August 27, 2008

LG and Quanta Agree to Negotiate Royalties

By From news reports

LG Electronics said Tuesday that it had agreed with Quanta Computer, a Taiwan company, to end eight years of fighting over patents and begin negotiations on royalties that Quanta would pay.

The agreement came after a U.S. Supreme Court ruling in June in favor of Quanta, sealing a case that centered around a downstream use of patented technology.

The patented technology allows data transfers between computers and peripheral devices like printers, LG said.

LG in 2000 accused Quanta, the world's largest maker of notebook computers, of infringing its patents through the use of microprocessors and chip sets of Intel, which is paying licensing fees to the Korean company. Quanta said it should not be forced to give royalties because Intel already pays.

LG had an agreement with Intel that allowed Intel to make those components but explicitly barred it from mixing them with non-Intel parts.

Quanta, the world's top contract laptop PC maker, bought the components from Intel and used them to make notebook computers, which led LG to sue Quanta for infringing the patents - not of the chips and chip sets themselves but "systems and methods" of using them.

The Quanta side had argued that because LG had collected its royalties from Intel, Quanta owed no further payment. But as part of the deal Tuesday, Quanta agreed to pay royalties for its peripheral component interconnection technology.

The U.S. Supreme Court had ruled that LG's license agreement with Intel did not restrict Intel's rights to sell components to purchasers who intended to combine them with non-Intel parts.

Patent experts have said that companies could raise royalty rates because of the new ruling.

LG said in a statement that the company and Quanta would drop all outstanding lawsuits.

"Despite the U.S. decision, the agreement means that Quanta acknowledges LG's technology," Lee Jeong Hwan, head of LG's intellectual property center, said in the statement. Carol Hsu, a spokeswoman for Quanta, declined to comment.

LG shares fell lost 1.89 percent, compared with the broader market's 0.79 percent loss.

Shares in Quanta, which makes PCs for customers including Hewlett Packard and Dell, fell 0.41 percent, compared with the Taipei market's 0.94 percent drop.

Originally published by Reuters, Bloomberg.

(c) 2008 International Herald Tribune. Provided by ProQuest LLC. All rights Reserved.