Lexmark, HP End Fight Over Dahlgren

Under the terms of the agreement, the printer rivals are dropping all outstanding litigation regarding Dahlgren's employment with HP, and HP has agreed to pay Lexmark $525,000 for stock options Lexmark paid to Dahlgren. As part of the deal, Dahlgren also is prohibited from recruiting Lexmark employees or intentionally interfering with Lexmark customer relationships worldwide until July 9, 2008.

The bitter battle began early last year after Dahlgren left Lexmark, where he played a key role in shaping the future of the company's vertical focus and workflow and document management solutions, and joined HP as senior vice president of worldwide enterprise sales for HP's $25 billion Imaging and Printing Group. At HP, Dahlgren reports directly to HP printing darling Vyomesh Joshi, who has a direct line to CEO Mark Hurd.

Shortly after Dahlgren joined HP in January, HP lawyers filed a pre-emptive lawsuit in a California superior court, contesting the legality of Dahlgren's noncompete agreement. While California courts typically don't recognize the legitimacy of noncompete agreements, Lexington, Ken.-based Lexmar fired back with a countersuit in the Kentucky court.

The battle went on to take various twists and turns, most notably last spring when the Kentucky court issued a preliminary injunction preventing Dahlgren from working for HP in North America for at least one year. As part of the agreement reached this week, Lexmark agreed that Dahlgren and HP had satisfied the requirements of that injunction.

"HP is pleased to have resolved all outstanding litigation with Lexmark in California and Kentucky relating to Bruce Dahlgren's joining HP," says Ryan Donovan, a spokesman for HP.

Lexmark issued similar sentiments in a statement.

"We are pleased with this settlement, which protects Lexmark's legitimate business interests," says Vincent Cole, Lexmark vice president and general counsel.