Louisville’s Storage Technology Corp. lost an initial court battle this week in a multimillion-dollar patent-infringement dispute with a rival.
San Jose, Calif.-based Quantum Corp. can continue to sell a new generation of data-storage tapes and tape drives based on technology StorageTek says it patented, a federal judge in Denver ruled. StorageTek sought a preliminary injunction to stop Quantum’s sales of the products while the case proceeds.
StorageTek sued Quantum in U.S. District Court in Denver two years ago, claiming Quantum’s manufacture and sale of the tapes and drives is unlawful. Quantum argued that an injunction would destroy a quickly growing segment of its tape and tape-drive business, which accounts for two-thirds of its revenues.
StorageTek officials said Thursday that the ruling by Judge Richard Matsch on Tuesday has little or no effect on its overall case and that it still plans to take the suit to trial. A trial date has not been set.
“This is like a football game, and the coin flip was just decided,” StorageTek spokesman Jeremy Story said. “We still have to play the game.”
A Quantum spokesperson said: “We’re obviously pleased the judge denied the request for a preliminary injunction. We continue to believe we’ve got a strong case.”
The dispute dates to the mid-1990s, when scientists at the companies raced to develop technology to optically record information on the back of a magnetic data tape. The idea was to increase tape capacity at a relatively low cost.
StorageTek applied for a patent on its technology in December 1997, followed by Quantum five months later. For the next six years, the companies jostled for the upper hand through the U.S. Patent and Trademark Office. Meanwhile, each introduced products based on the new technology, and their lawyers met to try to avert a full-blown patent dispute.
But on April 15, 2003, the companies sued each other in different courts making the same claim: that the other was infringing on its patents. Quantum later withdrew its suit, filed in California, pending the resolution of the Colorado case.
In March, senior executives for each company testified during a four-day hearing on StorageTek’s motion for a preliminary injunction.
Jon Benson, StorageTek’s vice president and general manager of automated tape solutions, testified that if Quantum were barred from selling its new-generation of tapes and drives, StorageTek could sell to a broader market. John Gannon, Quantum’s president and chief operating officer, also testified.
In its financial reports, Quantum does not break out revenues for its Super DLTtape products, as the new-generation tapes and drives are labeled. But the company said that in 2004, all tape and drive sales accounted for $558 million of its total revenue of $808 million.
Staff writer Greg Griffin can be reached at 303-820-1241 or ggriffin@denverpost.com.
