HP sues Acer for patent infringement

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LOS ANGELES/TAIPEI (Reuters) - Hewlett-Packard Co. said it had sued Taiwan computer maker Acer Inc. for patent infringement, pressuring Acer shares.

Goldman Sachs analyst Henry King said the lawsuit, which aims to stop Acer from selling some products in the United States, could pressure Acer's already-slim profit margins there.

``Acer has become a threat that leading PC vendors cannot afford to neglect,'' he said in a research note. ``We understand why competitors would desire a halt to Acer's expansion in the U.S. market.''

Shares in Acer, which is due to report earnings later on Wednesday, were down 2 percent to T$63.00 at 0425 GMT on Wednesday, underperforming the benchmark TAIEX index, which declined 0.92 percent, although MSCI's index of IT stocks, down 1.4 percent, indicated a broad sell-off in the sector.

The lawsuit, filed in a Texas federal court on Tuesday, seeks to stop Acer from selling some products in the United States, including desktop and notebook computers, and media centers and related products, because HP alleges they use its patented technology.

The five U.S. patents listed in the lawsuit were issued between 1997 and 2003.

HP, the world's top PC maker, said in a statement it ``is taking necessary action to protect its intellectual property against unauthorized use'' by Acer, the world's No.4 PC maker.

The patents relate to optical data storage, circuits and methods for reducing computer system power consumption, multiple processors in computer systems, and an improved method for attaching devices to a digital serial bus, which allows communication between electronic systems.

An Acer spokeswoman had no immediate comment on the lawsuit, but said the company may come out with a statement later in the day.

The firm is expected to announce its 2006 full year earnings after market closes on Wednesday in Taiwan.

HP may have taken the step to counter Acer's growing threat on the global stage, with the lawsuit aimed at slowing down its momentum in North America, which now takes up 20 percent of its sales, said JP Morgan analyst Alvin Kwock.

``This is a sign that they are recognizing Acer's threat, but it should not affect Acer's financials,'' said Kwock.

Acer told Reuters on Tuesday it is aiming to overtake China's Lenovo for the spot as the world's third biggest PC seller by the end of this year.