Nuance Sues Zi Corp for Patent Infringement

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Nuance Communications and its Tegic subsidiary have filed a patent infringement lawsuit against Zi Corp in Canada just a few days after Nuance offered to buy Zi Corp for around USD40 million. Zi rejected the takeover bid as undervaluing the company.

Milos Djokovic, President and CEO of Zi stated: "This motion for contempt is without merit. Providing this notice is clearly a tactic employed by Nuance in light of its failed proposal to acquire Zi last week at a low valuation. The timing of this motion is highly suspicious and is an unnecessary legal tactic by Nuance. We are disappointed that Nuance is resorting to these kinds of tactics to acquire Zi without recognizing its full value. We will vigorously defend ourselves in this litigation proceeding. We are examining all legal remedies available to us with respect to Nuance's tactics."

The claim by Nuance accuses Zi of infringing Canadian Patent Numbers 2,399,961 and 2,278,549, each entitled "Reduced Keyboard Disambiguating System." Nuance is seeking damages from Zi's infringement as well as a judgment enjoining Zi's further infringement.

The lawsuit accuses Zi of violating a 2002 consent judgment which settled a patent litigation with Tegic Communications involving Zi's eZiText software. Tegic was recently acquired by Nuance.

"Nuance has invested significant resources in developing technologies, building solutions and acquiring intellectual property," said Jo-Anne Sinclair, vice president and general counsel of Nuance Communications. "These inventions and the intellectual property protecting those inventions are critical to our business. We take great pride in and place significant value on our patents and will aggressively protect our intellectual property rights through all available means."

Last week, Nuance Communications posted a loss for the fiscal third quarter of USD9.9 million, which was 30 percent wider than its year-ago results, but its adjusted numbers still managed to beat Wall Street's consensus estimate.

Nuance said revenue from "mobile and embedded solutions" totaled $45.3 million in the latest quarter, driven by customers including LG Electronics, Samsung and Nokia.

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