Intel will pay Nvidia $1.5 billion over the next five years. That’s the result of a patent battle between the two companies that ended with a licensing agreement rather than a long, expensive court battle.
Intel called it a “comprehensive, long-term patent cross-license agreement.” The six-year deal officially puts an end all outstanding legal disputes between the companies and halts litigation filed in Chancery Court in Wilmington, Del.
“This agreement ends the legal dispute between the companies, preserves patent peace, and provides protections that allow for continued freedom in product design,” said Doug Melamed, Intel senior vice president and general counsel. “It also enables the companies to focus their efforts on innovation and the development of new, innovative products.”
A New Era for Nvidia?
Here are the terms of the deal: Intel receives a license to Nvidia’s patents. Nvidia receives a license to Intel’s patents. However, x86 and certain other products are not licensed to Nvidia under the agreement.
Intel and Nvidia have also exchanged broad releases for all legal claims, including any claims of breach of their previous license agreement. Intel will pay Nvidia $1.5 billion over the next five years. Intel recognized an expense of $100 million in the fourth quarter of 2010, classified as “marketing, general and administrative.” Intel will pay out the remainder of the licensing fees in five annual installments, beginning Jan. 18.
“This agreement signals a new era for Nvidia,” said Jen-Hsun Huang, Nvidia’s president and CEO. “Our cross license with Intel reflects the substantial value of our visual and parallel-computing technologies. It also underscores the importance of our inventions to the future of personal computing, as well as the expanding markets for mobile and cloud computing.”
Nvidia Rising
Beyond all the executive verbal jockeying over the deal, there are clear implications for both companies. The cross-licensing arrangement is good for…