Gateway Shoots Back at HP in Patent Feud

It says Hewlett-Packard should barred from importing certain computers and monitors that it claims infringe on its patents. HP has filed similar requests based on its own patents, and the battle will only grow more costly with time.

Gateway this week fired the latest salvo in its ongoing patent dispute with Hewlett-Packard, asking the U.S. International Trade Commission (ITC) to prohibit HP from importing certain computers and monitors that Gateway claims infringe on three patents.

The filing is the latest shot in a legal tussle that began in March, when Hewlett-Packard Co., of Palo Alto, Calif., filed suit against Gateway Inc., claiming that the PC maker was refusing to pay licensing fees on six designs patented by HP. The patents covered such features as laptop hinges, cursors and a keyboard that requires a password.

Gateway, of Poway, Calif., sued HP in May over five patents related to multimedia features. Now, both companies also have asked the ITC to get involved. HP filed a similar claim in May, asking that Gateway be banned from importing computers and components that allegedly violate seven of HPs patents.

Gateway has asked the ITC to prohibit HP from bringing into the United States any foreign-made Pavilion notebooks, media center PCs and monitors related to three other patents.

According to Gateways 23-page complaint filed with the ITC, those patents involve technology relating to keyboard control of CDs, integrated multimedia and telecommunication features in a PC, and a diagnostic display on a monitor.

Gateway spokesman Ted Ladd said the company wants to settle the dispute with HP but will continue the fight in court if necessary. Ladd said he expects the ITC process to take at least 10 to 12 months.

HP filed its initial complaint through its Hewlett-Packard Development Co., which was created last year to improve the licensing of HP technology. According to HP, Gateway licensed technology from Compaq Computer Corp.—which HP acquired in 2002—but kept using the technology after the license expired in 1999.

HPs allegations also involve eMachines Inc., which Gateway bought in March.

/zimages/4/28571.gifRead more here about the eMachines buy and its significant impact on Gateways change in direction.

Joe Beyers, vice president of intellectual property licensing at HP, said that while negotiations with Gateway continue, HP will push the case forward.

"We feel we have a very strong case against Gateway that covers all of their products, including desktops, laptops and servers," Beyers said.

He also said HPs intellectual property unit has about 100 projects ongoing and that the Gateway issue is the only one involving litigation. The others involve the licensing of technology to other companies.

Roger Kay, an analyst at International Data Corp., said that given the size and resources of HP, "this case is a mismatch."

"HP has a lot of hooks in the water," said Kay, in Framingham, Mass. "HP has a stated policy to get as much out of their patent licenses as possible, something they feel they hadnt been doing before."

The HP-Gateway battle is still early in the process, but the longer the dispute goes on, the more costly it could get, he said, adding that those costs can tumble down into the prices of product and services. For the companies themselves, a protracted legal battle can chip away at time and resources.

"Lawsuits are no doubt very distracting to management," Kay said. "Lawsuits are a nightmare. Every company incurs them, but they try to settle them. Otherwise, it becomes a war of attrition."

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