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Microsoft settles infringement suit

Company agrees to license key networking method from Alacritech after start-up hit the software giant with an injunction.

Microsoft and Alacritech have settled a dispute over networking technology the software giant plans to use in future versions of Windows.

Alacritech, which sued Microsoft for patent infringement last year, announced the settlement Wednesday. The dispute centered around Microsoft's "Chimney" technology, which the software giant said it developed independently, but which Alacritech said was based on its own intellectual property.

The start-up, based in San Jose, Calif., won a preliminary injunction in April that temporarily blocked Microsoft from incorporating Alacritech's patented networking interface into new versions of Windows Server 2003 and Longhorn, the next version of Windows.

"Today?s announcement ensures that Microsoft customers and partners will be able to realize improved application, server, and network performance with Windows Server 2003," Microsoft said in a statement. "As part of this agreement, we have resolved all outstanding litigation with Alacritech."

The companies did not disclose the financial details of the settlement or the fees Microsoft agreed to pay to license Alacritech's technology. As part of the cross-licensing settlement, Alacritech will also have access to certain patented networking technology from Microsoft.

In addition, Broadcom, which builds communications chips for machines that run Windows, signed a cross-licensing agreement with Alacritech, the company said.

Alacritech's technology is a networking interface created to efficiently process Internet traffic. The company says the product, a combination of hardware and software, can eliminate system and network bottlenecks and help shuttle data through Ethernet-based networks. The technology is particularly useful, the company said, as bandwidth speeds increase and ever more data travels over the Internet.

Chimney is a program to support hardware that accelerates networking using the Internet's TCP/IP standard. Microsoft has said that it developed Chimney independently and that it first began to discuss it publicly in 2003.