It was on Wednesday the news of Intel-Nvidia dispute came out on web. According to reports, Santa Clara, California based Intel and Nvidia are in court, over the patent-licensing agreement signed by the two in 2004.

Confirming the legal scuffle, on Wednesday, Intel stated that it filed a lawsuit against Nvidia, on Monday, to make it clarify its position on the 2004 license agreement. The legal spokesman of Intel asserted that Nvidia has no right to make chipsets for Intel's newest generation of CPUs.

In its lawsuit, Intel has implored the court to stop Nvidia from broadcasting to customers that it has the “right to make chipsets that will work with Intel's next-generation CPUs”.

According to Intel spokesman Chuck Mulloy, Intel and Nvidia were attempting to resolve the issue for well over a year, but unable to resolve the issue mutually, the company went to the court to “resolve the dispute about what rights they have”.

But on the contrary, Nvidia maintained that the 2004 agreement gives it authority to manufacture chip sets, which work with the next-generation microprocessors of Intel. According to Nvidia, Intel has alleged that the four-year-old chipset license agreement between them does not extend to its next-generation Nehalem products.

Nvidia accused Intel of “trying to delay the inevitable value shift" from central processors to graphics chips. It claimed that Intel has lost the battle for "the soul" of the personal computer.

Jen-Hsun Huang, president and CEO of Nvidia, said, "'We are confident that our license, as negotiated, applies. At the heart of this issue is that the CPU has run its course and the soul of the PC is shifting quickly to the GPU. This is clearly an attempt to stifle innovation to protect a decaying CPU business."

On Wednesday, Derek Perez, Nvidia's head of public relations, clarified, "We have a cross-licensing agreement with Intel, entered into about four and a half years ago. Intel is now basically saying the cross-license agreement doesn't apply to future bus interfaces, specifically DMI, (the direct media interface Intel uses to link the Nehalem CPU to a system's memory, a new feature for Nehalem chipsets). Intel has now filed an injunction against us, basically trying to stop us from innovating on DMI.

"We believe our business license with Intel lets us build chipsets for Intel CPUs, specifically for CPUs with integrated memory controllers (such as DMI). The PC has become a GPU-based platform as much as a CPU-based platform, and Intel is trying to delay that inevitable shift. They're trying to do everything they can to slow that down and it's because they recognize the importance of the GPU," Perez said. 

On the other hand Mulloy said, "There's no injunction and there's no damages, though if we get a decision we do want our lawyers' fees paid for. Our suit seeks to have the court declare that Nvidia is not licensed to produce chipsets compatible with any Intel product with an integrated memory controller, such as the recently introduced Nehalem products. We say they have breached the [four-year-old chipset license] agreement by saying that they do have that right."