Quantum and StorageTek end patent spat

Quantum and StorageTek, a Sun Microsystems subsidiary, have buried the hatchet in their long-running intellectual property dispute and entered into a patent cross-licensing agreement.

The reconciliation ends a legal fight which centred on the "legacy patent infringement lawsuit" StorageTek filed against Quantum before Sun acquired the firm in August 2005.

The April 2003 lawsuit related to the use of an optical servo system in Quantum's SDLT tape drives.

StorageTek sued Quantum on 15 April 2003 alleging that Quantum had engaged in the unlawful manufacture and sale of SDLT tape drives and media products that infringed on two StorageTek patents.

The lawsuit sought a permanent injunction against the sale of these Quantum products and monetary damages of $142m, including treble damages for alleged wilful violations of StorageTek's patents.

The suit was scheduled to be tried in the US Federal District Court in Denver on 27 February 2006, but was withdrawn as a result of the settlement between Quantum and Sun.

Under the cross-licensing agreement, Quantum and StorageTek will be able to license a limited number of the other's patents on a non-exclusive, worldwide basis.

In addition, Sun has dismissed the StorageTek lawsuit against Quantum, and Quantum has agreed to pay Sun a total of $25m, $20m in the current quarter and the remaining $5m over the next five quarters.

Rick Belluzzo, chairman and chief executive at Quantum, said: "The agreement and the related legal settlement serve the best interests of Quantum and our shareholders by putting the legal dispute behind us and enabling the two companies to focus all our interactions on enhancing this partnership."

Belluzzo added that Quantum agreed to settle after considering the benefits of the agreement, the additional legal costs it would have incurred in proceeding with the trial, and "the uncertainty inherent in any jury case and the potential impact on our business if we lost in court".

As a result of the settlement with Sun, Quantum announced that its GAAP earnings for the current fiscal fourth quarter of 2006 could be negatively affected by up to $25m.