Minor issues on outmoded printer-related patents to have no practical impact
on Gateway customers or product shipments
IRVINE, Calif., Aug. 9 /PRNewswire-FirstCall/ -- Gateway, Inc. (NYSE: GTW)
is pleased with an International Trade Commission (ITC) ruling Monday that
rejected the majority of patent claims made by HP against Gateway, and awarded
HP a Pyrrhic victory on two outmoded printer technology claims.
Gateway said the ruling will not disrupt shipments to customers, retail
partners, or professional clients of its Gateway-branded models for the
balance of this year, and that the company has ample time to make any
necessary changes to eliminate any risk of disruption next year. eMachines
systems should not be implicated by the initial determination in any event,
according to the judge's recommendation.
"We're very pleased with the result as we won outright on five of the
seven patents HP asserted, and saw the remaining two reduced to only a few
claims directed at unused, legacy technology," said Wayne Inouye, Gateway
president and CEO. "We also have an ITC case against HP for infringing a
Gateway patent involved in Media Center PCs, and look forward to prevailing on
our patent claims."
Monday's determination was the result of HP's decision in 2004 to assert
seven patents against Gateway in the ITC. In the course of this proceeding,
three of HP's patents were dismissed prior to trial, and the judge overseeing
the action determined Monday that Gateway prevailed outright on two other HP
patents.
On the two remaining, related patents, the court found that 15 of HP's
19 claims were invalid. The four claims that survived, the court ruled, were
infringed because Gateway PCs contain legacy circuitry that would allow use of
an outdated printer technology using the parallel port. In many of its
products, Gateway had phased out parallel ports altogether as unnecessary,
legacy hardware. In those that remained, Gateway had disabled the use of
"DMA" transfers, the technology targeted by HP's patents, in an attempt to
eliminate HP's claims of infringement. Today, the vast majority of PC
customers print either through USB connections or through a network. And
today's Microsoft parallel port drivers do not support DMA.
Gateway will appeal part of an initial determination on the basis that an
administrative law judge reached an incorrect conclusion on infringement, and
regardless of that, the patents asserted by HP are not valid.
Monday's initial determination is not final, and if the ITC were to accept
the judge's findings, any resulting order would not take effect until
February 2006, and is not expected to cover eMachines systems. Gateway has
time to make any necessary changes to any Gateway-branded imported product to
eliminate any new argument for infringement. The changes contemplated are not
expected to impact customers, nor diminish system functionality or
performance.
"Our history as a company makes it clear we respect the intellectual
property of others, and that we expect others to respect ours," Inouye said.
"What this is really about is HP's strategic decision to attack us in the
courts as another means of competition, given that they have lost significant
ground to Gateway in retail. We're disappointed that HP chose to travel this
road but we have no choice but to reply in kind."
At present, Gateway and HP are engaged in intellectual property litigation
in five venues around the nation. The next case to come to decision will be
Gateway's claim that HP Media Center PCs infringe Gateway's intellectual
property. That ITC decision is due in October 2005.
About Gateway
Since its founding in 1985, Irvine, Calif.-based Gateway (NYSE: GTW) has
been a technology pioneer, offering award-winning PCs and related products to
consumers, businesses, government agencies and schools. After acquiring
eMachines in early 2004, Gateway is now the third largest PC company in the
U.S. and among the top ten worldwide. The company's value-based eMachines
brand is sold exclusively by leading retailers worldwide, while the premium
Gateway line is available at major retailers, over the web and phone, and
through its direct and indirect sales force. See http://www.gateway.com for
more information.
Special note
This press release contains forward-looking statements that involve risks
and uncertainties, as well as assumptions that, if they do not materialize or
prove incorrect, could cause Gateway's results to differ materially from those
expressed or implied by such forward-looking statements. All statements,
other than statements of historical fact, are statements that could be
forward-looking statements, including any projections or preliminary estimates
of earnings, revenues, or other financial items; any statements of plans,
strategies and objectives of management for future operations; the extent of
seasonal changes in demand; any statements regarding proposed new products,
services or developments; any statements regarding future economic conditions
or performance; statements of belief and any statement of assumptions
underlying any of the foregoing. The risks that contribute to the uncertain
nature of these statements include, among others, risks related to shifting
our distribution model to third-party retail; competitive factors and pricing
pressures, including the impact of aggressive pricing cuts by larger
competitors; general conditions in the personal computing industry, including
changes in overall demand and average selling prices, shifts from desktops to
mobile computing products and information appliances and the impact of new
microprocessors and operating software; the ability to simplify the company's
business, change its distribution model and restructure its operations and
cost structure; component supply shortages; short product cycles; the ability
to access new technology; infrastructure requirements; risks of international
business; foreign currency fluctuations; risks relating to new or acquired
businesses, joint ventures and strategic alliances; risks related to financing
customer orders; changes in accounting rules; the impact of litigation and
government regulation generally; inventory risks due to shifts in market
demand; the impact of employee reductions and management changes and
additions; and general economic conditions, and other risks described from
time to time in Gateway's Securities and Exchange Commission periodic reports
and filings. Gateway assumes no obligation to update any forward-looking
statements to reflect events that occur or circumstances that exist after the
date on which they were made.
SOURCE Gateway, Inc.
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Related links:
http://www.gateway.com
CONTACT:
Media, David Hallisey, +1-949-471-7703,
david.hallisey@gateway.com, or John W. Spelich, +1-949-471-7710,
john.spelich@gateway.com, both of Gateway, Inc.
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