Acer uses legal lash on allies in HP fight

Acer is using legal means to bolster its patent battle with Hewlett-Packard - suing partners who supply both companies, to keep them on Acer's side.

Last week, an Acer subsidiary filed suit against three of its contract manufacturers, claiming they have contractual agreements to indemnify Acer in patent suits, such as the one in which HP alleges Acer laptops infringe ten of its patents.

The three companies, Quanta Computer, Hon Hai, and Wistron, are all from Taiwan and count Acer and HP as customers. What's more, HP orders around US$15 billion worth of IT goods from Taiwan each year, and Quanta is normally a major recipient of laptop PC orders from the company. Wistron was spun-off from Acer several years ago, and Acer remains one of its largest shareholders.

The three suppliers could face fines or worse if they refuse to honour their contracts and help Acer in the case. However, they face the risk of losing future orders from HP if they cooperate. There are plenty of other contract manufacturers around for HP to choose from.

Quanta, the world's largest contract laptop PC maker, said legal proceedings with Acer have already started, and it plans to seek an amicable solution to the problem that is in the best interest of both customers.

Hon Hai, the world's largest contract electronics maker, said it has not yet received papers from the court, and declined further comment, according to a statement filed with the Taiwan Stock Exchange on Saturday.

Wistron declined to comment specifically on the Acer lawsuit, but said it will comply with court orders and hopes to resolve the dispute outside of the courts.

HP sued Acer in March this year, and followed it up with another suit, alleging the infringement of 10 HP patents in all. HP is seeking to block Acer PC imports to the US and is asking for compensation from Acer, payment of legal fees, and treble damages for alleged intentional violation of the patents.

Acer has said it is looking into HP's claims, and that it believes it is indemnified by the contracts with its contract manufacturers. Many laptop and desktop PC suppliers do the design and manufacturing work for customers. Acer says that since its suppliers worked on the design of the PCs in question, they should share the burden of the HP lawsuit. The supplier agreements specifically indemnify the company from lawsuits such as the two brought about by HP, Acer says.

The HP lawsuits come as Acer continues to gain market share in the global PC business, and some analysts have called the disputes a response to the inroads Acer has made in the U.S. PC market.