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Dell reaches $50 million settlement with Tulip

Patent infringement case sorted out of court

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Dutch PC maker Tulip has withdrawn its patent infringement law suit against Dell following an out-of-court settlement from which the Texan hardware giant emerges as the de facto winner.

The two companies last week agreed to a deal under which Tulip will receive $49.5 million - significantly less than the $17 billion in actual and punitive damages it originally sought. Dell will only have to pay $10 million toward that $49.5 million - it's not clear where the rest is coming from; presumably its motherboard suppliers will have to cough up the rest - and is able to say that it didn't infringe Tulip's patent.

Dell also gets a non-exclusive licence to the patent at the heart of the case: number 5,594,621, entitled 'Motherboard for a computer of the AT type, and a computer of the AT type comprising such motherboard' and which describes a way to connect PCI and ISA cards to an AT motherboard.

In November 2000, Tulip alleged that Dell Optiplex PCs shipped since 1997 incorporated without authorisation technology covered by that patent. The patent was filed in 1995.

Cleared on all charges and paying only $10 million - a conclusive victory for Dell, we'd say.

That said, Tulip doesn't do too badly, either: it wins a tidy sum of money - which it describes as "a significant improvement of its financial position"; it lost €7.2 million during fiscal 2002 - and the validity of its patent is ensured for the time being. Dell had not only claimed it did not infringe Tulip's patent but it contested that the patent was invalid and unenforceable.

John Ferrell, a partner at Palo Alto-based law firm Carr & Farrell who specialises in patent issues, told The Register: "This was a very favorable outcome for both parties. Tulip avoided exposing its patent to invalidation scrutiny, while Dell and its vendors dodged a potential billion dollar judgment.

"Tulip's AT patent received $50 million in gold plating with this settlement." ®

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