Nortel, Others Sued by Litton Over Amplifier Patent (Update1)
By Erik Schatzker
Los Angeles, Oct. 5 (Bloomberg) -- Nortel Networks Corp., JDS Uniphase Corp. and other makers of telecommunications equipment and components were sued Tuesday by a Litton Industries Inc. subsidiary for allegedly infringing a patent on a device that helped usher in the commercial era of fiber-optic transmission.
Stanford University and Litton Systems Inc. filed the lawsuit in U.S. District Court in Los Angeles, alleging the 15 defendants have been infringing the patent by using, selling or making products that incorporate a design for a fiber amplifier. The amplifier was invented by two Stanford researchers, the lawsuit claims. It was patented in 1989 and licensed exclusively to Litton.
Fiber amplifiers made optical communications a commercial reality in the 1990s by eliminating the need for inefficient and costly regenerators every few dozen kilometers. The amplifiers, which use lasers to brighten the fading beams of light in a fiber network and sell for as much as $40,000, play a crucial role in modern telecommunications.
``For two decades, Stanford and Litton have expended considerable resources on research and development of fiber-optic technology,'' the lawsuit says. The defendants' actions -- if not stopped -- have ``caused and will continue to cause Stanford and Litton substantial and irreparable injury,'' the suit says.
Stanford, based in Palo Alto, California, and Litton seek unspecified damages and requested that a judge order the defendants to stop infringing the patent.
``An injunction would bring this industry to its knees, but I would be amazed to see one granted,'' said analyst Mark Langley of Epoch Partners.
Settlement Sought
Spokesman Randy Belote said Litton wants to settle the dispute out of court if possible. Although talks with the defendants have ``in some cases been going on for quite some time,'' Stanford and Litton filed suit to assert their rights to the patent.
``It's a situation where we had to put a stake in the ground,'' Belote said.
Nortel said it hasn't been served with the suit. Other defendants, such as Lucent and Ciena, are reviewing the complaint. None of those contacted was prepared to comment on the allegations.
Sales of fiber amplifiers for land networks -- as opposed to undersea systems -- will swell to $1.2 billion in 2003 from $390 million this year, according to a March report by market researcher RHK Inc. of South San Francisco.
``Short of an injunction, this could be a much bigger deal for Stanford and Litton that for the defendants,'' Langley said. ``For an industry that's growing at this rate, a small royalty on future revenues shouldn't dissuade investors.''
Shares of Woodland Hills, California-based Litton Industries, the U.S. Navy's third-largest shipbuilder, fell 63 cents to 44.88. Its stock had fallen 10 percent this year.
Latest in Trend
The lawsuit is the latest in a trend by universities to protect their patented inventions through litigation.
``What you have is universities realizing that a lot of work and research that they're doing is patentable and, once patented, an asset,'' said Porter Fleming, a lawyer who specializes in patent litigation at Bickel & Brewer in New York. ``By enforcing their rights, not only do they get recognition, they can also be compensated.''
The defendants named are Nortel, the biggest maker of fiber- optic equipment; JDS Uniphase, the biggest maker of fiber-optic components; Alcatel SA; Alcatel USA; Corning Inc.; Pirelli SpA; Lucent Technologies Inc.; Tyco International Ltd.; Tyco International (U.S.) Inc.; Tyco Submarine Systems Ltd.; TyCom Ltd.; TyCom Networks (U.S.) Inc.; Scientific-Atlanta Inc., Ciena Corp. and SDL Inc
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