A US district court has ordered Palm, and its former parent 3Com, to post a £35m bond, following a ruling that Palm infringed on Xerox's handwriting recognition patent.

Xerox has claimed that Palm's Graffiti is the same as the Unistrokes technology it developed in its Palo Alto Research Center. The Xerox patent has been found valid by the court and by a 1999 re-certification from the US Patent and Trademark Office, the company said.

But the court denied Xerox's motion to prevent Palm from selling its handheld devices, saying that Xerox would not be irreparably harmed if sales continued.

Eric Benhamou, chairman and chief executive at Palm, said in a statement that the company intends to pursue an appeal vigorously. "For thousands of years, people have been creating writing symbols. Xerox doesn't own the alphabet," he explained.

If Palm loses the appeal, the £35m bond "will ensure that Xerox is able to collect at least some, if not all, of the damages it will suffer as a result of 3Com's infringement during the appeal period", wrote US District Court Judge Michael Telesca.

Should this happen, the next step is for the court to determine the amount of damages for past infringement of the patent. Palm and 3Com are jointly and separately liable.

The bond covers only the potential damages that accrue during the appeal period, not the entire infringement period.

In 1997 Xerox sued US Robotics, which was later acquired by 3Com, over the Graffiti software.

Christina Clayton, Xerox general counsel, said: "We continue to serve notice that Xerox will always take the appropriate actions to protect its valuable patents from unauthorised use and infringement."