The long-running legal battle, which has held up production of next-generation optical disc players and recorders, has been resolved, with Japan's Nichia and Toyoda Gosai companies reaching a settlement.

The two announced their decision at the end of last week, saying they have "agreed to respect any and all patent rights which the other party owns and to enter into negotiations in good faith in order to come to an end of any and all disputes and suits in and outside of Japan".

The agreement comes less than a month after the Tokyo High Court overturned a ruling by the Japan Patent Office concerning a Toyoda patent that had been ruled invalid. The decision, delivered on 18 July, was the ninth in a series of patent infringement lawsuits heard in front of the court and the eighth that Toyoda had won.

The spat between the companies, both virtually unknown beyond optoelectronics circles, has dragged on for six years and hobbled the development of new optical disc systems because it centres around a small but crucial component that makes the systems possible — blue laser diodes.

Current optical disc systems such as CD and DVD are based on lasers that emit red light but next-generation systems require a change to shorter-wavelength blue lasers. As the wavelength of the laser light gets smaller, the size of the light spot that the laser burns on the disc surface becomes smaller, meaning data can be recorded in a smaller space and each 12cm disc can therefore store more data.

"The blue laser technology is a must in order to develop DVDs that can be replayed or record more data," said Akihiko Ohiwa, a spokesman for Sanyo, which announced the development of its own blue-laser technology last week. The company, like several others, had been driven to develop its own technology because the ongoing legal battle had made it reluctant to license technology from either company. "Because [the patents under dispute] are not open, each vendor needs to develop its own technology," he said.

Sony, which is also busy researching blue laser-based optical disc systems, said through a spokeswoman that it was pleased with the settlement. "We hope this will open up the industry and development a little," she said.

Sony is one of a number of companies involved in development of a new consumer video-recording system based on blue-laser technology called Blu-ray. The system boasts a storage space of 27GB per side compared to the 4.7GB of DVD and is being backed by Sony, Philips, Hitachi, LG, Panasonic, Pioneer, Samsung, Sharp and Thomson.