By AP Business Writer
updated 10/7/2004 9:09:52 PM ET 2004-10-08T01:09:52

Eastman Kodak Co., poised to ask for more than $1 billion in damages from Sun Microsystems Inc., has reached an out-of-court settlement in a long-running patent dispute over the Silicon Valley company's Java programming language.

A federal jury in Kodak's hometown decided last Friday, after a three-week trial, that Java infringes on patents Kodak acquired when it bought Wang Laboratories Inc.'s imaging software business for $260 million in 1997.

The night before the trial's damages phase, which was to begin Thursday, the companies ended their two-year-old battle, according to court papers filed in U.S. District Court.

Neither Kodak nor Sun Microsystems would comment and it was unclear whether the terms of the sealed settlement would be released.

"All that's on the record is an order dismissing the case because the parties have a settlement agreement," said attorney Paul Yesawich, who represented Kodak.

Kodak had been prepared to request $1.06 billion in lump-sum royalties _ equal to half Sun Microsystems' operating profit from sales of computer servers and storage equipment from January 1998 to June 2001.

Sun Microsystems, based in Santa Clara, Calif., made its name selling servers that tie desktop computers together and host Web sites. Java, which it developed and first introduced in 1995, allows software to run on a variety of computing platforms, regardless of the operating system and including cell phones and other portable devices.

Sun Microsystems not only denied that any portions of Java infringe on Kodak's patents but argued that the photography company's patents were invalid.

Kodak's patents describe a method by which a program can "ask for help" from another application to carry out certain computer functions _ which is similar, it argued, to the way Java operates.

Kodak has in recent years been more assertive about protecting its intellectual property as it endeavors to turn hundreds of patents to its advantage in accelerating its transition from film photography into digital imaging.

Sun has been struggling since the dot-com collapse to bolster sales as systems based on inexpensive microprocessors and the Linux operating system become more powerful and more viable. The company has earned little from Java.

Shares in Kodak rose 4 cents to $34.29 in afternoon trading on the New York Stock Exchange. Sun shares fell 7 cents to $4.24 on the Nasdaq Stock Market.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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