Palm, Inc. has settled a patent infringement lawsuit filed by Xerox Corporation nine years ago. In April 1997, Xerox sued a predecessor to Palm, Inc., claiming that the handwriting-recognition technology marketed as Graffiti and formerly used in Palm OS handheld devices infringed a Xerox patent known as the Unistrokes patent.

The agreement affords Xerox and Palm "patent peace." Palm will pay Xerox $22.5 million for a fully paid-up license for three Xerox patents, including Unistrokes, and a seven-year mutual covenant not to sue for patent infringement within mutually agreed fields of use.

Palm will account for the license as a charge against earnings in its fourth quarter of fiscal year 2006. Under the settlement, Palm's co-defendants, including PalmSource, Inc., a wholly owned subsidiary of ACCESS Co., Ltd., and 3Com Corp. will receive a full and unconditional release from the litigation, and each is entitled to a fully paid-up license to the Unistrokes patent.