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STAMFORD, Conn. — A federal court has reinstated a suit by Xerox Corp. charging that Palm Inc. infringed its patent in the development of the handwriting recognition system for the Palm handheld computer. 

The U.S. Court of Appeals in Washington, D.C., on Friday reversed a lower court dismissal of the case, representatives of both companies said Monday. The litigation now returns to federal court in Rochester, N.Y., where it had been dismissed. 

“It’s a huge victory for Xerox,” said Bill McKee, a company spokesman. “The U.S. Court of Appeals agrees there is enough evidence to proceed in a litigation that there is a patent infringement.” 

The suit alleges that Palm’s Graffiti handwriting recognition software infringes a Xerox U.S. patent relating to computerized interpretation of handwriting. In June 2000, the district court issued an order dismissing Xerox’s claims. 

Palm Inc., based in Santa Clara, Calif., confirmed that the court reversed the lower court dismissal, but said the court also rejected a motion for summary judgment brought by Xerox. Xerox said the court did not rule on the summary judgment request. 

Federal courts were closed Monday for the Columbus Day holiday. 

“Palm continues to believe that the Graffiti software does not infringe the patent and that Palm has other defenses supporting its stance,” said Carl Yankowski, Palm’s chief executive officer. “Palm intends to continue to vigorously defend itself.” 

Xerox contends that its scientists invented the “Unistroke” software that recognizes one-stroke motions as characters. Xerox went to court in April 1997, four months after receiving a patent for handwriting recognition. 

The technology in dispute allows users to make simple, one-time strokes to enter letters and numbers in Palm computers. If successful in court, Xerox could force Palm and other companies to pay a license fee for each of the handheld organizers sold. 

Xerox has moved aggressively to defend against what it sees as technology pilfered from its labs, especially after letting go of inventions such as the computer mouse and laser printer. 

Xerox stock closed Monday on the New York Stock Exchange at $7.62, up 26 cents. Palm stock closed on the Nasdaq Stock Market at $1.49, down 6 cents. 

On the Net: 

http://www.palm.com 

http://www.xerox.com