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Palm Ordered to Post $50 Million Bond in Xerox Patent-Infringement Case

Tuesday, February 26, 2002

Press release from the issuing company

ROCHESTER, N.Y--Feb. 25, 2002--Following a December ruling that Xerox Corporation's Unistrokes patent is valid and was infringed by Palm Inc. and 3Com Corp.'s handheld electronic organizers, the U.S. District Court on Feb. 22 ordered Palm and 3Com to post a $50 million bond with the court. Palm and 3Com are appealing the judge's Dec. 20, 2001, ruling for Xerox's patent validity. Should Xerox prevail on that appeal, the $50 million bond "will ensure that Xerox is able to collect at least some, if not all, of the damages it will suffer as a result of 3Com's infringement during the appeal period,'' wrote Judge Michael Telesca, U.S. District Court for the Western District of New York. The $50 million bond only covers the potential damages that will accrue during the appeal period. It does not cover the entire period that Palm and 3Com have been infringing Xerox's patent. The judge denied Xerox's motion for an injunction that would have prevented Palm from selling its electronic organizers during the appeal period, saying Xerox would not be irreparably harmed if sales continue. However, the $50 million bond still has the same effect of protecting Xerox's interests during the appeal period, and the denial of an injunction is appealable by Xerox. If the Court of Appeals rejects Palm and 3Com's appeal, the next step is for the trial court to determine the amount of damages for past infringement of the patent. If the infringement is determined to have been willful, the court can triple the amount of damages due to Xerox. Both Palm and 3Com are jointly and separately liable. In April 1997, Xerox sued U.S. Robotics, later acquired by 3Com, asserting that the handwriting recognition technology marketed as Graffiti and used in Palm handheld devices infringed a Xerox patent received on Jan. 21, 1997. The technology in question, known as Unistrokes, was invented at Xerox's Palo Alto Research Center. The Xerox patent has been found valid by the court and by a 1999 re-certification from the U.S. Patent and Trademark Office following reexamination of the Unistrokes patent. "We continue to serve notice that Xerox will always take the appropriate actions to protect its valuable patents from unauthorized use and infringement,'' said Christina Clayton, Xerox general counsel.




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