Intersil, Proxim Resolve 802.11b Patent Spat

Two Silicon Valley-based companies fighting over the rights to products based on wireless standard 802.11 Tuesday have put aside their differences.

Sunnyvale, Calif.-based Proxim and Milpitas, Calif.-based Intersil said they have resolved all pending patent-related litigation between the two companies that pertain to their involvement in wireless local area networking (WLAN) .

Both company’s products are becoming popular because of the rise in wireless home networking.

Under the terms of the agreement, Proxim and Intersil agreed to dismiss all claims against each other, including lawsuits before the International Trade Commission and Delaware and Massachusetts Federal Courts.

As part of the confidential settlement agreement, the two companies have entered into a patent cross-license agreement for their respective patent portfolios and Intersil will make a one-time payment of $6 million to Proxim. The company said it would spend about half of that amount to pay off legal fees and other litigation-related expenses.

The two companies have also entered into a product supply agreement defining the terms under which Proxim will be able to purchase 802.11 products that use Intersil’s PRISM WLAN chipsets.

“We believe that this agreement will help both companies benefit from the expected growth and expansion of the wireless LAN market well into the future,” Intersil president and CEO Rich Beyer said in a statement.

The trouble started in May 2001, when Intersil filed a lawsuit with Cisco Systems saying Proxim violated some of its WLAN patents.

Intersil and Cisco sought damages, costs and attorneys fees from Proxim based on “breach of contract and unfair competition,” according to an Intersil filing with the Securities and Exchange Commission at the time.

Earlier that year, Proxim filed patent lawsuits against six companies that sell direct sequence WLAN products and services.

In addition to Intersil and Cisco, suits were also filed against 3Com , SMC Corp., Symbol Technologies and Wayport.

In August 2002, Proxim announced that it settled patent-related litigation with Agere Systems, Inc. as part of the acquisition of the ORiNOCO equipment business.