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Intel Corp. lost its second patent battle against Intergraph Corp. last week when a Texas federal court ruled that Intel’s Itanium microprocessors infringe two Intergraph patents. But the stakes weren’t as high as they were in the previous dispute. That’s because attorneys hammered out an unusual settlement in the first case that limited the damage award to $150 million in the second case, with an additional $100 million tacked on if Intel loses an appeal. “I’m not aware of any case that proceeded this way,” said Intergraph attorney George Schwab, a partner at Townsend and Townsend and Crew. “The normal approach is not to have preset remedies.” Intel spokesman Chuck Mulloy said the company will probably file a motion for reconsideration of the judge’s decision. If that is denied, he said Intel plans to appeal. Intergraph’s first patent infringement suit against Intel, heard before an Alabama federal court, settled in April when Intel agreed to pay $300 million in damages. The settlement also put a liquidated cap on total damages in the case before the U.S. District Court of the Eastern District of Texas. The two suits involved separate sets of patents. In the Alabama case Intergraph claimed Intel’s Pentium microprocessors infringed its so-called Clipper chip patents. Mulloy said Intergraph was seeking upwards of $2 billion in damages. In the Texas case the company claimed Intel’s new Itanium processors infringed its patents for executing individual computer instructions in parallel. Intergraph, once a leading manufacturer of computer work stations, sold microprocessors until about 1993 when it opted to use Intel’s microprocessors. The Huntsville, Ala.-based company now makes mapping and design software. In addition to Schwab, Intergraph’s trial team included Townsend associates R. Scott Wales and Gregory Bishop, along with partners from three Texas firms. They were Franklin Jones Jr., of Marshall’s Jones and Jones; Otis Carroll of Tyler-based Ireland, Carroll & Kelley; and S. Calvin Capshaw III of Austin-based Brown McCarroll. Santa Clara’s Intel was represented by Fish & Richardson partners Ruffin Cordell and Joseph Colaianni Jr. in the Washington, D.C., office, and Thomas Melsheimer in the firm’s Dallas office. The team also included Sam Baxter, a partner at Dallas-based McKool Smith. HEADWATERS/ISG Attorneys in the San Francisco office of Pillsbury Winthrop represented Headwaters Inc. in its acquisition of Industrial Services Group Inc. and its subsidiary, ISG Resources Inc., the nation’s largest marketer and manager of coal combustion products. Headwaters will pay $22.7 million in cash, $10 million in ISG management-financed debt and 2.1 million shares of common stock for 100 percent of ISG. In addition, Headwaters refinanced $181 million of ISG outstanding debt including a new $155 million senior secured debt facility. “What made the deal complicated was when we signed the deal in July, the bottom fell out of the debt equity markets,” said Linda Williams, the lead partner for Pillsbury. “We all had to be creative to make the deal happen within the time frame of the agreement.” Headwaters develops coal combustion products and provides marketing and management to the electric power industry. ISG sells fly ash — a product generated at coal-fired power plants — which is used for improving the strength and quality of concrete products like cement. Utah-based Parsons Behle & Latimer represented Industrial Services Group Inc. Lawyers in the New York and Chicago offices of Kirkland & Ellis also represented ISG. In addition to Williams, Pillsbury partners Nathaniel Cartmell III, P. Joseph Campisi Jr. and Patrick Lawler teamed up to lead the deal out of the firm’s San Francisco office. Tax partner Victor Penico and environmental law partner Norman Carlin also worked on the deal from the firm’s San Francisco office. In addition, senior attorney Patrick Devine and associates John Dick, Paula Brosnahan, Matthew Africa, Philip Tendler, Donyelle Werner, Justin Hovey and Lindsay Robbins worked on the deal. Tax partner Paul Sharer worked out of the Northern Virginia office. The Utah-based law firm of Snell & Wilmer worked on local issues for Headwaters. Headwaters in-house counsel Harlan Hatfield also worked on the transaction.

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