In an agreement that ends a 2-year-old dispute, enterprise applications leader SAP will pay supply chain applications provider i2 Technologies, Inc. $83 million in cash to settle a patent infringement lawsuit.

I2 sued SAP in September 2006, claiming that SAP AG and SAP America had violated seven of i2’s technology patents. The smorgasbord of patents included:

• An extensible model network representation system for process planning

• Planning and coordination systems for coordinating separate factory planning systems and a method of operation

• A framework for negotiation and tracking the sale of goods

• A system and method for allocating manufactured products to sellers

• A system and method for managing available-to-promise product

When i2 filed the suit in 2006, the company’s then President and CEO Michael McGrath said, “We believe that it is critical to protect our patented innovations and accordingly took these actions today against SAP.”

In August 2007, SAP sued i2, claiming that i2 had infringed on two of SAP’s patents. SAP’s filing sought an unspecified monetary reward and a permanent injunction. That trial had been scheduled for March 2009.

Under the agreement announced late last week, the two companies effectively wipe the slate clean, putting both suits to rest, an i2 spokeswoman said today. The terms of the pact state that “each party will license to the other party certain patents in exchange for a one-time cash payment to i2 of $83,333,333.36.” The settlement also “dismisses the existing litigations between the parties with prejudice,” read the statement filed with the Securities and Exchange Commission, meaning the same case cannot be filed again in the future.

The i2 spokeswoman today said the company is “pleased to be able to move forward.”

In the two years between the lawsuit’s filing and its resolution, i2 tracked a volatile path as it continued its battle to fend off the encroachment into the supply chain management market by traditional ERP vendors such as SAP. The folding of supply chain management applications into the ERP portfolio cut into the market share of supply chain specialists such as i2, JDA, and Manhattan Associates.

By the time i2 reported a 49% third-quarter drop in software license revenue in late 2007, McGrath had retired from the top spot, Pallab Chatterjee had been named interim CEO, and the company had formed a strategic review committee to explore its options as a business, including a possible sale.

More recently, the supply chain apps pioneer reported on a first quarter that featured total bookings exceeding any other quarterly total in the past three years, and said that it has received interest from two potential suitors, although officials have not revealed details. The $83 million award in the patent suit exceeds i2’s typical quarterly sales, which range in excess of $60 million.

SAP did not respond to requests for comment today.