Technical solutions company Intergraph sued Intel in August 2001, alleging that Intel had infringed two of Intergrapgh's patents that define key aspects of parallel instruction computing (PIC). PIC technology is used in Intel's Itanium, a high-performance chip that runs powerful computers and servers.
In mid October 2002 a federal judge accepted Intergraph's arguments and found that its patents were "valid and enforceable." He ruled that Itanium infringed on designs embodied in the two patents and in the Clipper processor, formerly used in Intergraph's workstations.
In the meantime, however, Intel and Intergraph apparently reached a deal that both settled a previous patent dispute and, reportedly, limited Intel's liability in the current dispute to $250 million, which was to be paid in two stages:
A non-refundable sum of $150 million was to be paid if Intel lost a reconsideration of the 11th October ruling.
A further $100 million in license fees was to be paid if Intel lost an appeal of that reconsideration. If Intel won on appeal it would pay nothing and license the technology covered by the patents.
The case was reconsidered in late October 2002, and the judge followed the earlier ruling. Intel therefore paid $150 million to Intergraph.
But on Wednesday a federal appeals court turned the case on its head when it vacated the earlier decision because "the district court erred in construing" terminology used in the claim, namely the meaning of the words "pipeline identifier".
The case has therefore been sent back to the district court so that the court may consider whether the Itanium chips infringe Intergraph's patents in light of the new definition.
Commentators speculate that this may have an effect on the refundability of the $150 million.
Intel spokesman Chick Mulloy told CNET News.com:
"We certainly are grateful that the appeals court agreed with our position".
He continued:
"It is premature to speculate on what will happen next. We've got a lot of analysis to determine how the ruling affects the framework."
According to Intergraph CEO Halsey Wise:
"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."