Chip makers shake hands

Intel Corporation and Nvidia have agreed a new patent cross-licence deal worth $1.5 billion.

In return for the licence fee, Nvidia will continue to allow Intel to access its entire patent portfolio.

The companies also agreed to file dismissal orders with the US Court of Chancery of the State of Delaware, ending litigation between them.

The cross-licence agreement—effective from January 10—requires Intel to pay Nvidia a licence fee in six annual instalments for access to its patent portfolio. The existing deal will expire on March 31.

The first of three instalments of $300 million was paid to Nvidia on January 18. From January 2014, each instalment will be worth $200 million.

On top of the licence fee, Nvidia may access Intel’s patent portfolio. This excludes Intel’s proprietary processors, flash memory and certain chipsets for the Intel platform.

Jen-Hsun Huang, president and chief executive officer at Nvidia, said: “Our cross-licence with Intel reflects the substantial value of our visual and parallel computing technologies.”

The legal dispute between the companies arose in February 2009 when Intel sued Nvidia for breaching their original cross-licence agreement.

Intel believed that the compatibility of Nvidia’s MCP chipset with its recently released Nehalem processor breached the original agreement. According to Intel, it did not grant Nvidia a licence to sell any chipsets compatible with the new processor.

In its counterclaim, Nvidia denied the breach of contract, calling the licensing dispute a “calculated strategy to eliminate Nvidia as a competitive threat”. The company wanted the court to uphold its interpretation of the licence agreement and find Intel’s actions to be in breach of the agreement.

Doug Melamed, senior vice president and general counsel at Intel, said: “This [new cross-licence] agreement ends the legal dispute between the companies, preserves patent peace and provides protections that allow for continued freedom in product design.”