INTEL Corp. (INTC) said yesterday it reached a settlement with Shenzhen Donjin Communication Technology Co., a maker of telecommunications and network equipment, ending a legal dispute lasting more than two years.

Intel sued the Shenzhen company in 2004 for alleged infringement of copyrights on technology used for touch-pad telephone systems.

In 2005, a unit of Shenzhen Donjin countersued Intel, alleging the Santa Clara, California chipmaker had engaged in monopolistic practices.

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

The settlement comes a week before the second meeting of the U.S.-China Strategic Economic Dialogue in Washington, where the subject of China's protection of intellectual property rights will likely come up.

In April, the United States filed two complaints to the World Trade Organization, challenging China's lax protection of copyrights, and its restrictions on the distribution of foreign movies, music and printed materials.

"In recent years, the Chinese Government has put in great efforts in setting up and improving its system for protecting intellectual property rights," both companies said in the joint statement.

"At the same time, it has also paid extra attention to intellectual property right disputes between Chinese and foreign companies, and has advocated dialogue as a way of solving such problems," according to the statement.

Intel and Shenzhen Donjin said yesterday they agreed to keep confidential the terms of the out-of-court settlement, which the courts had encouraged both companies to reach. Both companies also agreed to work together, but they didn't specify in which areas they would cooperate.

Editor: Yan