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A U.S. district court ruled on Thursday that technology Intel used in its 64-bit Itanium processors infringes on patents held by Intergraph--a finding that could require Intel to hand over at least $150 million in liquidated damages to the smaller company, Intergraph said.

Judge John Ward of the U.S. District Court, Eastern District of Texas, ruled that Intel's Itanium products infringe on patented Intergraph technologies related to so-called parallel instruction computing (PIC). The judge said Intergraph's patents are "valid and enforceable" and that Intel's products "literally infringe" on parts of those patents, according to Intergraph.

Intel will ask the judge to reconsider the terms of his decision within the next ten days, according to Chuck Mulloy, an Intel spokesperson. "We plan to file a motion for reconsideration and, if the judge denies that, we plan to appeal the ruling," Mulloy said.

Earlier Disputes

Intergraph and Intel settled an earlier patent infringement case in April 2002. Under terms of that settlement, Intel paid Intergraph $300 million and licensed certain Intergraph technology patents. At the time, the companies also agreed to set liquidated damages for the PIC case, according to Intergraph's statement.

Under terms of that agreement, the Texas court's finding requires Intel to pay Intergraph $150 million in liquidated damages for the PIC infringements, according to Intergraph. Intel must then either appeal the District Court's decision, pay an additional $100 million for a license to Intergraph's PIC patents, or redesign its Itanium chips in a way that doesn't infringe on Intergraph's patents, Intergraph said.

If Intel chooses to appeal and then loses, terms of the April settlement will require it to pay the smaller vendor an additional $100 million, according to Intergraph.

"We would like to bring this to a conclusion," said Jeannie Robison, an Intergraph spokesperson. "We have been in litigation for several years."

Hopes for Itanium

Intel is looking for the Itanium processor to boost its place in the high-end server market currently dominated by IBM, Hewlett-Packard, and Sun. The company released the second version of its Itanium chip this year.

Intergraph provides software and services for a variety of vertical markets, including education, energy and public safety. The company was formerly a maker of computer chips.

The Texas court ruling validates Intergraph's patents and paves the way for it to pursue licensing fees from other vendors in the consumer electronics and computer industries, Intergraph chair and CEO Jim Taylor said in the statement.

Intergraph noted in its statement that Fujitsu had recently licensed the PIC technology for use in consumer electronics and embedded applications.

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