The nine-year old battle between Palm, Inc. and Xerox over handwriting recognition is now over. Palm will pay Xerox $22.5 million for a fully paid-up license for three Xerox patents, covering its text input Unistrokes technology, and a seven-year mutual agreement of 'patent peace' not to sue for infringement within mutually agreed fields of use.

Xerox first sued Palm predecessor Palm Computing back in April 1997, claiming that the Graffiti text-entry system used in its PDAs infringed on patents for Unistrokes , which allows users to input letters and numbers into personal data units with basic, one stroke movements.

Then in June of 2000, a judge dismissed the case, only to have that decision reversed the next year. A federal Court of Appeals in 2003 affirmed that Palm infringed in February 2003, at the same time it questioned aspects of the soundness of the patents.


                Xerox Unistrokes

The next year, in February 2004, Judge for United States District Court for the Western District of New York ruled one of the patents, No. 5,596,656, invalid, citing prior art that showed Xerox's unistroke system wasn't unique. At the time, the court said, "The prior art references anticipate and render obvious the claim."

Earlier this year, however, the U.S. Court of Appeals for the Federal Circuit in Washington sent the case back for reconsideration, saying the New York judge erred when he ruled the Xerox's patent invalid

Through much of these legal wrangling, Palm hedged its bets by changing handwriting recognition systems altogether in January 2003. The company licensed Communication Intelligence Corporation's (CIC) Jot for what became known as Graffiti 2 and stopped using Graffiti.

While many, including Palm, consider Graffiti 2 superior, there are still those who either miss or are fans of the original. The end of the handheld-maker's feud with Xerox could give Palm the option bringing Graffiti back to life once again.

Palm spokesperson Marlene Somsak, the company's VP of corporate communications, told PDAStreet she wouldn't want to speculate on this possibility. "The settlement does grant Palm complete design freedom when it comes to the selection of handwriting recognition software," she added, however, which leaves the option open.

Somsak emphasiszed how to early adopters Graffiti served as kind of secret handshake, as it was limited to a select community - the first PDA users: who found something new and even liked the idea of writing a J with a check mark. Graffiti 2 is far more natural to use and thus more accessible to new customers, however. You write a J as you would on a piece of paper for example.

So while there may be holdouts for Graffiti, Somsak indicates more natural handwriting recognition is what most users are looking for today.

Under the settlement, Palm's co-defendants, former subsidary and Palm OS developer PalmSource, and former parent company 3Com Corp. receive a full and unconditional release from the litigation.

Palm says it'll account for the license as a charge against earnings in its fourth fiscal quarter of 2006, while net proceeds of the agreement will be substantially offset in Xerox's second-quarter net income by costs related to the expected settlement of other legal matters.