3Com, the former owner of PDA maker Palm, has publicly distanced
itself from Palm’s troubles in a lawsuit against Xerox. 3Com is
letting investors know that it will be Palm that pays up in the
event of an award of damages in favour of Xerox, not 3Com, although
both companies are being sued jointly and severally.
The company announced, in response to media and investor
inquiries, that it is indemnified by Palm with respect to any
potential liability from the current patent litigation between
Xerox and Palm. The patent litigation relates to alleged
infringement of a handwriting recognition patent allegedly covering
Palm's use of Graffiti in its handheld computers.
Xerox originally filed its patent infringement lawsuit against
US Robotics Corporation in April, 1997, before 3Com acquired that
company and its subsidiary, Palm. In 2000, 3Com spun off Palm as an
independent, publicly traded company. As part of Palm's separation
from 3Com it agreed to indemnify and hold harmless 3Com against any
damages or losses from the Xerox lawsuit.
Xerox alleges wilful infringement of its patent, entitled
“Unistrokes for Computerised Interpretation of Handwriting.” Xerox
is seeking damages and hopes to permanently ban Palm from
infringing the patent in the future.
In 2000, the District Court dismissed the case, ruling that the
patent is not infringed by the Graffiti handwriting recognition
system used with Palm handheld computers. Xerox appealed the
dismissal. On 5th October 2001, an appeals court amended the ruling
and remanded the case to the District Court for further
proceedings. On 20th December 2001, the District Court granted
Xerox's motion for summary judgment that the patent is valid,
enforceable, and infringed. 3Com and Palm filed a Notice of Appeal
on 21st December 2001.
In connection with Palm’s separation from 3Com, Palm agreed to
indemnify and hold 3Com harmless for any damages or losses which
might arise out of the Xerox litigation.
