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HP Files Lawsuit Against Gateway

Patents for technologies used in personal and server computers were infringed, the claim says.

March 26, 2004|Terril Yue Jones | Times Staff Writer

Computer maker Hewlett-Packard Co. has filed a patent infringement lawsuit against rival computer manufacturer Gateway Inc., the first action taken by an HP department formed last year to protect the company's intellectual property.

The suit, filed in federal district court in San Diego on Wednesday, claims Gateway infringed six patents for technologies used in desktop, laptop and server computers. The patents cover such features as power management, keyboard password functions and cursor generation, according to the suit.

HP "has been irreparably harmed by Gateway's act of infringement," the suit says.

The six patents are among 6,000 HP holds for personal and server computers, and HP believes Gateway is infringing a substantial number of other patents, said Joe Beyers, HP's vice president for intellectual property licensing.

Gateway rejected the charges and suggested HP was rushing to litigation. "The fact is, both companies are in possession of significant patent rights in the area of computer technology," said Gateway spokesman Robert Sherbin. "We are very confident of our position and will defend ourselves vigorously."

In the meantime, the litigation won't force Gateway to halt computer shipments. "That's simply not going to happen," Sherbin said.

The dispute stems from a licensing deal Poway, Calif.-based Gateway signed with Compaq Computer Corp., which HP bought in 2002. Gateway would not renew the licenses when they expired in 1999, Beyers said.

Palo Alto-based HP resolved a similar dispute with another computer maker, EMachines Inc., a year-and-a-half ago. So when Gateway bought EMachines this month, HP tried to reach a deal that would cover the entire combined company, Beyers said. But talks broke down, leading to the suit.

HP, which sells hand-held computers and corporate computing systems, dwarfs Gateway in both sales and profits. In its most recent fiscal year, HP earned $2.5 billion on revenue of $73 billion. Gateway, which sells primarily PCs and consumer electronics items, lost $526 million on revenue of $3.4 billion.

HP executives hinted that they might step up patent enforcement at an analysts' meeting in Palm Springs last September, said Roger Kay, an analyst at technology market research firm IDC. "They said at the time that, 'We're not getting all the juice out of our patent portfolio that we should,' " Kay said. "A successful lawsuit would be one way to increase revenues."

Both HP and Gateway shares gained ground Thursday on the New York Stock Exchange. HP rose 77 cents to $22.39. Gateway gained 38 cents to $5.40.

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