This excerpt taken from the SONO 10-Q filed Nov 10, 2008.
On February 21, 2007, we filed a patent infringement suit against Zonare Medical Systems, Inc. (“Zonare”) in the federal district court of the Central District of California alleging that Zonare infringed our U.S. patent 5,722,412 through sales of its z.one ultrasound system. On March 14, 2007, Zonare filed an answer to our claim which included a counterclaim against us alleging that our products infringe its U.S. patent 6,980,419 related to its portable docking station. On July 16, 2008, we settled all claims and counterclaims in this suit with Zonare. The parties entered a settlement agreement that included among other terms, a cross license of the patents-in-suit limited to certain existing products of each party, and mutual releases and covenants not to sue for a certain period of time. The agreement provided that we receive cash and a note receivable. Additionally we and Zonare provided limited cross licenses to patented technologies. The note receivable and license to patented technologies were recorded at their fair values. We recognized a benefit of $2.6 million in operating income for the three and nine months ended September 30, 2008. Net income in both the third quarter and nine month period of 2008 included a $1.5 million after-tax benefit for the settlement of the Zonare patent lawsuit.