October 24, 2007 – Transmeta and Intel have buried the axe in their year-old litigation over patents, with Intel agreeing to license all Transmeta patents and patent applications for $150M and five years of $20M annual payments.

The “perpetual, non-exclusive” license Transmeta’s LongRun and LongRun2 technologies and future improvements thereupon, over the next 10 years. With this agreement, both parties dismiss pending patent litigation “with prejudice”, and will mutually release all claims of any type between them.

“We believe that this arrangement will create value for Transmeta stockholders both by realizing immediate financial value for our intellectual property rights and by supporting our technology development and licensing business going forward,” said Les Crudele, president and CEO of Transmeta, in a statement.

Transmeta investors clearly welcomed the news with open arms — shooting the company’s stock more than 230% today, on 3x+ trading volumes from recent weeks.

In early 2005, Transmeta shifted its business focus from designing and manufacturing chips to licensing the IP behind them, and a year later requested an injunction against Intel’s continuing sales of Pentium III, Pentium 4, Pentium M, and Core and Core 2 Duo processors, which incorporate patented Transmeta technologies, seeking monetary damages including royalties. Several media reports noted that those Intel products had generated more than $100 billion in cumulative revenue.

Earlier this year Intel responded with a countersuit denying those claims, and contending that Transmeta is actually infringing some of Intel’s own patents.