US sources said Digital Equipment and Intel have discussed an out of court settlement to their legal battle over processor patent infringement.
Earlier this month VNU Newswire revealed that Digital chairman, president and CEO Bob Palmer is ready to agree an out of court settlement with Intel. Two weeks ago Palmer said: "I wouldn?t be surprised if they said could we perhaps work this out in some less acrimonious way, and I would listen."
On Friday The Wall Street Journal claimed that meetings have taken place between Palmer and Intel president Craig Barrett but the opponents have not yet agreed to a deal. Neither side would confirm anything but there is plenty of speculation in Silicon Valley surrounding the possible motives and outcomes.
Despite dismissing the suit at first, many sources said the meeting shows Intel is set against a long, painful trial which would give it, at best, bad publicity. At worst, a settlement in Digital?s favour would cost Intel billions if Palmer?s estimate is correct.
After settling a long-running battle with AMD, Barrett is thought to be more experienced at settling legal issues than Intel CEO Andrew Grove and the rumoured meetings show Intel clearly views the suit more seriously than analysts first thought.
From Digital?s side, sources suggest Digital would prefer to work with Intel or receive hefty royalty payments from the company to settle the dispute. Any kind of alliance between the companies, which promote different chip architectures, would raise a question over Intel and Hewlett-Packard?s collaboration over Merced, a new generation of chip which the companies expect to launch by 2000. HP and Digital compete in hardware, chips, software and services so a joint venture between would be unlikely.
Both Intel and Digital are understood to prefer a private settlement to a lengthy, costly legal war, though Palmer has repeatedly said he is prepared to go to court. A Digital insider said: "This is his big chance to prove his worth to the board and make Digital great again, so he has to be committed to it."
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