Despite a recent pledge to "vigorously" contest a patent infringement suit filed against it by Wang Laboratories Inc., Santa Ana-based Wespercorp said Wednesday that it has reached an out-of-court settlement under which it will phase out production and sales of a printer controller that accounts for a "significant" portion of its operating revenue.
Wespercorp reported sales of $20.1 million for its fiscal 1985 year. Sales for the first nine months of fiscal 1986 were $10.8 million.
Wang, the Lowell, Mass., computer giant, filed the suit in U. S. District Court in Los Angeles in May, alleging that Wespercorp's DLP-4400 printer controller, which is compatible with various Wang computer systems, infringed on the patent for Wang's "Distributed Data Processing System."
Neither company would elaborate Wednesday on details of the settlement or discuss how Wespercorp obtained the technology.
However, Wang said in a prepared statement that it was "pleased that it has once again successfully enforced" its patents.
George Dashiell, Wespercorp's president and chief executive officer, described the settlement as "primarily an economic decision." The costs of fighting a suit, he said, would have been prohibitive.
The suit had sought unspecified damages as well as an injunction prohibiting Wespercorp from manufacturing and selling the device.
In a major concession, Wang has agreed to give Wespercorp until September of 1988 to phase out the DLP-4400, leaving the company time to develop new products to make up for the anticipated loss in revenue from printer controller sales.
Wang officials noted that two years is about as long as it would have taken "under the best of circumstances" for them to win a court order prohibiting Wespercorp from manufacturing and selling the disputed controller.
In an earlier interview with the Times, Dashiell said a halt in sales of the controller "could materially and significantly affect" Wespercorp's profitability.
However, on Wednesday he said that the device accounts for less than half the company's operating income and its eventual loss "doesn't have so much impact that we can't recover from it."
The bulk of Wespercorp's business--or about 60%--comes from the Federal Aviation Administration, to which Wespercorp is supplying computer systems for airport control towers. The company also manufactures a variety of computer controllers and other peripherals for a wide range of systems.
As previously reported, Wespercorp had net earnings of $26,000 for the fiscal third quarter ended March 31, the company's first profitable quarter in 30 months. During the like period a year ago, Wespercorp had a net loss of $857,000 and sales of $5 million. The company reported a loss of $2.9 million for its fiscal 1985.
In addition to permitting Wespercorp to continue selling the DLP-4400 for two more years, the settlement announced Wednesday gives Wespercorp perpetual rights to maintain and repair printer controllers already in the field. The settlement also called for Wespercorp to make an undisclosed payment to Wang, but the companies agreed that Wespercorp instead will transfer to Wang its rights to the DLP-4400 technology.