Gateway, Hewlett-packard settle patent dispute

Gateway and Hewlett-Packard (HP) this afternoon announced that the companies will cross-license each-other’s for a period of seven years. Under the terms of the agreement, Gateway will pay $47 million in license-fees damages on PCs that have infringed on HP’s patents.

Gateway said that it has attributed $16.7 million of the $47 million to resolving, "without admission of fault," allegations of past infringement in connection with PCs made from 1999 to the present. The remaining $30.3 million will be attributed to the seven-year cross license. A total of $25 million will have to be paid within seven business days following the execution of a definitive settlement and cross-license agreement, and $22 million a year after that date.

As a result of the agreement, the company will revise its results for the quarter and year ended 31 Dec 2005 to take a charge of $16.7 million. Gateway will revise its previously announced net income for 2005 from $49.5 million down to $32.8 million.