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Lenovo Group sues Clevo, for alleged infringements

PC giant claims local company violating 1990 IBM agreement

Lenovo Group sues Clevo, for alleged infringements

Lenovo Group Ltd., the world's third- largest personal-computer maker, sued rival Clevo Computer Co., claiming the Taiwanese company infringed two patents for PC functions and owes millions of U.S. dollars in licensing royalties.
The lawsuit was filed March 2 in federal court in New York. Lenovo, which bought International Business Machines Corp.'s personal-computer business in 2005, claims Clevo isn't making payments under a 1999 agreement with IBM scheduled to run through December 31. As part of the acquisition, IBM granted Lenovo the right to collect licensing fees under the contract with Clevo.
Lenovo joins LG Electronics Inc. and Samsung Electronics Co. in filing suits against Taiwanese computer makers for patent infringement. South Korea's LG in July won a suit against Taiwan's Quanta Computer Inc. and Compal Electronics Inc.
Taipei-based Compal, the second-largest notebook computer maker after Quanta, is involved in a dispute with Samsung over software used for the output of data from notebook keyboards.
Taiwanese companies make about four in five of notebook computers shipped by customers including Hewlett-Packard Co., Dell Inc. and Apple Computer Inc., according to researcher DisplaySearch.
Clevo, which owns the Buynow retail outlet chain in China selling personal computers and electronics, was scheduled to pay US$3 million on August 31, 2006, and another US$3 million by August 31 this year.
The Taipei-based company has failed to pay "despite repeated demands for payment from IBM and Lenovo, and despite repeated assurances of payment by Clevo," Lenovo said in the complaint.
Terminated agreement
Geraldine Kan, Lenovo's Singapore-based spokeswoman, declined by telephone today to comment on ongoing litigation.
Clevo today said Lenovo didn't officially inform it about the rights transfer, and it delayed the 2006 payment due to "an uncertainty of the owner of the royalty," as both IBM and the Chinese company asked it for the payments, the company said in a statement to the Taiwan Stock Exchange.
On January 5, Clevo said it was terminating the agreement, according to the suit. Even so, Clevo owes a portion of the 2007 payment, which is about US$41,059.89, in addition to the 2006 fee, Raleigh, North Carolina-based Lenovo said.
Without the agreement, Clevo is infringing two patents controlled by Lenovo, according to the suit.
One patent, issued in 1996, is for a computer system with a single switch to turn it on or off, or to suspend or resume functions. The other, also issued in 1996, is for power management within a computer. Both were originally issued to Armonk, New York-based IBM.
Lenovo, China's biggest personal-computer maker, is seeking the contract payments, a court order to block Clevo from using the patented technology, and other cash compensation.