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BEIJING, China (AP) – Intel Corp., the world’s largest chip maker, said Monday it has settled a copyright infringement dispute with a Chinese maker of telecommunications and network equipment.

Santa Clara, Califofnia-based Intel sued Shenzhen Donjin Communication Technology Co. in 2004 for allegedly infringing its technology used for touch-pad telephone systems. Intel accused the company of copying parts of the software used by its Dialogic brand of high-end communications equipment. Intel has since sold the unit off.

In 2005, a unit of Shenzhen Donjin countersued, saying Intel engaged in monopolistic practices.

Intel spokesman Chuck Mulloy said Monday it no longer made strategic sense to pursue the litigation, and the two companies brokered a licensing deal over the disputed technology. The companies have agreed to keep confidential the terms of the out-of-court settlement.

”Continuing a lawsuit doesn’t benefit each company’s best commercial interests,” the companies said in a joint statement. Beijing Donjin Xinda Technology Co., the Shenzhen Donjin unit that filed the countersuit, also signed the statement.

Industry analysts said they were surprised by the speed of the resolution but added Intel is pouring money into China to tap into booming computer and microprocessor demand. The company likely wanted to eliminate any potential political or business roadblocks.

Intel has committed to investing $4 billion (euro2.95 billion) in China by 2010, including a $2.5 billion (euro1.85 billion) chip factory in the northeastern city of Dalian that will be used to make chip sets, which shuttle data from the microprocessor to other system components.

”Everybody wants to keep politics out of the industry as much as possible,” said Jim McGregor, director of semiconductors and enabling technologies research at market researcher In-Stat. ”Anything that gives the U.S. or Chinese government leverage in the current political climate is something both sides want to avoid.”

The settlement comes a week before the second meeting of the U.S.-China Strategic Economic Dialogue in Washington, where Chinese protection of intellectual property rights will likely be discussed.

Last month, the U.S. filed two complaints to the World Trade Organization, challenging China’s lax protection of copyrights, as well as its restrictions on the distribution of foreign movies, music and printed materials.

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