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Thursday, October 20, 2005

Chip start-up's big payoff comes in, at last

Micro who?

That was the question many asked when Intel reported in its third-quarter earnings Tuesday that it would pay a $300 million charge to settle a lawsuit with MicroUnity, an eight-employee company in Santa Clara, Calif.

The deal, which brought an end to a patent-infringement suit filed by MicroUnity in March 2004, was the first some had heard of the company, which specializes in media processors. But for Silicon Valley veterans, the MicroUnity name conjured up memories of the high-tech business before the Internet era, when Packard Bell and Egghead Software strode the Earth and Google founder Larry Page was just another guy in high school.

"They were the Transmeta of their day," Insight 64 analyst Nathan Brookwood said. Chipmaker Transmeta came on like gangbusters several years ago, promoting an energy-efficient processor for laptops, but ran into manufacturing problems and the dot-com bust.

In its suit, MicroUnity alleged that Intel had infringed on its patents with its use of extensions for multimedia and application threading, a process that lets a chip perform two tasks at once.

The settlement underlines the trend for small companies to seek revenue through patent lawsuits. In recent years, for example, Intel spent $675 million to put an end to a similar action by Intergraph. In MicroUnity's case, the deal illustrates how legal action can revive the promise of a once-hot company.

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