Cognos and Business Objects Settle Patent Infringement Lawsuit - TheStreet

Cognos

(COGN)

said it will pay

Business Objects

(BOBJ)

$24 million to settle a patent infringement lawsuit, and the company also reaffirmed its first-quarter and full-year guidance.

Cognos, a business software company, agreed to pay $10 million up front and quarterly payments of $1.75 million over the next two years to settle the lawsuit filed on May 5, 2000, alleging that the company's Impromptu software infringes on a patent held by Business Objects. Also, the companies have agreed to a five-year moratorium on patent litigation.

In a press release, Cognos said the agreement specifically reaffirms that the company makes no admission of guilt. Cognos' CEO Ron Zambonini said, "We stand firm in our position that the Business Objects patent is invalid and unenforceable against Cognos. However, we felt that the opportunity to settle was best for our business during a time of great business momentum."

In response, Business Ojects said it continues to believe that the patent in question is valid and enforceable, and it believes that the value of its patented technology has been recognized.

Cognos said it plans to include a special charge of $23.3 million in 2002 to reflect the settlement, dropping its earnings after tax for the year to $19.4 million from $36.2 million and its full-year EPS to 21 cents from 40 cents. The settlement will have no impact on the company's 2003 results, and Cognos reiterated its first-quarter and full-year guidance offered during its April 10 conference call.

Shares of Cognos were recently climbing 3.2% to $22.80 in premarket trading after closing at $22.10 Friday. Shares of Business Objects were up 5.5% to $30.40 on the news after closing at $28.82 Friday.