Intel Has 30 Days to Pay Intergraph

MARSHALL, Texas —  A U.S. District Court judge Wednesday ruled that Intel Corp. could not manufacture and sell its most powerful microprocessor, but then suspended his order immediately so the world’s largest chip maker could appeal the decision within 30 days.

In his final judgment, Judge T. John Ward of the U.S. District Court for the Eastern District of Texas again found that two patents held by computer services company Intergraph Corp., of Huntsville, Ala., are valid. He cited nine cases of infringement by Intel’s Itanium chips.

Ward in his order Wednesday suspended the injunction on making the Itanium chips until Nov. 29. The judge had ruled Oct. 11 that the chip maker was using Intergraph’s patented technology without permission in the Itanium-brand processors.

Intel spokesman Chuck Mulloy said Wednesday that the Santa Clara, Calif.-based firm will appeal the ruling.

Under an earlier agreement, Intel said it would pay Intergraph $150 million if it lost a motion for reconsideration on the Oct. 11 ruling. Intel on Wednesday confirmed it will make that payment.

But if Intel prevails on appeal, it will pay nothing and receive a license to the technology covered by the Intergraph patents. If it loses, Intel must pay an additional $100 million to Intergraph to license that technology.

Itanium chips run server computers that manage Internet sites and corporate networks. Analysts say Intel’s server chips are 50% more profitable than Pentium PC processors, and shipments may grow twice as fast in coming years as PC demand levels off.

The only way to avoid paying the $100 million without an appeal is to redesign the Itanium chips and get the design approved by the judge.

Shares of Intergraph rose 2 cents to $19.04 on Nasdaq. Intel shares rose 59 cents to $16.99.

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Bloomberg News contributed to this story.