Xerox Files Defamation Lawsuit Against BERTL.

Business Editors

Xerox Corporation (NYSE: XRX) has filed a lawsuit in federal court against Business Equipment Research & Test Laboratories (BERTL) for libel, interference with Xerox's customer relations, and other claims arising from defamatory statements BERTL made to Xerox customers and competitors.

The lawsuit, which was filed in the U.S. District Court here, also asks the court to resolve an ongoing dispute with BERTL over the use of BERTL's reports and test data.

BERTL conducts testing of digital imaging systems and produces reports on the results. Xerox has commissioned BERTL to do a number of tests of Xerox systems compared to competitive systems and to generate reports for Xerox use.

In particular, Xerox commissioned in November a series of tests to be conducted by BERTL comparing Xerox Document Centre systems against competitive Canon and Ricoh machines. Xerox paid $20,000 for the tests and the related rights to use the test reports, which were validated by BERTL. The test results showed the superior performance of Xerox systems over their competitors. Xerox prepared a summary of the test results as an internal sales training tool, which was an appropriate and authorized use of the data under the company's agreement with BERTL. However, around July 2 BERTL sent an e-mail to Xerox's competitors and customers -- including a substantially altered copy of the summary -- suggesting that Xerox was not authorized to use the data in this manner.

In fact, the Xerox summary accurately reported the positive results, and Xerox was authorized under its agreement with BERTL to publish them.

"Whatever BERTL's motive may have been, it tried to smear Xerox's name and mislead our customers and competitors - a blatant act of defamation," said Gil Hatch, president, Xerox Office Systems Group. "These test results were very favorable to Xerox - they showed the superior performance of our systems - and Xerox had the right to use those results."

The lawsuit seeks an injunction prohibiting BERTL from committing further acts of libel and from repudiating the rights BERTL granted to Xerox to use test results. The complaint also seeks unspecified damages for BERTL's unlawful conduct.

In addition, the lawsuit will resolve the dispute between Xerox and BERTL over the scope of Xerox's rights to use BERTL reports and test findings. BERTL has claimed Xerox was infringing its copyrights and trademarks and exceeding the scope of its licenses, allegations that Xerox denies.

"We are confident that the court will find that Xerox's licenses with BERTL are much broader than what BERTL recently has started to contend," Hatch said.

The print productivity of Xerox Document Centre systems has also been tested by the independent test firm Buyers Laboratory Inc., and BLI's tests showed that in networked office environments the Xerox systems evaluated offer print productivity that is superior to that of the competitive models included in the tests.*

NOTE TO EDITORS: Print productivity testing was conducted by Buyers Laboratory Inc. (BLI), with each product operating in default mode and resolution set at 600 dpi. Multiple jobs from a BLI test suite were sent in series to each device, with output consisting of a mix of single and multiple stapled sets with a banner page for each job in the test suite. The order of jobs was randomly selected.

For more information about Xerox, visit www.xerox.com/news. XEROX(R), The Document Company(R) and the digital X(R) are trademarks of XEROX CORPORATION.