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Cisco, China's Huawei Settle Lawsuit

Networking giant Cisco Systems agreed Wednesday to settle its lawsuit against Chinese rival Huawei.

Under the deal, which finalizes a tentative agreement reached in October, Huawei will revise its command-line interface, user manuals, help screens and some source code to address Cisco's concerns. Financial terms were not disclosed, though each party must pay its own legal fees.

"The completion of this lawsuit marks a victory for the protection of intellectual property rights," said Mark Chandler, Cisco's general counsel. "We are pleased to conclude the litigation as a result of the steps that were taken to address our concerns."

Stanley Young, an attorney representing Huawei, said his client welcomed the final resolution to the case.

"Huawei certainly looks forward to competing in the marketplace on its merits," he said.

Huawei, founded by a former Chinese army officer, is trying to jump into the corporate router and switch market that Cisco dominates. Last year, Huawei and 3Com announced a joint venture to develop and manufacture enterprise-class networking equipment.

The lawsuit, originally filed in January 2003 at the U.S. District Court in Marshall, Texas, claimed Huawei and two U.S.-based subsidiaries not only copied protected parts of Cisco technology but also infringed on at least five patents.

The infringements, according to the lawsuit, ranged from the word-for-word copying of Cisco technical documentation to the programming code, including sections that were used by Cisco for testing but are nonfunctional in the final products.

In September, the companies announced a six-month stay in the lawsuit pending a third-party review of Huawei's products. That was extended in April.

At the time, Huawei had already discontinued the sale of at-issue products and agreed to sell only new and modified equipment. It also agreed to submit units for review by a neutral expert.

Shares of Cisco were down 49 cents to $20.22 in late trading Wednesday afternoon on the Nasdaq Stock Market.

Copyright © 2004 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.

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