RealTime IT News

NetGear to Settle Speed Suit

NetGear's claim to speed has cost it some money.

NetGear will settle a class-action lawsuit that challenges its data-speed claims, according to documents filed with the Securities and Exchange Commission (SEC).

The wireless router and gateway maker still denies any wrongdoing, but "believes the settlement is in the best interest of NetGear and its stockholders to avoid the distraction and expense of continued litigation."

The settlement, which still requires a judge's approval, has several parts.

In addition to including a disclaimer about wireless signal rates on its packages, user manuals, press releases and ads, NetGear will give the suit's plaintiffs a 15 percent discount on future purchases from its online store.

Santa Clara, Calif.-based NetGear will also donate $25,000 worth of its products to a local nonprofit charity of its choice. The largest expense in the proposed settlement is NetGear's willingness to pay up to $700,000 in attorneys' fees and costs.

NetGear said it set aside $600,000 for the estimated cost of the settlement in its most recent quarter. It also expects to increase the litigation budget line by approximately $130,000 in the fourth quarter.

A hearing has been scheduled for March 21, 2006, to approve the terms of the agreement.

The legal action was originally filed in Superior Court of California on June 10, 2004, by Lev Zilberman on behalf of consumers who bought their products in the United States.

NetGear competes against several players for home and small business Customers, including the Linksys division of Cisco , Belkin, 3Com and D-Link, among others.