Intel sued Nvidia over patent-licensing agreements.

The two chip manufacturers are arguing over patent-licensing agreements signed in 2004. Intel decided to sue Nvidia over the latter’s plan to build chipsets compatible with Intel's latest Nehalem processors.

According to the lawsuit filed in the State of Chancery Court in Delaware, Intel, the world's largest semiconductor company, seeks a ruling that Nvidia has not a license to make chipsets compatible with Intel processors with integrated memory-controller functionality.

Intel is referring especially to its Nehalem microprocessors which it launched in November. Intel’s latest generation chips communicate much better with the CPU memory due to the fact that they integrate memory controllers inside the chip.

Intel tried to solve the problem with Nvidia the easy way. It was in talks with the company for about a year, but now it decided to take it to court.

On the other hand, Nvidia argues that a four-year-old bus license with Intel gives it the right to produce chipsets based on Intel CPUs with integrated memory controllers. The license singed between the two companies four years ago was about the usage of a bus (a point-to-point interconnect) that helps the CPU communicate with the PC’s components.

"We are confident that our license, as negotiated, applies," said Jen-Hsun Huang, Nvidia president and CEO, in a statement released on Wednesday. Mr. Huang described Intel’s move as an attempt to “stifle innovation to protect a decaying CPU business."

However, Intel insists that the 2004 license only gives Nvidia the right to connect its graphics chipsets to Intel processors and does not include chips built on Intel's Nehalem microarchitecture.