The ongoing patent-infringement lawsuit between Xerox and Palm took on a new twist when the appeals court reversed a federal judge's dismissal of the case.

The dispute began in 1997, when Xerox sued US Robotics - later acquired by 3Com and spun off into Palm - for infringement of Xerox's patented Unistrokes handwriting-recognition technology. Last year, Judge Michael Telesca dismissed the suit on the basis that Palm's Graffiti handwriting-recognition software – a part of the Palm OS that runs on handheld devices – does not use the same recognition patterns as Xerox's technology.

On Monday, the Court of Appeals for the Federal Circuit reversed that judge's decision, finding that the judge misunderstood how and where symbols must be written in order to be recognized by the handheld device, according to Xerox. The case has been remanded to the US District court in Rochester. Telesca continues to preside over that court.

"Xerox will undertake whatever is needed to protect this groundbreaking invention and valuable patent from unauthorized use and infringement," said Christina Clayton, Xerox's general counsel, in a written statement.

Palm officials restated their position that Graffiti does not infringe on Xerox's patent, and said the company will vigorously defend itself in this next round of the case.