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Transmeta Surges on Intel Suit

It alleges an infringing of 10 patents.

Updated from Oct. 11



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


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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.

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

An Intel spokesperson said the company had not seen the complaint yet and could not comment.

Santa Clara, Calif.-based Transmeta began its life in the mid-1990s making low-power chips for mobile devices based on the x86 instruction set used by Intel processors. During the past few years, Transmeta has changed its business model, focusing instead on licensing its intellectual property to other chipmakers and providing engineering and designing services.

The company had $72.7 million in revenue last year, with licensees including


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Wednesday's suit against Intel appears to mark a new turn in the company's IP strategy involving a more aggressive litigation approach. The company's latest quarterly earnings report does not mention any other ongoing patent-litigation suits.

"As part of our business decision last year to increasingly focus on monetizing our IP through technology licensing, we understood that in some cases, we might need to pursue enforcement through the courts," CEO Arthur Swift said in a statement.