Tessera Inc., a San Jose-based designer of semiconductor miniaturization technologies, announced Thursday that Taiwanese chip packager Powertech Technology Inc. had agreed to pay $196 million to settle a long-running patent licensing dispute.

“To state the obvious, we’re delighted with this outcome,” Tessera’s chief financial officer, Thomas Lacey, said during a conference call Thursday. Tessera was represented in the underlying Northern District patent litigation by a team from Irell & Manella led by Ben Hattenbach and Laura Seigle. Powertech was represented by a Baker Botts team led by George Hopkins Guy III.

Back in 2003, Powertech agreed to license a Tessera patent used in the encapsulation of microchips. But when Tessera went after Powertech customers in a complaint lodged with the U.S. International Trade Commission, Powertech fired back in the U.S. District Court for the Northern District of California, seeking a declaration of noninfringement and attempting to invalidate Tessera’s patent. Powertech also sought to terminate the license agreement, arguing that Tessera had breached the contract when it went to the ITC. Powertech’s claims were thrown out but then reinstated by the U.S. Court of Appeals for the Federal Circuit.

But last month, Judge Claudia Wilken ruled that Powertech had breached the contract by withholding millions in royalties and therefore couldn’t terminate the licensing agreement.

Tessera executives said on the conference call that Wilken’s ruling helped pave the way for an agreement under which Powertech will make two payments this year and quarterly recurring payments from 2015 to 2018, after which the litigation will be dismissed.

“We view litigation as a tool, not a strategy,” Lacey said on the conference call Thursday. “We will reach settlements whenever possible, but when we believe shareholders are not receiving fair value, we will pursue litigation.”

Contact the reporter at callison@alm.com.