updated 1/21/2005 3:30:53 PM ET 2005-01-21T20:30:53

Hewlett-Packard Co., a leading maker of personal computers and printers, has agreed to pay $141 million to settle patent disputes with software maker Intergraph Corp., both companies announced Friday.

Hewlett-Packard, which also makes servers and software, said in a statement that it expects the settlement to reduce earnings for the first quarter of fiscal 2005 by about 3 cents per share. It will pay Huntsville, Ala.-based Intergraph by Jan. 28.

The companies said in separate statements that they will immediately dismiss, withdraw or terminate all pending lawsuits while reserving the right to reinstate them. They also struck an agreement under which Hewlett-Packard is granted license to all Intergraph patents while Intergraph has license to all H-P patents in fields covered by its current products.

Intergraph sued in 2002 claiming that Hewlett-Packard, Dell Inc. and Gateway Inc. violated patents related to systems using Intel Corp. chips. Related settlements were reached last year with Intel, Dell and Gateway.

Palo Alto-based Hewlett-Packard had been in litigation with Intergraph in both U.S. federal court and in the European Union.

"We're pleased to have come to a resolution and to put it behind us without going into a protracted legal battle and into trial," said Monica Sarkar, an H-P spokeswoman.

Intergraph said it would record about $11 million in legal expenses for the first quarter of 2005 to offset the settlement.

"We believe that the settlement with H-P is in the best interest of our shareholders, and we are pleased to have received a license to H-P's extensive patent portfolio for our fields of business," said Intergraph CEO and President Halsey Wise.

Intergraph, which has more than 3,000 employees in 60 countries, specializes in graphics software to make maps, build and operate factories and ships, dispatch emergency service and manage infrastructure.

Last year, in addition to receiving a $225 million payment from Intel to settle the long-running chip patent dispute, Intergraph won a $25 million settlement payment in a separate case against chip manufacturer Advanced Micro Devices. In 2003, microprocessor maker Texas Instruments Inc. agreed to pay Intergraph $18 million to settle their patent battle.

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