De-Dupe Vendors Shake Hands

As Data Domain preps IPO, it signs deal to dodge future patent problems with Quantum

April 4, 2007

3 Min Read
Network Computing logo

Data Domain, the latest storage vendor to move toward an IPO, has signed a deal with Quantum to avoid de-duplication lawsuits. (See Data Domain Files S1 and Storage Bubble Wrap.)

Tucked away within Data Domain's S-1 filings are details of the cross-licensing deal, which centers on the vendors' respective de-dupe technologies. Both firms use a de-duplication technique called "variable length," which accommodates changes in patterns of data such as bytes or characters, as opposed to checking for "fixed length" packets of data.

Data Domain was unwilling to provide additional data on its S-1, although the deal has more to do with avoiding courtroom drama than building new products, according to Quantum spokesman Brad Cohen. "It's essentially giving [both companies] more flexibility to develop products without worrying about patent infringement and getting into a legal issue," he says.

At this stage, the firms have no plans to develop products together, says Cohen. "This is just so that if each company wants to license the other's patents, they can do so under this agreement."

Resolving patent infringement lawsuits can be a major distraction for technology firms, particularly those in emerging markets. (See Patently Profitable and Crossroads, Dot Hill Ponder Patents.) "Unquestionably it would have derailed the Data Domain IPO," says Arun Taneja, president of analyst firm Taneja Group. "De-dupe is at the core of data domain's product -- it's the essence of the company."Quantum has been down this road before, paying Sun $25 million to resolve a patent lawsuit last year. (See Quantum, StorageTek Bury Hatchet.) The April 2003 lawsuit related to the use of an optical servo system in Quantum's SDLT tape drives, although the two firms eventually signed a cross-license agreement providing access to a limited number of the other's patents.

The SEC filing reveals that Quantum approached Data Domain about the agreement in the fourth quarter of last year. In return for the partnership, Quantum received 390,000 shares of Data Domain stock.

With Data Domain expected to raise about $100 million in its IPO, Taneja estimates that the Quantum deal could cost it around $3.9 million, adding that this is a small price to pay. "You have a $100 million opportunity on the table -- the last thing that you want is a fly in the ointment," he says.

Quantum is certainly cranking up its de-duplication story at the moment. Yesterday, the vendor added de-dupe features to its StorNext data management software, using technology from its recent Rocksoft acquisition. (See Quantum Adds Data De-Dupe, Quantum Leaps Into De-Duplication, and Quantum Delves Deeper Into De-Dupe.)

Data de-duplication has been cited by users as one of 2007's hottest technologies, with IT managers and CIOs looking to reduce the bulk of backed-up data. (See Top Storage Predictions for 2007, 2006 Storage Winners & Losers , and The Year of Data Protection.) A number of vendors are currently fleshing out their de-dupe strategies, including EMC, which spent $165 million on Avamar last year, Sepaton, and early mover Diligent. (See EMC Picks Up Avamar, Symantec Dips Into De-Dupe, and Diligent Breaks Record.)Of these vendors, only Avamar uses a variable length "hashing" algorithm to perform de-dupe, Taneja says, although EMC's Centera device employs the fixed length technique.

Data Domain's S-1 reveals that the firm has racked up around 650 enterprise customers, with the vendor's net losses narrowing from $13.7 million to just over $4 between 2005 and 2006.

The Santa Clara, Calif.-based firm is the latest in a string of storage vendors to bust an IPO move over recent months. Data warehousing specialist Netezza, for example, recently filed its own S-1, following in the footsteps of Mellanox, Isilon, Double-Take Riverbed, and CommVault. (See Netezza Nudges IPO, Riverbed Comes Out at $9.75, and CommVault Swims in Public Pool.)

James Rogers, Senior Editor Byte and Switch

  • Avamar Technologies Inc.

  • CommVault Systems Inc.

  • Data Domain Inc. (Nasdaq: DDUP)

  • Diligent Technologies Corp.

  • EMC Corp. (NYSE: EMC)

  • Isilon Systems Inc. (Nasdaq: ISLN)

  • Netezza Corp.

  • Quantum Corp. (NYSE: QTM)

  • Riverbed Technology Inc. (Nasdaq: RVBD)

  • Rocksoft Ltd.

  • Sepaton Inc.

  • Taneja Group

Stay informed! Sign up to get expert advice and insight delivered direct to your inbox

You May Also Like

More Insights