Last month, Intel filed a lawsuit against Nvidia seeking a declaratory judgment that would prevent it from producing chipsets for any Intel processor with integrated memory controller functionality – like the Core i7. The company alleges their current cross-licensing agreement with Nvidia only extends to discrete memory controllers and any additional permission would have to come through a renegotiation that includes the newer Nehalem architecture.

Nvidia, however, has publicly charged that Intel is consciously misinterpreting the license to eliminate them as a competitive threat and thus it is stepping up the legal battle with a countersuit of their own. The graphics firm is accusing Intel of breach of contract and threatens to “terminate Intel’s license to Nvidia’s valuable patent portfolio.” This includes its 3D, graphics processing unit and other computing patents. We can probably expect a long and heated battle between the two, but if Nvidia gets its way, it could certainly put a damper on sales of Intel’s integrated GPUs and their forthcoming discrete graphics processors.