palmOne, PalmSource Settle Suit With Acer

palmOne and PalmSource have settled a joint suit against Acer. In September 2003, PalmSource filed a complaint against Acer in U.S. District Court for the Northern District of California, asserting claims arising out of a breach of contract regarding Acer's Palm OS License Agreement.

Acer became Palm OS licensee in May 2001. The company planned to tap the market for handheld computers in China and Taiwan. They released the first Chinese localized Palm OS handheld. The Acer s10 had a monochrome 160 by 160 screen, 16 MB of RAM, and runs a Chinese version of Palm OS 4.1. It also included memory stick expansion, MP3 playback and has a built-in voice recorder. PalmInfocenter even reviewed the first Acer s10 handheld.

Shortly after the release of the s10 the company began work on the S50 and S60 handhelds. The models improved on the S10 design by adding high resolution color screens. Acer originally planned to sell the devices in Europe and Asia, and later revealed they would become available worldwide. The handhelds went on sale in Europe and Asia, but never made it to the US. That was the last Palm OS related development to come out of the company.

In documents filled with the SEC, it was learned in April of 2004, that PalmSource and Acer have had major falling out. That action spawned a series of breach of contract lawsuits. PalmSource originally sought approximately $4.5 million in unpaid royalties and maintenance and support fees under the previous licensing agreement. (No. C03 04285 RMW)

Acer answered by filing a counterclaim seeking $4.9 million from PalmSource, including amounts Acer paid under the agreement. Acer alleged that PalmSource had breached the software licensing agreement by failing to provide development and marketing support. Acer further alleged the same conduct violated the implied covenant of good faith and dealing and PalmSource provided preferential treatment to Acer's competitors.

The case was first taken to Federal Court. On May 7, 2004, the Federal Action was voluntarily dismissed by stipulation of both parties. The case was still pending on the state level in the Santa Clara County Superior Court, (No. 1-04-CV-018484) and was settled outside of the courts on November 24, 2004.

The Settlement Agreement states Acer shall pay PalmSource a total of two million six hundred thousand dollars ($2.6 million) and releases PalmSource and palmOne from any further charges.

Thanks to the Voice of Reason for the tip.

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Nice Job, Nagel & Mace

Gekko @ 12/6/2004 6:18:34 PM #

Another one down - how many more to go?

Aren't you guys supposed to be attracting and retaining precious and scarce licensees? The Keystone Kops strike again.

RE: Nice Job, Nagel & Mace
Admin @ 12/6/2004 6:29:38 PM #
another million dollar victory for the legal community
RE: Nice Job, Nagel & Mace
Strider_mt2k @ 12/6/2004 7:29:14 PM #
Remember when it seemed like there were tons of new PalmOS handhelds getting ready to be released?

It's all changed to quickly...

RE: Nice Job, Nagel & Mace
Gekko @ 12/6/2004 7:40:36 PM #

Gentlemen - What you're hired for is to help the company. Does that seem clear to you? To help it, not to f*** it up.

RE: Nice Job, Nagel & Mace
james_sorenson @ 12/6/2004 7:48:13 PM #
Heh...nice foresight here:
Gained about 2.6 million dollars from a disgruntled licensee.
Lost a couple billion in potential future license holders.

Can we please NOT make signing a contract with Palmsource appear synonymous with dropping your neck in their teeth, please? Acer died so dang fast that you should have severed any connection with them no matter what unpaid bills there were. Looking like the CAUSE of the bankruptcy won't help.

James Sorenson

RE: Nice Job, Nagel & Mace
Admin @ 12/6/2004 7:56:56 PM #

The term has since come to be used to criticize any group for its mistakes, particularly if the mistakes happened after a great deal of energy and activity, or if there was a lack of coordination among the members of the group.

RE: Nice Job, Nagel & Mace
LiveFaith @ 12/7/2004 2:34:27 PM #
At least they collected the $2.6M instead of losing it all. On the surface the Acer suit did not sound too strong, but they needed a counter so that PSRC would not get the whole $4+M.

Pat Horne;
RE: Nice Job, Nagel & Mace
rcartwright @ 12/7/2004 4:57:14 PM #
I have to say there is just pleasing some of y'all. Either these guys are looting P1/PS, or when they protect the assets of the company (OS code, etc.) they are scaring off the the licensees. I have found that people will let me work for free as long as I like. If a licensee gets huffy over being required to pay to play, then thats a customer that PalmSource could do without.

The reality is that the handheld market has matured and there are not going to be a lot of consumer level Palm OS licensees. For better or worse, P1, AlphaSmart, Garmin and the few smartphone makers are all there are likely to be.

"The Anglo-Saxon-Scots-Irish people are the most warlike people in history, and their enemies forget it at their peril. "

RE: Nice Job, Nagel & Mace
twrock @ 12/8/2004 8:24:00 PM #
This is somewhat old news now considering the CMS acquisition plan, but I couldn't resist the post anyway. Besides, the CMS article makes this look all the more silly.

The incredibly skewed bias of some of the posters here is laughable. Simply put, if it has "Palm" in the name, it can't do anything right. Give me a break.

Did you somehow have access to a lot more data/information than the rest of us, or is your conclusion simply based on your bias with no evidence to back any of it up? Ok, I'll bite. Based on the information presented here and in the previous article about the Acer/Palm "falling out", please tell us how you have concluded that this is somehow the fault of Nagel & Mace?

Regarding Acer, my personal experience with a number of their products has relegated their brand to the "I will never again buy..." category. So maybe that has biased me. But I do find it interesting who is paying whom in the settlement.

Acer got what it deserves

RhinoSteve @ 12/7/2004 2:46:48 PM #
Frankly, Acer is no friend of any software developer. They are very similar to other classic predator manufacturing behemoths that are only interested in cranking out anything on a printed circuit board that makes money and the hell with who wrote the code that "just made it work."

In this business, you need a hardware partner that appreciates software and knows how to market it above a slick piece of industrial design and a cooked up product name. Frankly, it is my opinion that Acer moved into a market they had very little experience selling in and did the classic mistake of selling a “mini-PC.”

While others think this is abuse on PalmSource’s end, I view this more of a beaten wife getting her day in divorce court and the abusive husband having all of his dirty laundry shown publicly so he won’t be able to get another date.



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