Intel sues insurer over AMD litigation costs

02 February 2009

Intel filed a lawsuit against an insurer over failure to cover legal fees on an antitrust lawsuit filed by rival chipmaker Advanced Micro Devices (AMD).

In the suit, filed last week and amended on Wednesday, Intel accused the American Guarantee and Liability Insurance Company (AGLI) of breach of contract for failing to provide a defence fund to fight an antitrust case filed by AMD and related cases filed by other entities.

AGLI was obligated to cover "reasonable" costs related to the litigations, but failed to do so even though Intel provided related legal documents, Intel said in court documents. Intel has been covering the costs on its own, it said in the documents.

Intel is seeking $50 million and additional damages from the insurance company. It has also asked the court to rule that AGLI has a duty to cover litigation costs. The case was filed in the US District Court for the Northern District of California.

The chipmaker, which holds a $50 million policy with American Guarantee, purchased several layers of comprehensive liability insurance from a variety of insurance companies from April 2001 through April 2002. Beginning in mid-2005, chip rival Advanced Micro Devices and consumers filed lawsuits against Intel, alleging that the chipmaker engaged in anticompetitive conduct and unfair business practices in the sale, promotion, and marketing of its microprocessors.

According to Intel's lawsuit, Old Republic Insurance provided $16 million in comprehensive liability insurance as the first line of defense, and XL Insurance America provided a second layer of $50 million in coverage under a commercial umbrella policy.