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Intel and Dongjin Technologies Co Ltd yesterday settled a two-year-old lawsuit over claimed infringements of software copyrights.

The agreement comes a week before China and the United States are due to hold a strategic economic dialog. Vice-Premier Wu Yi will head a delegation to Washington to talk with US officials about trade and economic issues including intellectual property protection.

The two companies said yesterday they had reached a settlement and would drop all legal proceedings against each other, though they declined to reveal the terms of the settlement.

The settlement could set a precedent for the peaceful resolution of disputes between Chinese and American companies.

The case started in January 2005, when Intel brought Dongjin to a court in Shenzhen, where the Chinese firm is based, claiming Dongjin had copied the header files of Intel's Inter Dialogic System Release 5.1.1 software for communications cards. The devices are used at call centers, in Internet protocol telephony and faxing.

Intel asked for $7.96 million in compensation, which was equal to Dongjin's full-year revenues in 2004.

Three months later, Dongjin filed a counter-suit against Intel in a Beijing court alleging the company had a monopoly and demanded the court nullify the US giant's intellectual property rights to the header files.

Analysts said the world's largest chipmaker faced challenges from Dongjin in the area of communication technology integration (CTI), so it sued the Chinese company in a bid to stymie the latter's expansion.

As a result of its constant legal battles, Dongjin has failed to float any shares on the Shenzhen bourse.

Eagle Zhang, senior vice-president of the consulting firm Analysys International, said the CTI market had come out of a period of rapid growth, and that Intel had successfully checked Dongjin's expansion, so it was no longer worthwhile to devote so much energy to the suit.

As China's computer market grows, Intel may also have wanted to burnish its image.

"What I want to emphasize here is: We do not need to fear the rise of disputes. Even if there are disputes, it does not mean we must be enemies forever," said Moser Wang, director of strategic cooperation at Intel China.

In January 2003, Huawei, China's largest maker of telecom equipment, was sued by the US giant Cisco Systems for infringements of its intellectual property, but the two companies reached a settlement in October that year.

(China Daily 05/15/2007 page3)