Number one PC maker Hewlett-Packard has sued Gateway over alleged patent infringements in a spat that could shake up the IT world's tangled web of alliances.
The lawsuit claims Gateway "recklessly" infringed on six patents related to PC design, involving one-inch-thick laptop computers, computer cursors and power management, among other features. HP is seeking compensation for back payments on licensing fees, legal costs and a framework for future compensation, but the company didn't specify figures. Industry observers say compensation could run into tens of millions of dollars.
Gateway paid licence fees to Compaq Computer from 1994 to 1999, before Compaq was acquired by HP. The suit also involves eMachines, recently acquired by Gateway, which was involved in a patent licensing dispute with Compaq beginning in the early 1990s.
Gateway denied the charges and said it would defend itself vigorously in the case.
Patent lawsuits are not common in the PC industry, with smaller companies routinely agreeing to pay licence fees to big patent holders such as IBM and HP rather than face potentially catastrophic legal costs. The companies with the biggest intellectual property holdings tend to reach cross-licensing agreements rather than go to court; companies stockpile patents partly to protect themselves from lawsuits by other patent holders.
HP says it holds about 6,000 patents related to PCs out of a total of 21,000 worldwide, and is ranked fifth for patents filed in 2003. Gateway is the third-largest PC maker in the US, far behind Dell and HP, and the eighth-largest in the world.
The lawsuit is the first action of HP's three-month-old intellectual property licensing division, and the company said it was partly intended to make an example out of Gateway. Joe Beyers, vice president of the IP division, said HP would prefer licence fees from Gateway, but intended to show the company was "serious" about protecting its property, according to reports.
Patents have begun playing an increasingly important role in the software world, with a proposed European Union directive potentially opening the door to wider software patents in the EU, according to critics. Opponents of software patents - currently not allowed in Europe, but common in the US - say they are allowing large companies to dominate the software world as they do the PC industry.
A browser patent licensed to Eolas was responsible for a $521 million court judgement against Microsoft, but was later provisionally rejected by the US Patent and Trademark Office after a much-publicised review of its original approval.
HP did not immediately respond to requests for comment.