Transmeta and Intel Settle Lawsuits, Cross License Tech

Published: October 30, 2007

by Timothy Prickett Morgan

Last week, if you owned stock in former upstart X86 processor maker Transmeta, you were probably a happy camper after being a sad sack puppy for many years. Transmeta, which sued Intel for violating its patents relating to low-powered X86 processor technology, settled its lawsuit against Intel.

For a whopping $150 million and an additional annual fee payable to Transmeta for the next five years, Intel has been granted a non-exclusive license to the LongRun and LongRun2 X86 processor technologies that were embedded in the once promising Crusoe and Efficeon X86 processors. Transmeta was supposed to take over the laptop and entry blade server spaces because of its software-morphing and power-saving innovations, which it put into those clone X86 processors. But for a lot of complicated reasons, mostly having to do with the bad timing of introduction of its chips into an IT market in recession six years ago, Transmeta's chips were never widely embraced. While they were energy efficient, the Crusoe and Efficeon processors did not have a lot of oomph, and at low manufacturing volumes, that meant customers were being asked to pay a premium for a very efficient X86 chip that cost a lot more money.

Last October, Transmeta sued Intel in U.S. District Court for the District of Delaware, alleging that Intel's SpeedStep power-saving algorithms and other instruction ordering innovations in its Core architecture of chips--the ones that have given Intel more than a fighting chance against Advanced Micro Devices--violated patented technologies in the Crusoe and Efficeon processors. Transmeta went so far as to claim that its technologies were also infringed back in the Pentium Pro and Pentium II processors as well, which is a bit of a stretch since Transmeta was only founded in 1995. AMD and National Semiconductor (which owned the Cyrix X86 chips) licensed technologies from Transmeta, but Intel, for whatever reason, did not. While Transmeta's ideas for power saving and instruction set emulation were sound, the company's chip business lost hundreds of millions of dollars, and a few years ago it shut down its chip business and said it would focus on licensing its technology. It sued Intel a year ago, and Intel countersued Transmeta this January.

Under the agreement, Transmeta is allowed to continue to develop its LongRun technologies and to license them at will to anyone it so pleases. Intel not only has access to the Transmeta patent portfolio for that $250 million, but also to Transmeta's patent applications in process or any new ones it files in the next decade.

It would have been far cheaper to license the technology to begin with, or to buy Transmeta outright. But the government probably would frown on a monopolist buying out a nearly dead competitor to put the kibosh on a patent lawsuit. I said probably. . . .

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