Judge Edwin Nelson said National Semiconductor Corp. (NYSE:NSM) actually controlled the disputed patents, and Intel (Nasdaq:INTC) was allowed to use them as the result of a 1976 licensing agreement between the two companies.
The ruling is a reversal of an order Nelson signed in June, in which he said Intel had no rights to the technology.
In Tuesday's ruling, Nelson wrote that upon reconsideration, the court is satisfied "that it initially gave too little weight to Intel's argument that when National Semiconductor Corp. acquired all of the stock of Fairchild Semiconductor Corp., it also acquired 'control' of the patents that are now claimed to be owned by Intergraph and upon which Intergraph bases its infringement claims."
National Semi bought Fairchild in 1987 and gained access to the disputed patents -- nine years after the Intel-National licensing agreement began. Intergraph (Nasdaq:INGR) had claimed that it acquired the patents when it bought a portion of Fairchild Semiconductor from National in 1987.
The antitrust part of the suit is still intact and the two sides are slated to go to trial in June of next year.
"We're gratified," said Intel spokesman Chuck Mulloy of the judge's decision to toss out the patent claims. "It allows us to take our resources and focus them on a different part of the case."
Intergraph Corp. said it plans to appeal the ruling. "We believe Judge Nelson's original opinion of June 4th 1999 to be correct, which held that I did not have a license to use our patents," an Intergraph spokeswoman said.
Intergraph filed the original suit in the U.S. District Court in the Northern District of Alabama in April 1997, claiming that Intel engaged in anti-competitive practices and infringed upon its patents.
Intergraph also claimed Intel illegally withheld information about future processors from the company.
Judge Nelson agreed, and in a ruling in April 1998, he said that Intel had violated antitrust law by cutting off Intergraph's access to the chip information, which he said was the same as withholding an "essential facility." Under antitrust law, monopoly companies cannot cut off access to "essential facilities," or the resources companies need to do business. The antitrust claims are scheduled to be heard during the upcoming trial.