HP, Gateway Tussle Over Intellectual Property

The International Trade Commission on Monday said Gateway infringed on HP intellectual property by importing PCs that violated two HP patents related to the use of parallel ports for printing. At the same time, the ITC also dropped HP complaints that Gateway violated patents related to how processor speed is set and how PCs can be booted from a CD-ROM. Another three counts were dropped earlier by HP.

Gateway on Tuesday called the HP win a "Pyrrhic victory" because the parallel port issues were based on outmoded technology. A Gateway spokesperson said nearly everyone now uses USB or network connections for printing.

HP called the ruling a victory. A company spokesperson said that no matter which printer connection people use, the point is that Gateway violated HP patents and must stop importing desktop PCs, notebooks and servers that use that HP technology and are sold under the Gateway name.

And the PC rivals&' intellectual-property fight isn&'t stopping there.

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The HP spokesperson said the Palo Alto, Calif.-based IT giant is appealing the ITC's dismissal of its complaints against Gateway over the processor speed and CD-ROM booting issues. HP also filed a new complaint with the ITC on July 6, alleging that Gateway violated other HP patents, many of which are related mainly to portable PCs. These include patents relating to the editing gap between files when recording to a CD or DVD disk, the reduction of power consumption by powering down a monitor, the reduction of power consumption by changing the processor clock frequency, the scaling of graphics on an LCD panel and spill-resistant keyboards.

Late last week, the ITC, after a 30-day review period, ruled that HP's case met the criteria for a formal investigation. An ITC spokesperson said the next step is for a judge to set a schedule to determine whether Gateway infringed on HP patents. The ITC may or may not accept the judge's recommendation, the spokesperson said.

Meanwhile, Gateway hasn&'t been idle. The company has a complaint before the ITC that accuses HP of violating Gateway intellectual property related to Media Center PCs. The Gateway spokesperson said the Irvine, Calif.-based company expects a ruling on this case on Oct. 7.

Industry analyst Rob Enderle of the San Jose, Calif.-based research firm Enderle Group, in a report examining the HP-Gateway disputes, described one vendor going after another over intellectual property as being on the list of "running with scissors behavior." Vendors typically have had a gentleman's agreement not to pursue intellectual property disputes because of the risk that they could spiral out of control, Enderle wrote.

The HP action against Gateway was started by former HP CEO Carly Fiorina, who Enderle wrote was attempting to mine HP's patent portfolio "and apparently either didn't know of, or chose to disregard, the agreement not to do this that existed between the vendors. HP did win on two of seven counts, but for DMA technology no longer enabled in either PCs or printers in the general market."