Intel has settled its long-running patent case with Intergraph, agreeing to pay it $225 million - nearly half Intergraph's annual income. At the same time, Intergraph said it had dropped similar charges against Dell.

Intel and Intergraph have been tangled in litigation since 2001, when Intergraph sued Intel for alleged infringement of two patents on parallel-computing technology. A Texas court ruled in Intergraph's favour in late 2002, but an appeals court overturned it in February, sending the case back to the lower court for further examination.

Intel and Intergraph said Tuesday's settlement resolves their disagreement, and that they will move for dismissal of the case.

The settlement grants Intel a licence for Intergraph's patented Parallel Instruction Computing technology, and includes provisions preventing Intergraph from suing any Intel customers over product combinations involving Intel's microprocessors, chipsets and motherboards, Intel said.

That provision isn't retroactive, however, and Intergraph said it will continue its lawsuits against Gateway and Hewlett-Packard for alleged infringements stemming from their combinations of Intel hardware with their own products. Intergraph expects trial on that case to commence in August.

Meanwhile, on the patent merry-go-round, last week saw MicroUnity sue both Intel and Dell again for allegedly infringing seven patents covering multi-media processing and computer architecture. And HP put down its first patent lawsuit against - yes - Gateway.

Intergraph CEO Halsey Wise hailed the Intel settlement as a demonstration of the effectiveness of Intergraph's IP licensing and litigation strategy. The company, which had revenue of $527.3 million in 2003, will net $203 million in IP income in the first quarter of 2004, the company said.

Intel will pay Intergraph $125 million on 5 April, and make four further cash payments of $25 million each over the next year. Intel said it expects some or all of the $225 million owed to Intergraph to count against its earnings for the first quarter of 2004, which ends 27 March. In last year's first quarter, Intel reported income of $915 million on revenue of $6.8 billion.