Compaq sues for patent infringement

"Compaq makes substantial investments in research and development," said Alan Hodel, a spokesman for the Houston, Texas-based Compaq. "eMachines is infringing patents that hurt those R&D investments." eMachines would not comment, though a spokesperson was aware of the suit.

Filed in the Southern District Court of Texas, the suit claims that eMachines and the two Korean conglomerates that own the company used technology patented by Compaq. The technology in question, including selectable resolution monitor systems and a system designed to boot from CD-ROM or tape, is basic to PC systems.

Nathan Brookwood, principal analyst with computer technology watcher Insite 64, thought eMachines merely grew too big too fast, and that the suit is designed to slow down the upstart PC maker. "When a company like eMachines comes along -- without cross-license protection -- and starts gobbling up chunks of the market, it has no defence against a patent suit," said Brookwood, adding that Compaq, Dell and other PC makers have already cross-licensed their technology to each other, preventing them from suing. That makes the suit an ideal option for Compaq -- one that it has admitted to using before to tame a rival that had cut into it profits.

According to Hodel, two of the patents asserted in Monday's complaint were used against another low-cost PC maker, Packard Bell, in November in 1994. The suit lasted almost two years, but then in June of 1996 Packard Bell reached a settlement to pay license fees for 5 years for use of the patents.

This time around the fight seems more like a grudge match -- Compaq had no discussions with its low-cost rival. "We saw no reason to talk to any of the defendants about the infringements," said Hodel.

Trigem Computer Inc. owns 51 percent of eMachines while Korean Data Systems owns the other 49 percent.