Intel Settles Nvidia Patent Suit For $1.5 Billion

Intel and Nvidia have signed a six-year cross-licensing agreement that settles a nearly year-long legal dispute and has Intel paying its smaller rival $1.5 billion over the next five years.

The companies announced the deal Monday, saying the agreement covers Nvidia's full range of patents and gives the graphics chipmaker access to Intel patents covered under the previous licensing agreement between the two companies. The latest deal does not give Nvidia access to Intel's x86 technology, its flash memory, or certain chipsets.

Intel agreed to pay $1.5 billion in five annual installments starting Jan. 18 for use of Nvidia's patented technology. The companies also settled a licensing dispute that had prevented Nvidia from building graphics technology that connected to Intel's latest generation of Core processors, codenamed Sandy Bridge.

"This agreement ends the legal dispute between the companies, preserves patent peace, and provides protections that allow for continued freedom in product design," Doug Melamed, senior VP and general counsel for Intel, said in a statement.

Nvidia suspended last October product development for Intel's latest chips, due to the uncertainty of whether it could get the licensing rights. In December, the Federal Trade Commission opened an investigation of the dispute.

The FTC is also looking at the terms of a $1.25 billion settlement Intel reached with Advanced Micro Devices. AMD had filed an antitrust suit against its rival, claiming the chipmaker had used its dominant position in the market to extract favorable terms from computer makers and coerce some manufacturers to shy away from using AMD processors in their systems.

Having access to each other's technology is important to Nvidia and Intel. Nvidia is a major seller of graphics processors that hook to Intel's processors in order to boost performance for high-end gaming computers and professional workstations. Intel on the other hand is building more graphics capabilities into its chips and needs access to Nvidia technology to complement Intel's own work.

Jen-Hsun Huang, Nvidia's president and chief executive, told reporters and analysts in a conference call that the agreement "brought great value to both companies."

"These types of arrangement will continue and, hopefully, will increase," he said.