Gateway has agreed to pay HP $47m (£27m) to settle a longstanding patent dispute between them.
As part of the settlement, the PC makers also agreed a seven-year cross-licensing agreement and dropped all legal claims against each other.
The legal dispute began in March 2004 when HP filed a lawsuit against Gateway, alleging six patent infringements relating to its PCs.
The legal battle escalated when Gateway filed a counter lawsuit alleging HP had violated five of its patents.
Under the settlement, Gateway will pay HP $25m within seven days of a cross-licensing agreement starting, and will follow that with a $22m payment one year later.
As a result of the settlement, Gateway said that its previously reported net profits for 2005 will be reduced by $16.7m to $32.8m.