Transmeta Sues Intel

By Jessica Davis -- Electronic News, 10/11/2006

Transmeta Corp. has filed a patent infringement lawsuit against Intel Corp. in a U.S. District Court in Delaware, for patents used in $100 billion worth of Intel products, according to a spokeswoman.

Much of Intel’s x86 processor product line is named as being part of the suit, including Pentium III, Pentium 4, Pentium M, Core and Core 2 product lines.

The complaint covers 10 computer architecture and power saving technologies patents and asks for an injunction against Intel’s continuing sales of infringing products. It also seeks monetary damages including “reasonable royalties on infringing products, treble damages and attorney fees."

Transmeta declined to provide a dollar amount.

The move by Transmeta follows a change to its business model a year and a half ago when the company transformed itself from a fabless x86 processor company into an IP company. Transmeta, for the most part, stopped producing and selling processors then, although it still offers some of its second generation Efficieon processors.

This lawsuit by Transmeta against Intel is part of the company’s efforts to defend its IP, CEO Art Swift told Electronic News.

"Our strategy has not been to lead with litigation, but rather to enter into friendly win-win dialogs about how we could work together for mutual benefit," he said. "However, through our technical and legal efforts over the past decade, we have built a strong IP portfolio, and it is our fiduciary duty to defend it in order to maximize our shareholder value."

Observers with knowledge of the matter who requested anonymity said that the Transmeta claims are absolutely valid. However, they predicted a long fight. Some questioned whether Transmeta had the financial resources to pursue the case for the long term, and whether the lawsuit would drain its resources to the point where it would have to discontinue production of its remaining Efficeon processor. Another observer called a Transmeta win a "long shot."  Most observers thought a settlement would eventually be reached.

Transmeta executives pointed out that Intel has acknowledged competitive pressures led it to the development of low power processors.

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

Intel did not immediately return calls for comment.