Quantum, Imation Settle DLTtape Lawsuits

Quantum Imation

Imation, which manufactures a variety of data storage tape cartridges under license from several vendors, had tried unsuccessfully to qualify its DLTtape media with Quantum for some time. Last October, Imation filed a lawsuit against Quantum accusing Quantum, in collusion with other licensees, of trying to prevent Imation from qualifying its tape in order to protect their own markets. The suit was later amended to include Maxwell.

Quantum, in return, filed a suit alleging that Imation violated Quantum's trade secrets by manufacturing its own BlackWatch brand of DLTtape-compatible media.

Imation's suit of Quantum, originally seeking up to $450 million, was settled with both parties agreeing to drop the lawsuits. In addition, Quantum agreed to work to expedite the qualification of Imation's tape. Part of the settlement also called for Quantum to pay $5 million to Imation over an 18-month period, as well as other financial considerations that were not revealed.

John Gannon, president of Quantum's DLTtape Group, said Quantum is happy the two companies could put the disputes behind them. He said that while the qualification process for the license to manufacture the DLTtape remains the same now as it was before the lawsuits were filed, Quantum will work with Imation to help its tape get licensed.

"We are still using the same [qualification standards," Gannon said. "All I can comment is, Imation has made considerable progress in qualifying its tape. Both of us are committed to getting them through the qualification process."

In addition to manufacturing DLTtape under license from Quantum, Imation will also resell Super DLTtape media as well, Gannon said.

Brad Allen, vice president of investor relations for Imation, said that, according to his understanding, the agreement accelerates the pre-lawsuit qualification process, using data from where the two companies left off during the process.

The $5 million from Quantum, in addition to other unrevealed sums from both Quantum and Maxwell, will be recognized in 2002 as pre-tax income under the heading "cash payment," said Allen. "But more important, we continue our on-going relationship that allows us to participate in the DLTtape market," he said.