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Xerox Wins Case Against Palm and 3Com

21 Dec, 2001

Xerox Wins Case Against Palm and 3Com

Struggling handheld computer maker Palm Inc. and its former parent, 3Com Corp., infringed on a Xerox Corp. handwriting-recognition patent used in tens of millions of electronic organizers, a federal judge ruled Thursday. Xerox, based in Stamford, Conn., could gain a windfall in licensing fees from the ruling, the latest in a flip-flop legal dispute dating to 1997. The technology in dispute allows users to enter letters and numbers into personal-data units with simple, one-stroke motions. Xerox sued U.S. Robotics, later acquired by 3Com, in April 1997, claiming that the handwriting-recognition technology marketed as Graffiti and used in Palm, Handsprings and other handheld devices infringed a Xerox patent received on Jan. 21, 1997. U.S. District Judge Michael Telesca ruled that Xerox's patent for Unistrokes technology invented at its research center in Palo Alto, Calif., ``is valid and enforceable'' and was infringed upon by Palm and 3Com in devices that use ``Graffiti'' language. The ruling ends the liability portion of the lawsuit, clearing the way for Xerox to seek damages. The court would also decide whether Palm can continue to use the technology. The ruling ``vindicates our position that our handwriting-recognition patent was infringed,'' said Xerox's general counsel, Christina Clayton. ``Either Palm will have to cease production of its handheld organizer or license the technology from Xerox.'' Xerox has moved aggressively in recent years to defend what it sees as technology pilfered from its labs, especially after letting go of inventions such as the computer mouse and laser printer. ``We continue to serve notice that Xerox will always take the appropriate actions to protect its valuable patents from unauthorized use and infringement,'' Clayton said. The judge's ruling reinforces a 1997 certification from the U.S. Patent and Trademark Office validating the Unistrokes patent. Computer networking company 3Com last year spun off Palm, its high-flying hand-held computing device maker. Palm, based in Santa Clara, Calif., remains the worldwide leading maker of personal digital assistants but is struggling to return to profitability. The economic slump in 2001 led to a sudden drop in demand and a huge inventory glut. In November, the company cut its work force by 16 percent, or 250 employees. 3Com, based in San Jose, Calif., also has been struggling since it shed its modem and Palm handheld computer businesses.

Palm did not have an immediate comment on the ruling.

In after hours trading, Palm was down 15 cents to $3.31 after finishing regular trading on the Nasdaq Stock Market at $3.46, up 14 cents. 3Com rose 1 cent in after-hours trading after finishing the regular session down 32 cents to $5.77 on the Nasdaq.

Shares of Xerox rose 56 cents to $9.03 in regular trading on the New York Stock Exchange (news - web sites), then rose another 7 cents in after hours trading.

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