Intel Corp. and Nvidia Corp. have agreed to kiss and makeup – for a fee. Intel agreed to pay Nvidia $1.5 billion over five years to put an end to ongoing litigation between the two companies as part of a patent-licensing deal.
"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, in a statement. "It also enables the companies to focus their efforts on innovation and the development of new, innovative products."
"This agreement signals a new era for NVIDIA," said Jen-Hsun Huang, NVIDIA's president and chief executive officer, in a press release. "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."
Under the deal, Intel receives a license to NVIDIA's patents and, in turn, NVIDIA receives a license to Intel's patents including that x86 and certain other products are not licensed to NVIDIA under the agreement. The two parties have also exchanged broad releases for all legal claims, including any claims of breach of their previous license agreement.
According to Intel, the company’s pay-out is seen as a liability totaling approximately $1.4 billion, on a discounted basis. Intel recognized an expense of $100 million in the fourth-quarter of 2010, classified as "marketing, general and administrative." The remaining amount, approximately $1.3 billion, will be recognized as an intangible asset in the first quarter of 2011 and will be amortized into cost of sales over future periods.
Edited by Jaclyn Allard