Tegic Hails Sweeping Legal Victory in Patent Infringement Lawsuit Against Zi Corporation

SEATTLE, WA -- September 5, 2002 -- Tegic Communications Corporation was handed a sweeping legal victory in its patent infringement lawsuit against Zi Corporation of Canada (Nasdaq: ZICA) (TSX: ZIC) after a two week trial in the U.S. District Court for the Northern District of California, in San Francisco. In a unanimous verdict, the jury awarded Tegic US$9 million in damages due to Zi's infringement of two Tegic patents and found that Zi had willfully infringed those patents. Tegic will now request that the jury verdict be multiplied under the patent laws by up to three times because of Zi's willful infringement. Tegic may now recover up to US$27 million from Zi.

"We are pleased with the jury's verdict and concur with the conclusions they reached," the Company said in a statement. "Tegic has been an innovator in the wireless messaging space for over seven years. The verdict validates our intellectual property rights and represents an important milestone in protecting and enforcing Tegic's worldwide intellectual property rights."

Tegic sells software called T9 (r) Text Input that enables users to easily enter text into small devices with limited size keyboards, like mobile phones. T9 software replaces the traditional "multi-tap" method of entering text by tapping a key several times to get one letter and, instead, provides the ability to enter text using only one keystroke per letter. Using the letters on each phone key and a highly compressed database, the T9 software translates key press sequences into words in an easy to use way. Zi also sells text input software for cell phones, but it has refused to acknowledge openly that Tegic's patents are valid and cover fundamental aspects of this software.

The jury also vindicated Tegic's long-standing position that its patents show new inventions and that the patents were properly issued by the U.S. Patent and Trademark Office. In its verdict, the jury completely rejected Zi's arguments that the claims of the patents were invalid in light of old inventions for inputting Chinese ideographic characters onto computer displays. In fact, the jury agreed in its verdict with Tegic on every single issue in dispute in the litigation.

The two patents at issue are a small but important part of Tegic's worldwide patent portfolio covering systems and methods designed to make it easier for users to enter text quickly on reduced keypads such as cell phones. Tegic has sought patent protection for its inventions in the U.S. and other major world markets since 1995 and has received patents in countries around the world. Tegic was represented in the case by Charlie Verhoeven and a trial team with the law firm of Quinn Emanuel Urquhart Oliver & Hedges, LLP, of San Francisco, and an AOL in-house counsel team of Jim Bramson, Vice President and Associate General Counsel, and Seth Brown, Senior Counsel.

Contact Info:

"Nicholas Graham, America Online" 703-265-1746