StorageTek, Quantum Sue Each Other

Storage Technology Corp. (StorageTek) (NYSE: STK) and Quantum Corp. (NYSE: DSS) seem to be living by the rule, "The best defense is a good offense." The two companies are at each other's throats, each filing tape-related patent infringement lawsuits against the other today (see Quantum Sues StorageTek and StorageTek Sues Quantum).

The announcement of Quantum's lawsuit hit the wires first today, as the company apparently filed it with the Northern District of California late last night. StorageTek, however, wasn't far behind: Only a few hours later, it filed its own patent infringement suit against Quantum in the U.S. District Court in Denver.

In its press release, Quantum claims that StorageTek has illegally made and sold tape and tape drive products that infringe on two separate patents: U.S. Patent No. 5,474,253, issued in December 1995, and U.S. Patent No. 4,809,110, issued in February 1989. The company said it's seeking an injunction against the future sale of StorageTek products it claims are based on the patents. Quantum did not return calls by press time.

StorageTek, meanwhile, charges in its suit that Quantum's Super DLT product is based on two StorageTek patents, and it is seeking both a preliminary and permanent injunction against further sales of the product. The company is also seeking damages and royalty payments from Quantum for prior sales of the product, including "treble damages" for willful violations of its U.S. Patent Nos. 6,236,529 and 6,549,363.

Mark Roellig, StorageTek VP and general counsel, insists that the patents at issue in the two cases are very different. He insists that StorageTek hasn't infringed on any Quantum patents -- but even if it had, the patents that Quantum is moaning about are very old and basically irrelevant, he claims. The infringed StorageTek patents, on the other hand, were issued in 2000 and today, he says, are being used in a profit-generating product. "Ours go directly to the positioning of the tapes," he says.StorageTek, according to Roellig, raised its concerns about Quantum's alleged patent infringements last October. He says the two companies have since been trying to reach a solution without going to court. And while StorageTek's suit was filed after Quantum's, he says, it has been prepared and ready to go for a long time. "It's one of those things where you hope you never have to pull the trigger, but I wouldn't be doing my job if I didn't keep the gun loaded," he says.

The issue of "who filed first" is important, according to Yar Chaikovsky, counsel in the IP Counseling Group in Weil, Gotshal & Manges LLP's Silicon Valley office. Since the courts may view the two suits as similar, they could rule that they were litigated at the same time. This means the case will probably be tried in the Northern District of California, which would be good news for Quantum.

"You always want to litigate in your own home court to get the home court advantage," he says, pointing out that trying a case at home means having familiarity with the rules and the judges, as well as possibly a more favorable jury.

If the two companies can't kiss and make up, the lawsuits could be painfully drawn-out and expensive ordeals for both of them -- no matter where the case or cases are tried. "It's very expensive, complex litigation," Chaikovsky says. "Both sides could end up paying upwards of $5 million."

And, of course, these lawsuits tend to take a long, long time to resolve. In September 2002, for instance, StorageTek finally received a favorable ruling in a lawsuit originally filed by Stuff Technology Partners in 1987! (See StorageTek Wins Patent Dispute.)Eugénie Larson, Reporter, Byte and Switch