Xfire, Yahoo near terms for settlement

Pivotal hearing in early December scrapped as parties seek to settle patent infringement lawsuit out of court.

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With an important hearing looming, Xfire attorneys have petitioned the court hearing the Yahoo! v. Xfire patent infringement case, seeking a delay in further proceedings while the parties themselves negotiate the final terms of a settlement.

In documents filed on November 8, 2005, with the federal district court hearing the case, attorneys for Xfire state "Plaintiffs Yahoo! Inc. and Defendant Xfire, Inc. believe they have reached agreement on key terms for settlement of this dispute."

The dispute revolves around patents that apply to the Yahoo Messenger instant message service. Yahoo alleges that an Xfire client application provides a similar service to its users and taps protected technology.

The Yahoo patent was granted to two once-Yahoo employees Brian Gottlieb and Chris Kirmse in March of 2004. After his tenure at Yahoo ended, Kirmse transitioned to Xfire, becoming its vice president of engineering. Yahoo claims that "after Kirmse joined defendant [Xfire], defendant began to develop, test, and offer instant messenger 'client' software and a messenger server that, when operated with game servers, offers the capabilities of the invention."

In January 2005, Yahoo filed a lawsuit against Xfire in US District Court alledging the infringement.

On December 9, 2005--in what would have been the latest chapter in the dispute--Xfire was to have presented its Motion for Summary Judgment of Non-Infringement to the presiding judge, the Honorable Jeremy Fogel.

The November 8 filing states that "the parties wish to work to reach a final settlement without consuming either their or this Court's resources." The filing asked that the December 9 hearing be stricken from the court docket. On November 21, Judge Fogel signed off on that request.

While the documents filed this week in district court do not specifically outline a settlement nor state that one has been reached, a settlement now seems likely.

Xfire reps declined to comment on the filing. Yahoo reps were preparing a statement at press time.

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