Gateway Inc., the cow-motif company that made almost $4 billion last year selling personal computers, had decided to settle rather than pursue a patent-infringement trial in what appeared to be an increasingly cynical federal court.
"We are pleased that Gateway has finally settled this patent infringement case," Adams said. "We can now turn our attention to suing other infringers in the computer industry."
His attorney, Gregory Phillips, identified those targets as Sony, Dell and Micron, along with IBM and its formerly independent subsidiary Lenovo.
Terms of the settlement - including the amount Gateway paid Adams and whether the computer-seller acknowledged any wrongdoing - were not disclosed, though Phillips allowed that his client was "very satisfied."
All Gateway spokesman John Spelich would say was that "both parties, given the uncertainties of litigation, felt it was the best course to allow them to put this matter in the past and move forward."
Adams, a former IBM engineer and founder of Phillip M. Adams & Associates, had sought up to $150 million - triple the estimated licensing fee Gateway could have paid six years ago to use his fix for a floppy disk data-destruction flaw.
Instead, Adams in a 2002 U.S. District lawsuit contended that Gateway asked for demonstrations of Adams Detector- and Solution-brand programs, then allegedly applied the fixes to affected computers, violating both a nondisclosure agreement and Adams' patents.
Even before what was to have been a weeklong trial began on Monday, Gateway's case seemed in serious trouble. Last week, U.S. District Judge Ted Stewart - who was to conduct the bench trial - imposed sanctions on Gateway for alleged destruction of key evidence, and threatened an immediate judgment in Adams' favor if more evidence turned up missing.
In opening arguments Monday, Gateway attorney David Connors tried to repair the damage, promising his client would hold back nothing else from the court as the trial proceeded. "Gateway recognizes it made mistakes during the [evidence] discovery phase," he acknowledged.
Judge Stewart, in an interruption of Phillips' opening statement, underscored his determination to conduct a public trial. He notified attorneys that he was planning to unseal about 150 formerly secret trial documents filed in the case.
How important was that decision to spurring a settlement? Neither Adams, his attorneys nor Gateway would say.
However, sometime after opening arguments concluded, settlement overtures were made. By Monday night, a tentative agreement had been hammered out so that it could be formalized on Tuesday.
"The judicial system works," attorney Phillips said, adding special praise for the court because it "resolved countless [evidence] disputes and [refused] to take Gateway's claims of [document secrecy] privilege at face value by reviewing . . . tens of thousands of pages of allegedly privileged documents."
bmims@sltrib.com
