Transmeta Surges on Intel Suit

Updated from Oct. 11

Transmeta's(TMTA Quote) recent incarnation as an intellectual-property firm paid off for its shareholders Thursday, after the company said it's picking a fight with chip goliath Intel(INTC Quote).

Transmeta announced late Wednesday that it has sued Intel for infringing 10 of its patents. The complaint alleges that a variety of Intel microprocessors, including its new Core 2 products, violate Transmeta patents covering computer architecture and power-efficiency technologies.

The complaint, filed in Delaware District Court, seeks an injunction against Intel's continued sales of the chips, as well as monetary damages.

Shares of Transmeta were surging more than 15% to $1.29 on volume of more than 13 million shares; average daily volume is 1.27 million shares.

"Intel has acknowledged that Transmeta has been an innovative spur to some of Intel's own development efforts, roadmap decisions and new-product successes. At the same time, Intel has practiced multiple Transmeta inventions in its major product lines," John O'Hara Horsley, the company's general counsel, said in a statement.

"After endeavoring to negotiate with Intel for fair compensation for the continued use of our intellectual property, we have concluded that we must turn to the judicial system to be fairly compensated for our inventions," said Horsely.

According to the complaint, Intel's Pentium III, Pentium 4, Pentium M and Core 2 processors all infringe on the company's patents.