EMC and Hitachi Bury Hatchet

EMC Corp. (NYSE: EMC) and Hitachi Ltd. (NYSE: HIT; Paris: PHA) have settled their patent infringement lawsuits against each other, signed a five-year agreement to cross-license certain technologies, and promised to make their storage systems more interoperable (see EMC and Hitachi Settle Lawsuits).

"This is how these things usually end," says Christine Wallis, senior VP of global strategy and planning at Hitachi Data Systems (HDS), the enterprise storage subsidiary of Hitachi. "We put all the patents on the table, reach an agreement, and then everyone goes home and competes in the market."

Under terms of the settlement, Hitachi will make "balancing payments" to EMC. Hitachi officials say this is to make the exchange equitable, based on the value of the patents. The size of these payments, however, is being kept secret.

All of the patents that were the subject of the two companies' lawsuits are part of the cross-licensing agreement; aside from that detail, none of the terms of the agreement are being disclosed. EMC and Hitachi also have agreed to exchange storage-related application programming interfaces (APIs), following a steady stream of similar agreements among the major storage systems vendors (see HP Makes API Triple Play, EMC, HP Catch Each Other's Codes, IBM, Hitachi SAN Compatible, and HP, Hitachi Trade APIs).

EMC originally filed patent-infringement suits against Hitachi and HDS on April 11, 2002, alleging that their products infringed six EMC patents. Less than a week later, Hitachi countersued EMC, asserting that certain of EMC's products infringed eight patents owned by Hitachi and its subsidiaries (see EMC Nails HDS With Lawsuit, Hitachi Scoffs at EMC Suit, and Hitachi Countersues EMC).From what's been publicly disclosed, it looks like EMC came out ahead in this deal. To wit: EMC alleged six patents were at issue; Hitachi cited eight; but in the end, Hitachi will make a payment to balance out the exchange of patents. Score one for the Hopkinton legal team, then?

Actually, says EMC spokesman Mark Fredrickson, "the numbers [of patents] don't matter... it's the effect of each patent that's important." Still, he says, EMC is "very, very pleased about the resolution."

There was certainly no shortage of bad blood between these two companies. HDS executives had accused EMC of short-circuiting API-exchange negotiations by filing its patent infringement claim. For its part, EMC claimed it had been trying for more than four years to resolve the issue "amicably" with HDS, according to a spokesman. At the time it filed its lawsuit, EMC said it first contacted HDS about its patent-infringement concerns in December 1997 (see HDS: EMC Scuttled API Swap).

Now it's all water under the bridge. Dan Tanner, an analyst at Aberdeen Group Inc., says the resolution of the dispute is clearly a positive development for both vendors, as well as for their customers.

"It's good that these two suppliers of enterprise-class storage subsystems will begin to exchange APIs and build out software to manage truly heterogeneous storage infrastructures," he says, adding, "I'm sure they're both happy not to have to pay lawyers for this anymore."However, Charles King, an analyst with The Sageza Group Inc., believes HDS and EMC must ultimately work together in good faith for end users to see any benefit. "An agreement that follows the letter rather than the spirit of cooperation will be largely useless to enterprise storage customers," he writes in a research note.

Also this week, EMC announced an API-swapping agreement Veritas Software Corp. (Nasdaq: VRTS). Under this agreement, EMC will license APIs to Veritas to provide broader support of Symmetrix, Clariion, and Celerra systems. Conversely, Veritas will license EMC APIs to support mapping, control, and replication functions of the Veritas Volume Manager, Veritas File System (VxFS), and Veritas Foundation Suite products (see EMC, Veritas Swap APIs).

Meanwhile, the patent dispute between EMC and Hewlett-Packard Co. (NYSE: HPQ) is still pending. In that case, HP alleges that EMC violates seven of HP's storage-related patents. EMC, in turn, filed a countersuit accusing HP of infringing six of its patents. In addition, EMC in 2000 sued startup StorageApps (since acquired by HP) for allegedly infringing five of EMC's patents (see HP Slaps EMC With Lawsuit and EMC Countersues HP).

Todd Spangler, US Editor, Byte and Switch