Hewlett-Packard, Intergraph Settle Patent Dispute

Hewlett-Packard's (HPQ) earnings will take a 3-cents-a-share hit in the current quarter due to the hardware giant paying $141 million to Intergraph (INGR) to settle a patent dispute that stretches back two years.

Hewlett-Packard shares held steady at $20.10 and Intergraph shares rose 2.4% to $28.19.

The settlement marks the end of all Intergraph litigation against computer manufacturers related to its Clipper patents, which cover memory management within computer systems. Intergraph filed suit against Dell ( DELL), Gateway ( GTW) and H-P in late 2002 and subsequently reached a settlement with Dell and Gateway last year. Intergraph also settled a related case with Intel ( INTC) last year that resulted in the chipmaker's payment of $225 million to Intergraph.

The H-P settlement was announced Friday morning. Both companies will dismiss all pending litigation, and H-P will pay Intergraph $141 million during the first quarter. The two companies will also enter into a cross-licensing agreement.

During the past two years, Intergraph has extracted $860 million in pretax income from the protection and enforcement of its intellectual property. The Huntsville, Ala.-based company used to make computer workstations based on its own chip and graphics technologies. It now specializes in software and related services in industrial and government applications.

Intergraph will log $11 million in legal expenses in the first quarter.

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