Microsoft and TomTom settle patent fight

Parties settle dispute after more than a year

* Microsoft (nasdaq: MSFT - news - people ) says TomTom to make payments

* Financial details of settlement not disclosed

(Adds background on dispute, share prices)

SEATTLE (Reuters) - Microsoft Corp and Dutch navigation device maker TomTom NV said Monday they had reached a settlement after more than a year of squabbling over software patents.

In the last few weeks, both companies had sued the other, claiming patent infringement.

Under the terms of a five-year agreement, Microsoft said TomTom will pay Microsoft for use of the eight car navigation and file management system patents in the case Microsoft brought against TomTom, while Microsoft will be able to use the four patents included in the TomTom countersuit without any payment to TomTom.

TomTom confirmed there was a settlement but declined further comment.

Specific financial terms of the agreement were not disclosed.

The world's largest software company in February sued in federal court in its home state of Washington and petitioned the U.S. International Trade Commission claiming TomTom -- which makes portable navigation devices for cars and mapping software for handheld computers -- breached eight of its patents.

Microsoft said the patents involved in the case related to innovations in car navigation technology and other computing functionality that Microsoft has licensed to other companies, such as TomTom's rival Garmin Ltd. (nasdaq: GRMN - news - people )

TomTom countersued in the U.S. District Court for the eastern district of Virginia, earlier this month, claiming Microsoft violated a number of its patents.

Microsoft shares slightly pared losses after the announcement, down 3.9 percent at $17.43 in a broad market decline. Ahead of the settlement announcement, TomTom shares closed at 3.413 euros in Amsterdam, down 7.2 percent. (Reporting by Bill Rigby; Editing by Tim Dobbyn)

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