HP to pay $445 million to settle lawsuits with EMC

Money may never change hands, however, if HP buys enough EMC kit

Hewlett-Packard and EMC said on Monday they have signed a five-year patent cross-licensing deal that will end four years of litigation between the two vendors. The settlement agreement calls for HP to pay EMC a US$325 million (N$445 million) "balancing" payment.

HP's payment obligation can be satisfied over the next five years through purchase of EMC software for internal use or resale, the companies said. HP spokesman Ryan Donovan says HP already uses EMC's VMware software internally and resells it to enterprise customers.

"They use some of our products, and we use some of theirs," Donovan says.

EMC sued storage management company StorageApps in 2000, claiming StorageApps' technology infringed EMC patents on creating "mirror" copies of system files. HP became involved in the dispute when it acquired StorageApps in 2001. In 2002, HP slapped EMC with a retaliatory lawsuit alleging that a range of features in EMC's Symmetrix, Clariion and TimeFinder products infringe on seven HP patents. HP later followed up with a second lawsuit against EMC, while EMC fought back with a set of counterclaims. A trial was expected to commence in late 2005.

HP lost a jury trial last May on EMC's case against StorageApps. HP agreed to enter arbitration to determine damages, but appealed the judgment of liability. Monday's deal, which ends all the legal cases between the companies over the patent disputes, dismisses the claims with no admissions of liability by either vendor.

Both companies say they expect the settlement to expand and strengthen their partnership and reselling arrangements.