Palm Allowed To Challenge Xerox Patent

Palm received a partial reprieve in a patent infringement case Thursday, when a judge ruled it has a right to challenge a patent owned by Xerox for handwriting recognition software.

While the U.S. Court of Appeals in Washington upheld a ruling that Palm infringed on Xerox's patent, it gave Palm an additional chance to show the patent is invalid.

In December 2001, a federal court in Rochester, N.Y., ruled that Palm's handheld organizers, which use handwriting technology marketed as "Graffiti," infringe on patents held by Xerox.

In a subsequent hearing a federal judge ordered Palm and 3Com Corp., which spun off Palm, to post a $50 million bond to cover the potential damage that may occur during the appeal period. Palm has been able to continue selling devices with the software until the dispute is resolved.

"We believe strongly Xerox will continue to prevail on this issue," Xerox spokeswoman Christa Carone said.

She said the appeals court found Palm infringed on the patent, but asked the district court to go back and do more analysis to determine the validity of the patent.

Carone said that if the lower court finds the patent is valid, Palm will have to stop selling devices with the handwriting recognition software in dispute.

Officials at Palm weren't immediately available to comment.

Palm shares rose 7 cents to close at $13.58 Thursday on the Nasdaq Stock Market, while Xerox shares fell 31 cents to $8.94 on the New York Stock Exchange.

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