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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): November 17,
1997
INTERGRAPH CORPORATION
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
0-9722
------------------------
(Commission File Number)
Delaware 63-0573222
- ---------------------------- ------------------------------------
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation)
Intergraph Corporation
Huntsville, Alabama 35894-0001
- ---------------------------------------- --------------
(Address of Principal Executive Offices) (Zip Code)
(205) 730-2000
------------------
(Telephone Number)
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INTERGRAPH CORPORATION
FORM 8-K
November 24, 1997
Item 5: Other Events.
-------------
Intergraph Corporation ("Intergraph" or "the
Company") filed a legal action on November 17, 1997, in
U.S. District Court, the Northern District of Alabama,
Northeastern Division, charging Intel Corporation
("Intel"), the supplier of all of the Company's
microprocessor needs, with anticompetitive business
practices. In the lawsuit, Intergraph alleges that
Intel has engaged in a series of wrongful acts designed
to coerce Intergraph into relinquishing to Intel certain
of its computer technology patents, including
interference with business and contractual relations,
interference with technical assistance from third party
vendors, breach of contract, misappropriation of trade
secrets, and negligence, and further alleges that Intel
has infringed upon those patents. These patents define
the architecture of the cache memory of a microprocessor
developed by the Company, and the Company believes this
architecture is at the core of Intel's entire Pentium
line of microprocessors and systems. Intergraph asserts
claims for compensatory damages resulting from Intel's
wrongful conduct and infringing acts, and punitive
damages in an amount sufficient to punish and deter
Intel's wrongful conduct. Additionally, the Company has
requested that Intel be permanently enjoined from use of
anticompetitive business practices against the Company,
allowing Intergraph to continue development and sale of
Intel-based products without interruption.
Intel filed a responsive legal action on November 17,
1997, in the U.S. District Court, the Northern District
of California, requesting, among other things, i) that
the court declare the Company's patents invalid and/or
not infringed by Intel, ii) that Intergraph be enjoined
from making further assertions that Intel's customers
infringe based on the use of Intel's microprocessors,
iii) that the court declare that Intel has no obligation
to disclose any of its trade secrets or other
confidential information to Intergraph, and iv) that the
court declare that Intel's decision to discontinue the
provision of trade secrets and other confidential
information to Intergraph does not violate any doctrine
of federal or state statutory or common law.
The Company's patents relate to its RISC (reduced
instruction set computer)-based Clipper microprocessor,
which was the industry's first attempt to bring
mainframe computing power to compact, low cost
integrated circuit technology. In 1992, Intergraph
began evaluation of a transition from Clipper to Intel's
microprocessor for use in its future workstation
products. At that time, Intel had little experience
with workstations or the workstation market and had been
unsuccessful in the development of its own RISC-based
microprocessor for the workstation market. In 1993,
Intergraph began discussions with Intel regarding this
transition. Based on Intel's representations regarding
its microprocessor development plans for the workstation
market, Intergraph began the transition from Clipper to
Intel-based design, and the two companies cooperated in
introduction to the market of the Intel/Windows NT
platform as an alternative to the RISC/UNIX platform.
The Company ceased further design of its Clipper
microprocessor at the end of 1993, and made a
substantial investment in the redesign of its hardware
platform to utilize microprocessors supplied by Intel.
The Company relied on the assurances, representations,
and commitments of Intel that they would supply
Intergraph's microprocessor needs on fair and reasonable
terms, and would provide Intergraph with the essential
technical information, assistance, and advice necessary
to utilize the microprocessors to be developed and
supplied by Intel. As a result of the assurances of
Intel and the transition to Intel-based workstations,
Intergraph is technologically and economically bound to
the use of Intel's microprocessors.
The Company believes it has the commitment of Intel
for microprocessor supply believed to be adequate for
the Company's needs through March 31, 1998, and Intel
spokesmen have publically stated that it is unlikely
they will refuse to sell to Intergraph as a result of
Intergraph's lawsuit. The Company, however, has filed a
motion before the court requesting that Intel be
required to continue supply of the Company's
microprocessor needs until resolution of Intergraph's
claim. An inability to obtain sufficient supply of
Intel microprocessors or migration of the Company's
products to microprocessors other than those of Intel
would have significant adverse effects on the Company's
financial position and results of operations.
The Company believes it was necessary to take legal
action against Intel in order to defend its growing
workstation business and its intellectual property
related to that business. The Company will vigorously
pursue and defend its positions and believes it will
prevail in these matters.
Item 7: Exhibits.
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Number Description
-------- ----------------------------------------------------
99(a) Press release, "Intergraph Sues Intel for
Anticompetitive Behavior", dated November 17, 1997
99(b) Press release, "Intergraph CEO Explains
Suit Against Intel in Open Letter to Shareholders",
dated November 17, 1997
Forward-looking statements
- --------------------------
Any statement contained in this current report which is not a
historical fact, or which might otherwise be considered an
opinion or projection concerning Intergraph Corporation ,
whether express or implied, is meant as and should be considered
a forward looking statement as that term is defined in the
Private Securities Litigation Reform Act of 1996. Forward
looking statements are based on assumptions and opinions
concerning a variety of known and unknown risks, including but
not necessarily limited to fluctuations in customer demand,
acceptance of new products, changes in technology, product
introductions by competitors, and general economic conditions,
as well as other risks more completely described in the
Company's filings with the Securities and Exchange Commission,
including its most recent Annual Report on Form 10-K and its
Forms 10-Q for the quarters ended March 31, June 30, and
September 30, 1997. If any of these assumptions or opinions
prove incorrect, any forward looking statements made on the
basis of such assumptions or opinions may also prove materially
incorrect in one or more respects.
INTERGRAPH CORPORATION
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto
duly authorized.
INTERGRAPH CORPORATION
----------------------
(Registrant)
By: /s/ John W. Wilhoite
-----------------------------
John W. Wilhoite
Vice President and Controller
Date: November 24, 1997
Exhibit 99(a)
INTERGRAPH PRESS RELEASE
- ----------
FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION:
Aggie Frizzell
(205) 730-6139
(800) 316-0576 (pager)
[email protected]
Jeannie Robison
(205) 730-8066
(205)-707-3324 (pager)
[email protected]
Coercive tactics used by Intel in attempt to obtain rights to
- -------------------------------------------------------------
Intergraph's patents
- --------------------
Intergraph Sues Intel for Anticompetitive Behavior
HUNTSVILLE, Ala., November 17, 1997 -- Intergraph
Corporation, a billion dollar developer of Windows NT-based
workstation hardware and technical software applications, today
filed a lawsuit in U.S. District Court, the Northern District of
Alabama, charging Intel Corporation with anticompetitive
behavior. Specifically, Intergraph claims that Intel has engaged
in a series of wrongful acts to coerce Intergraph into
relinquishing certain patent rights to Intel.
In its complaint, the company says Intel is guilty of
wrongful conduct, including interference with business and
contractual relations, interference with technical assistance
from third-party vendors, breach of contract, misappropriation of
trade secrets, negligence and infringement of computer technology
patents owned by Intergraph.
Intergraph says that Intel ended a harmonious multi-year
business relationship with Intergraph when Intel sought to
acquire rights to Intergraph patents at no cost. These patents,
which define the architecture of a microprocessor's cache memory
management, are at the heart of the entire Pentium family of
processors and systems, including the Pentium Pro and Pentium II
processors. "When Intergraph refused to give up its patent
rights," the complaint states, "Intel undertook a systematic
campaign of coercion and oppression against Intergraph" and "has
used, and is using, its dominant market power in the computer
industry to pressure Intergraph to give up its valuable property
rights, or to crush Intergraph in retaliation for refusing to do
so."
In the lawsuit, Intergraph is asserting claims for monetary
damages and injunctive relief to prevent Intel from continuing
its anticompetitive behavior. An injunction would require Intel
to stop its wrongful acts and thus allow Intergraph Computer
Systems to continue developing leading edge Pentium II-based
graphics workstations, PCs, and servers without interruption.
"Intel is using its dominant market position in
microprocessors to undermine us on multiple fronts," stated
Intergraph CEO Jim Meadlock. "It's necessary for us to take legal
action against Intel in order to defend our rapidly growing
workstation business and our intellectual property. We've
discussed these issues with Intel for well over a year, and we
now need to take action that is in the best interest of our
shareholders, customers, business partners and employees."
Intergraph Takes Intel/Windows to High-End Computing
- ----------------------------------------------------
In describing the circumstances leading to today's action,
Intergraph says the patents in question relate to the Company's
Clipper microprocessor, the industry's first attempt to bring
mainframe-class computing power to compact, low-cost integrated
circuit technology. The Clipper was used in Intergraph's
RISC/UNIX workstations before the company migrated its product
lines to the Intel/Windows NT platform. Intergraph continues to
support its legacy hardware that uses the Clipper processor.
In 1993, Intergraph Computer Systems became the pioneer of
affordable high-performance workstations based on the open-
architecture Intel/Windows NT platform. As cited in the court
filing, Intergraph believed that, based on assurances from Intel,
the Intel Pentium family of microprocessors combined with
Microsoft's 32-bit Windows NT operating system would be capable
of providing workstation-class performance, handling the
processing requirements of high-end creative and technical
applications such as animation, visual simulation, and computer-
aided design, manufacturing, and electronics (CAD/CAM/CAE).
Also in 1993, Wade Patterson, president of Intergraph
Computer Systems, proposed to Intel that the two companies work
together to introduce the Intel/Windows platform as an
alternative to the RISC/UNIX systems, which then dominated the
workstation market. The companies enjoyed a mutually beneficial
relationship, with Intergraph developing award-winning
workstations and Intel expanding its microprocessor sales beyond
PCs and into new workstation markets such as Hollywood's
entertainment industry. Intergraph was the first to use dual-
processor technology for Pentium-based workstations. This
capability boosted systems performance and caused wider and
faster acceptance of the Pentium processor as a computer
technology for workstations.
Intergraph introduced the industry's first single and dual
Pentium-based 3D graphics workstation in January 1994, the first
Pentium Pro-based workstation, and the first quad-processor
workstation in November 1995. In November 1995, Intel used
Intergraph's TDZ 3D Graphics Workstations to introduce its new
Pentium Pro processors worldwide.
Patent Protection Results in Anticompetitive Tactics
- ----------------------------------------------------
Intergraph contends that Intel has sought to obtain rights
under Intergraph's Clipper-related patents through coercive
tactics. According to Intergraph's complaint, Intel began
demanding broad license grants of Intergraph technology,
including the Clipper patents, before Intergraph could
participate in new Intel product development programs.
Intergraph refused.
Intel rapidly escalated its anticompetitive behavior.
Intergraph contends that in May 1997, Intel retaliated by
drastically curtailing its technical and marketing support to
Intergraph. The complaint alleges that Intel directed its
employees "to cease and desist providing any support to
Intergraph." The complaint further states, "Intel also notified
Intergraph that it was unilaterally terminating NDAs [non-
disclosure agreements] with Intergraph."
Intergraph cited that also in May 1997, Intel did not inform
Intergraph of a bug in its released PIIX4 chipset. In October
1997, Intergraph discovered a second bug in the PIIX4 chipset and
asked Intel for technical information and support to correct the
problem. Intel would not respond to Intergraph's requests. When
Intergraph ordered a testing device from a third-party vendor to
debug the problem, Intel would not permit the supplier to release
the equipment to Intergraph. Both these actions caused
Intergraph a significant amount of rework and resulted in major
product delays for workstations announced by Intergraph Computer
Systems in August.
The complaint also contends that in recent months, Intel has
introduced competitors into Intergraph's customer accounts and
has even suggested to customers that Intel would fund projects if
they use a competitor's workstation but might not fund those
projects if customers purchased Intergraph's workstations.
"Intel's anticompetitive behavior has taken a significant
toll on Intergraph's time, energy, resources, and dollars," said
Meadlock. "This is a situation we could no longer tolerate and
we needed to take action in order to keep our business on track.
We are confident that this action will protect our property and
rights in court, and ensure our ability to continue the direction
initiated in 1993 to provide open systems to the market place."
###
Editors note: A detailed backgrounder is available upon request.
Contact 205-730-8066. A copy of the filed full complaint is available
from The Clerk of the Court, U.S. District Court, Northern District,
Northeast Division of Alabama.
More information is available on Intergraph's Website at
http://www.intergraph.com/press.stm
Intergraph Background Information
- ---------------------------------
A member of the Fortune 1000, Intergraph Corporation
(Huntsville, Ala.) is the world's largest company dedicated to
supplying interactive computer graphics systems. Products range
from technical software, to point solutions that meet individual
and departmental needs, to integrated, enterprise-wide systems.
Noted for delivering interoperable systems and applications,
Intergraph products are based on the Windows 95 and Windows NT
operating systems, with continued support for its legacy UNIX-
based systems and solutions. The company's common stock trades on
The Nasdaq Stock Market under the symbol: INGR.
Intergraph Computer Systems (ICS), a company of Intergraph
Corporation, is the world leader in 3D graphics technology,
hardware products, and related services for Windows NT.
Intergraph develops, manufactures, sells, and supports computer
systems for the creative, business, and technical desktop as well
as servers, networking, and interoperability products for IT
solutions. Hardware products include Windows/Windows NT-based
2D and 3D graphics workstations and PCs and high-performance
servers built with Intel Pentium/Pentium Pro/Pentium II
processors.
Intergraph and the Intergraph Logo are registered trademarks of
Intergraph Corporation. Intel, Pentium, and the Intel Inside
logo are registered trademarks of Intel Corporation. Microsoft
and Windows are registered trademarks of Microsoft Corporation.
Other brands and product names are trademarks of their respective
owners.
Forward-looking statements
- --------------------------
Any statement contained in this report which is not a historical
fact, or which might otherwise be considered an opinion or
projection concerning Intergraph Corporation, whether express or
implied, is meant as and should be considered a forward looking
statement as that term is defined in the Private Securities
Litigation Reform Act of 1996. Forward looking statements are
based on assumptions and opinions concerning a variety of known
and unknown risks, including but not necessarily limited to
fluctuations in customer demand, acceptance of new products,
changes in technology, product introductions by competitors, and
general economic conditions, as well as other risks more
completely described in the Company's filings with the Securities
and Exchange Commission, including its most recent Annual Report
on Form 10-K and its Forms 10-Q for the quarters ended March 31,
June 30, and September 30, 1997. If any of these assumptions or
opinions prove incorrect, any forward looking statements made on
the basis of such assumptions or opinions may also prove
materially incorrect in one or more respects.
Exhibit 99 (b)
INTERGRAPH PRESS RELEASE
- ----------
FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION:
Aggie Frizzell
(205) 730-6139
(800) 316-0576 (pager)
[email protected]
Jeannie Robison
(205) 730-8066
(205)-707-3324 (pager)
[email protected]
Intergraph CEO Explains Suit
Against Intel in Open Letter to Shareholders
HUNTSVILLE, Ala., November 17, 1997 -- In an open
letter to Intergraph Corporation's shareholders, Jim
Meadlock, Chairman and CEO, explained the company's decision
to sue Intel Corporation for anticompetitive behavior. The
lawsuit, which has been filed in the U.S. District Court,
the Northern District of Alabama, Northeastern Division,
accuses Intel of a systematic campaign to coerce Intergraph
into relinquishing valuable patent rights to Intel. It
further alleges that when Intergraph resisted this pressure,
Intel used its market dominance to punish the company by
withholding vital technical information necessary for
Intergraph's continued workstation development efforts.
"The decision to file suit was a difficult one,"
Meadlock told his shareholders, "given our formerly warm
relationship with Intel and our dependence upon Intel's CPUs
in our workstations, PCs and servers. But that very
dependence -- coupled with Intel's use of their dominant
position to coerce us to give up our patent rights -- has
forced us to this action."
"Intel is trying to undermine us on multiple fronts,
cutting us off from critical product information and
support, escorting our competitors into our own accounts,
and trying to obtain rights to our intellectual property,"
Meadlock stated. "It is necessary for us to take legal
action against Intel in order to defend our rapidly growing
workstation business and our intellectual property." In
the lawsuit, Intergraph is asking for monetary damages and
injunctive relief from Intel's anticompetitive actions.
Citing the 5-year, multi-million dollar investment
Intergraph has made in pursuing the Windows NT market with a
broad line of Pentium Pro and Pentium II-based workstations
and servers, Meadlock said, "We have discussed these issues
with Intel
for well over a year, and we now need to take action that is
in the best interest of our shareholders, customers,
business partners and employees. We cannot give away our
valuable patents in order to get Intel to treat us fairly,
nor should be we required to
do so."
The patents cited in Intergraph's lawsuit resulted from
the innovative design work done in the development of the
Clipper RISC microprocessor, the industry's first successful
attempt to bring mainframe-class computing power to compact,
low-cost integrated circuit technology. Before teaming with
Intergraph, Intel had little or no experience with
workstations, and had been unsuccessful in the development
of a RISC-based CPU for the workstation market. Intergraph
introduced the industry's first single and dual Pentium-
based 3D graphics workstation in January 1994, the first
Pentium Pro-based workstation, and the first quad-processor
workstation in November 1995. "In November 1995, Intel used
Intergraph workstations to introduce its new Pentium Pro
processors worldwide," Meadlock reminded shareholders.
Meadlock reassured the Intergraph shareholders that
until a decision is reached Intergraph will continue to
develop computers based on Pentium II microprocessors.
"There has been no disruption of supply of microprocessors
from Intel, nor do we expect any disruption in the future,"
Meadlock said.
###
Editors note: A detailed backgrounder is available upon
request. Contact 205-730-8066. A copy of the filed full complaint is
available from The Clerk of the Court, U.S. District Court,
Northern District, Northeast Division of Alabama.
More information is available on Intergraph's Website at
http://www.intergraph.com/press.stm
Intergraph Background Information
- ---------------------------------
A member of the Fortune 1000, Intergraph Corporation
(Huntsville, Ala.) is the world's largest company dedicated
to supplying interactive computer graphics systems.
Products range from technical software, to point solutions
that meet individual and departmental needs, to integrated,
enterprise-wide systems. Noted for delivering interoperable
systems and applications, Intergraph products are based on
the Windows 95 and Windows NT operating systems, with
continued support for its legacy UNIX-based systems and
solutions. The company's common stock trades on The Nasdaq
Stock Market under the symbol: INGR.
Intergraph Computer Systems (ICS), a company of Intergraph
Corporation, is the world leader in 3D graphics technology,
hardware products, and related services for Windows NT.
Intergraph develops, manufactures, sells, and supports
computer systems for the creative, business, and technical
desktop as well as servers, networking, and interoperability
products for IT solutions. Hardware products include
Windows/Windows NT-based 2D and 3D graphics workstations
and PCs and high-performance servers built with Intel
Pentium/Pentium Pro/Pentium II processors.
Intergraph and the Intergraph Logo are registered trademarks
of Intergraph Corporation. Intel, Pentium, and the Intel
Inside logo are registered trademarks of Intel Corporation.
Microsoft and Windows are registered trademarks of Microsoft
Corporation. Other brands and product names are trademarks
of their respective owners.
Forward-looking statements
- --------------------------
Any statement contained in this report which is not a
historical fact, or which might otherwise be considered an
opinion or projection concerning Intergraph Corporation,
whether express or implied, is meant as and should be
considered a forward looking statement as that term is
defined in the Private Securities Litigation Reform Act of
1996. Forward looking statements are based on assumptions
and opinions concerning a variety of known and unknown
risks, including but not necessarily limited to fluctuations
in customer demand, acceptance of new products, changes in
technology, product introductions by competitors, and
general economic conditions, as well as other risks more
completely described in the Company's filings with the
Securities and Exchange Commission, including its most
recent Annual Report on Form 10-K and its Forms 10-Q for the
quarters ended March 31, June 30, and September 30, 1997.
If any of these assumptions or opinions prove incorrect, any
forward looking statements made on the basis of such
assumptions or opinions may also prove materially incorrect
in one or more respects.
