Mar 25, 2004 (01:03 PM EST)
HP Sues Gateway For Patent Infringement

Read the Original Article at InformationWeek

SAN JOSE, Calif. (AP) -- Hewlett-Packard Co. filed a patent infringement lawsuit Thursday against Gateway Inc., alleging its rival refused to pay licensing fees on six HP patented designs.

Alleged culprits included laptop hinges, keyboards that require passwords--even the cursor that points to icons on a computer's video display.

According to HP attorneys who filed in San Diego federal court, Poway-based Gateway paid licensing fees from 1994 to 1999 to Compaq Computer Corp., which HP acquired in 2001. After the first licensing agreement expired in 1999, HP attorneys say, Gateway kept using patented designs but did not pay for them.

Some of the patent infringement claims in HP's lawsuit involve eMachines Inc., which Gateway acquired March 11. HP says eMachines failed to pay Compaq, and then HP, for use of its intellectual property starting in the late 1990s.

"We would be happy to have Gateway take a license right away and put all this behind us--we'd love that to be the outcome," said Joe Beyers, vice president of the 50-person intellectual property licensing division at Palo Alto-based HP. "But given that we were in this situation, we're showing that HP is serious about adequately protecting and getting fair value for our inventions and intellectual property."

Gateway spokesman David Hallisey said company policy forbade him from discussing details of the lawsuit. But he noted, "We have every intention of defending ourselves vigorously against these claims."

HP, which was suing for attorneys fees and back payment on licensing fees, would not say how much Gateway allegedly owed, but one analyst said an award could be in the tens of millions of dollars. HP is asking the court to award triple damages, "in view of the reckless, willful, and deliberate nature of Gateway's infringement," according to court records.

The lawsuit is one of the first to come out of HP's 3-month-old intellectual property licensing division.

HP, which has 21,000 patents worldwide and ranked fifth for the number filed in 2003, has been aggressively boosting its intellectual property portfolio since Carly Fiorina spearheaded the "Invent" marketing campaign in 1999.

Although IBM Corp., Intel Corp., and other technology giants have long sued or threatened to sue rivals over patent infringement, the strategy is risky.

In the last decade, tech companies have dramatically increased the amount of parts and services that they purchase from each other, and lawsuits could damage relationships between suppliers and vendors.

That's especially true for HP, which sells its computer and printing products to rival computer makers, and Gateway, which doesn't spend as much on research and development as Dell Inc. or bigger competitors.

"HP and Gateway really need each other," said Martin Reynolds, vice president of San Jose, Calif.-based research firm Dataquest. "A lot of players in this industry are cross-licensing each other. You don't want things to get too ugly."