Legato Lobs Lawsuit at NSI

Legato Systems Inc. (Nasdaq: LGTO) last Friday said that it is suing competitor NSI Software for patent infringement, one of the latest lawsuits in the software industry (see Legato Sues NSI).

The software vendor filed the suit in the Northern District of California Federal District Court in San Jose on May 15, charging that NSI willfully infringed on two of its patents, U.S. Patent Nos. 5,799,141 and 6,308,283.

The first patent was filed by the Qualix Group Inc. in 1995. After acquiring that company, Legato filed the second patent, a continuation patent, in 1998. Legato uses the patented technology in its file-replication software, RepliStor, formerly known as Octopus. The technology, according to the company, enables asynchronous, real-time data replication, allowing for the simple creation of more than one copy of Windows data across LAN and WAN environments (see Legato Bundles Continuity Apps).

Legato claims that NSI has integrated the two disputed patents into its popular Double-Take data replication software (see NSI Eyes Europe With Sunbelt, NSI Wins IBM Approval, and NSI Stalks Windows NAS).

The issues, say intellectual property experts, are whether NSI's software actually performs functions covered by Legato's patents and whether there are prior claims on the technology. "The question is: How were people providing mirroring of files... before the 1995 patent was filed?" says Yar Chaikovsky, an intellectual property attorney at Weil Gotshal & Manges LLP, pointing out that NSI will probably try to establish that the technology was being used prior to the patent filing. "The older these patents get, the more difficult it is to find the [unpatented] prior art."Legato insists that it has been gravely wronged. The company, which is being represented by McDermott Will & Emery, has asked to be awarded unspecified damages and is demanding an injunction prohibiting NSI from using, selling, or licensing software using its patented technology.

"We are committed to defending our intellectual property," says Theodore Chen, Legato's director of intellectual property and general counsel. He says he doesnt yet know how long the case might take or how much Legato stands to win. But he adds, "I can tell you, it’s not going to be a small amount."

NSI, for its part, claims it just learned about the case from Legato’s Website today. "We are presently looking in to the nature of the action because we have received no direct communication from Legato," NSI spokeswoman Bridget Hatt writes in an email to Byte and Switch. "We respect the rights of others just as we expect them to respect our rights but are unaware of any basis for a claim by Legato at this time."

Chen, however, says that Legato contacted NSI last week. "We have contacted them directly," he says. "We haven’t heard from them yet."

The Legato lawsuit appears to be part of a larger trend, according to Chaikovsky. “We’re seeing more and more of these systems/software cases being filed,” he says, adding that this could be because so many software patents were filed in the 1990s.And while there’s more software litigation going on, a growing number of cases now seem to be stretching almost, or all the way, to a trial. "If both parties believe they have a valid position, they’re looking at an average two to three years before the trial date," Chaikovsky says.

One example of how intellectual property litigation can be drawn out is the McData Corp. (Nasdaq: MCDTA) suit against Brocade Communications Systems Inc. (Nasdaq: BRCD) in a dispute over a 1999 OEM agreement that covered certain patents for both firms. After a U.S. Court for the District of Colorado denied McData’s motion for a preliminary injunction against Brocade last December, McData requested arbitration to resolve the litigation. A schedule for that arbitration has yet to even be set, according to both companies (see McData Seeks Arbitration ).

The Legato-NSI case has initially been assigned to Magistrate Judge Elizabeth Laporte, but could be reassigned to a district judge if either party requests a change.

— Eugénie Larson, Reporter, Byte and Switch