Intel To Pay Transmeta $250 Million To Settle Patent Suit

Intel has agreed to pay Transmeta $250 million to settle a patent infringement suit that claimed Intel infringed on 10 patents covering computer architectures and power efficiency technologies.

Under the agreement announced Wednesday by Transmeta, Intel has agreed to make an upfront payment of $150 million, followed by an annual license fee of $20 million for the next five years. In return, Intel gets non-exclusive access to all Transmeta patents either existing now, or obtained over the next 10 years.

Transmeta sued Intel in 2006 in federal court in Delaware, claiming the chipmaker had used its technology in a variety of microprocessor products, including Intel's Pentium III, Pentium 4, Pentium M, Core, and Core 2 product lines. Intel countered that Transmeta's technology infringed on its patents too. As part of the settlement, Intel agreed not to sue Transmeta and to drop any pending litigation.

Les Crudele, president and chief executive of Transmeta, said he was pleased to have reached an agreement with Intel. "We believe that this arrangement will create value for Transmeta stockholders both by realizing immediate financial value for our intellectual property rights and by supporting our technology development and licensing business going forward," Crudele said in a statement.

Transmeta in 2005 launched a major restructuring plan that eventually led to the once high-profile company exiting the processor business to focus on intellectual property.

In July, Intel rival Advanced Micro Devices invested $7.5 million in Transmeta. In announcing the funding, AMD said it would collaborate with Transmeta on creating advanced computing technologies. Transmeta is best known for its x86-architecture Crusoe processor.