Intel Settles Transmeta Dispute, Granted License for Power Management

The company that years ago set out to become a legitimate alternative to Intel, and blazed the trail that AMD eventually followed, today announced it is setting aside its patent infringement claim against Intel. The companies have reached an out-of-court settlement granting Intel perpetual license to Transmeta's CPU power management technology, in exchange for $150 million in cash up front and $100 million more over the next five years.

"This agreement insures there will be a complete peace between the companies," Intel spokesperson Chuck Mulloy told BetaNews this morning, "and presents the opportunity for the companies to work on future projects together."

The technology in question was originally called LongRun, and it made its first appearance in 1999 as the underlying power management mechanism behind a CPU designed to go up against Pentium in mobile systems. At that time, overheating was not so much a battery problem as an issue that struck at the very heart of Intel's designs on the mobile computer space: Pentium CPUs were generally too hot for mobile systems.

So when Intel unveiled its own power management technology shortly thereafter, some said it bore some resemblance to LongRun. Some said it bore a whole lot of resemblance to LongRun, but not many challenges were issued beyond the relative safety of the trade press.

When Transmeta began its transformation away from an engineering and production business - a move that eventually culminated last February into a shedding of 68% of its staff - it found itself needing to defend the monetary value of its core asset. AMD was its principal customer and one of its main shareholders, but why would AMD want to pay Transmeta for a license to the same technology Intel appeared to be getting away with for free?

Last October, Transmeta sued Intel, publicly claiming that statements its executives made were indicators that it was crediting Transmeta for the invention of the power management technology it first rolled out in later-model Pentiums. In January, Intel struck back with a countersuit that appeared to indicate it was claiming ownership of that same technology.

But with the patent landscape changing, the burden of proof may become heavier for anyone wanting to claim legal ownership of a technology. Intel might have seen the handwriting on the wall - specifically, on the walls of Congress.

"Intel believes this agreement is consistent with our long stand practice of licensing technology in exchange for fair value," Mulloy told BetaNews. "As you know we are very interested in power management technology from a strategic point of view, and we will put this technology into the mix with other programs we have under way."

Now Intel will have perpetual license not only to the technology it was already using in Pentium III and Pentium 4, but to the LongRun2 technology that Transmeta has already been licensing to AMD. Transmeta describes LongRun2 as "a suite of advanced power management, leakage control and process compensation technologies that can diminish the negative effects of increasing leakage power and process variations in advanced nanoscale designs."

In this morning's statement, Transmeta CEO Les Crudele indicated the settlement will effectively affirm his company's valuation strategy for its IP, which is now its sole business. "We believe that this arrangement will create value for Transmeta stockholders both by realizing immediate financial value for our intellectual property rights and by supporting our technology development and licensing business going forward," Crudele said.