wednesday, Feb. 11, 2004. The U.S. Court of Appeals for the Federal Circuit ruled in favour of Intel’s appeal, vacating the lower court’s decision, and sending the case back to the District Court. This means that Intel could recover some of the US$150 million it has already paid to Intergraph.

So where are we now?

“It’s unfortunate. I can’t say much due to the evolving circumstances,” said Keith Britnell, a spokesperson for Intergraph. “Our attorneys are studying the ruling to try to figure out what it means and where to go from here.”

Intergraph CEO Halsey Wise stated, “the decision is being reviewed by Intergraph’s counsel to determine its meaning in the context of the April 4, 2002 settlement agreement between Intergraph and Intel. “(The) ruling on the appeal of Intel’s infringement of our ‘PIC patents’ relates to different patents and products than those involved in our ongoing lawsuit with Dell, Hewlett-Packard, and Gateway.”

According to Intergraph, HP, Dell, and Gateway had allegedly infringed its Clipper memory management patents. The patents relate to cache memory management technology, specifically the Clipper technology used in company’s workstations.

“Those lawsuits are continuing with a trial date that’s set for August,” Britnell, said. “In general, with respect to our intellectual property, we’re protecting our patents from abuse and licensing it to those who can benefit from it as well.”

Intergraph claimed that after several years of mutually beneficial work, Intel began making unreasonable demands for royalty-free rights to Intergraph patents already being used in Intel microprocessors. When Intergraph refused, Intel took actions intended to force Intergraph to give Intel access to the patents, the company said. Intergraph’s patented PIC technology is an essential component of Intel’s IA-64 EPIC architecture, which is at the heart of Intel’s new Itanium chip. The patents, which Intergraph filed for in 1993, cover techniques for conveying compiler-recognized parallelism to the hardware and a novel approach to routing instructions to any of the processing units.

According to Martin Reynolds, an analyst with the Gartner Group in San Jose, Calif., though Intergraph settled its patent arguments with Intel, the original settlement did not indemnify Intel’s customers.

“Other companies such as HP and Sun could potentially be sued – IBM seems to have licensing agreements with everyone which is why they’re not a target – since Intel didn’t indemnify its customers,” Reynolds said. “Intergraph has tried to position itself as an intellectual property company in order to find new revenue streams. As a result, they do have grounds to go after other players in the IT industry.”

Interestingly, Reynolds said Intergraph faces little retribution from the companies it targets with its patent licensing agreements. The company no longer builds hardware, and therefore it’s not vulnerable to retaliatory measures from the likes of Intel, HP and others.

Reynolds said from a market perspective, should Intergraph prove to be successful in its litigation efforts against other system builders, the outlook is not good.

“Users will end up paying more at the end of the day,” he said. “This is more of an inhibitor than a benefit to the market place.”

On another front, Advanced Micro Devices Inc., Intel’s rival, is suing Intergraph.

In Jan. 2004, AMD filed an action against Intergraph in California, asserting that Intergraph was about to sue them over what it says is an invalid patent claim on AMD’s processors. Intergraph had subpoenaed AMD in another intellectual property case.

Britnell said Intergraph was perplexed over AMD’s lawsuit against the company.

“We had talked to them about the licensing of our intellectual property,” Britnell told eChannelLine. “But we don’t know what triggered them to file. Something happened that caused them to think we might contemplate filing an action against them. It’s another one we’re sifting through to figure it out.”

When asked if Intergraph was considering filing a lawsuit against AMD for intellectual property patent infringement, Britnell declined to comment.

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