HP, Gateway sign $47m patent pact

HP and Gateway have agreed to settle their legal differences with a $47m payment, from Gateway to HP. The two firms fell out in 2004 over patent infringement allegations made by both companies against each other - both now have a licence to use the other's intellectual property.

The deal was announced just as a ban on the importation into the US of Gateway PCs containing the disputed technology came into force - an injunction placed on the company by the US International Trade Commission in August 2005.

Gateway said it will re-state its FY2005 results to account for the payment - it will knock $16.7m off what it made that year, knocking its net income down to $32.8m. But the settlement will save it $12m in anticipated legal costs during the current fiscal year.

HP sued Gateway in March 2004, alleging the smaller company had violated six of its patents covering power management, keyboard-password functions and cursor-generation, among other technologies.

Gateway countersued the following May, alleging HP had infringed five of its patents. In the same month, HP filed a complaint with the ITC requesting it find Gateway guilty of infringing seven of its patents and that it ban the importation into the US of allegedly infringing kit.

In July 2004, Gateway followed up its own countersuit with an ITC complaint of its own, this time listing a number of other patents it believed HP has used without permission. ®