REFILE-UPDATE 1-LG Elec ends 8-year PC patent row with Quanta

(Refiles to correct day of week to Tuesday in first par)

(Updates with details, shares)

SEOUL, Aug 26 (Reuters) - South Korea's LG Electronics Inc (066570.KS) said on Tuesday it had agreed with Taiwan's Quanta Computer Inc (2382.TW) to end eight years of patent fights and began negotiations on royalties Quanta would pay.

The agreement came after a U.S. Supreme Court ruling in June in favour of Quanta, sealing a case that centred around a downstream use of patented technology.

LG, which holds patents on microprocessor chips and chip sets, had an agreement with Intel Corp (INTC.O) that allowed Intel to make those components but explicitly barred it from mixing them with non-Intel parts.

Quanta, the world's top contract laptop PC maker, bought the components from Intel and used them to make notebook computers, which trigged LG to sue Quanta for infringing the patents -- not of the chips and chip sets themselves but "systems and methods" of using them.

The Quanta side had argued that because LG collected its royalties from Intel, Quanta owed no further payment. But as part of Tuesday's deal, Quanta agreed to pay royalties for its peripheral component interconnection technology.

The U.S. Supreme Court had ruled that LG's license agreement with Intel does not restrict Intel's rights to sell components to purchasers who intend to combine them with non-Intel parts.

Patent experts have said companies could raise royalty rates because of the new ruling.

LG said in a statement the company and Quanta would drop all outstanding lawsuits.

LG shares fell 1.42 percent to 104,500 won by 0148 GMT, compared with the broader Seoul market's 0.31 percent loss.

Shares in Quanta, which makes PCs for customers including Hewlett Packard (HPQ.N) and Dell (DELL.O), was down 1.33 percent to T$48.05, in line with the Taipei market's 1.26 percent fall. (Reporting by Rhee So-eui; Editing by Keiron Henderson and Ken Wills)