Compaq, Packard Bell Drop 2 Lawsuits
Compaq Computer Corp. and Packard Bell Electronics Inc. settled a bitter 10-month legal feud and agreed to drop lawsuits against each other, the judge in the case said Friday.
The battle erupted in April 1995, when Compaq, one of the top-ranked personal computer makers in the United States, alleged in a lawsuit that Packard Bell failed to disclose to customers that they might be buying a PC with used components.
Compaq said in the suit that Packard Bell disassembled many of its returned products and then used their parts in the assembly of products that were then sold as new.
After Compaq filed its suit, privately held Sacramento-based Packard Bell was hit with class-action lawsuits that it settled by agreeing to change its practices and pay nearly $4 million in legal fees.
In October, Packard Bell lashed back, suing Compaq for false advertising and defamation.
In the background was a feud between two fast-growing PC makers. Houston-based Compaq has been the largest PC-maker in the nation until recently, when fourth-ranked Packard Bell acquired Zenith Data Systems, making it No. 1.
Judge Roderick McKelvie of U.S. District Court in Delaware announced the settlement and canceled a trial that was scheduled to begin Monday.
There were no monetary damages to either side.
The settlement includes dismissal of Packard Bell’s libel charges against Ross Cooley, a Compaq senior vice president
Cooley reportedly said that Packard Bell President Benny Alagem was unable to take his company public because “investors fear that if Alagem and senior executives were to cash out,” Packard Bell would be left with nothing “but some Mexican factories and four Chinese engineers.”
Still pending is a patent lawsuit brought by Compaq against Packard Bell in U.S. District Court in Houston. In a court hearing in Delaware last year, Compaq revealed that it was seeking $450 million in damages in the suit, alleging Packard Bell has infringed three Compaq patents for power conservation, video display and high-speed switching.
Compaq Computer stock rose 62.5 cents to close at $51.875 on the New York Stock Exchange.
