Hon Hai, FCI settle a patent dispute out of court

Taipei, March 30, 2004 (CENS)--Hon Hai Precision Industry and U.S. connector supplier FCI recently reached a settlement over a patent dispute, with Hon Hai agreeing to pay FCI an undisclosed amount of royalty.

Industry insiders estimated the compensation at millions of U.S. dollars, far lower than earlier estimate of US$30 million to US$200 million. Hon Hai executives pointed out that the charge would not undermine the company's planned profit goal for this year as it had allocated a fund for the spending.

Around two years ago, FCI USA, Inc. and FCI Americas Technology, Inc. filed a lawsuit against Hon Hai and its wholly owned Foxconn International over alleged Hon Hai infringement of their four U.S. ball grid array (BGA) connector patents.

The four patents have affected Hon Hai's Socket 478 connector compatible with Intel's Pentium 4 platform, one of Hon Hai's money-making connectors. Hon Hai plans to roll out Socket 755 connector in May this year. Fearing that the lawsuit would also impact marketing of the new device, the company decided to give in.

Hon Hai Chairman T.M. Kuo pointed out that his company decided to reach a settlement with FCI because it was under great pressure from a big customer, which is reported to be Intel. Kuo said the big customer is eager to deliver its products which contain the connectors in question.

Kuo said he was reluctant to settle this legal dispute because his company would win the victory in this lawsuit in the long run.