Nortel Sues Arbinet Over Copyright

Nortel said it filed the suit in federal court in the Eastern District of Virginia, following failed talks between the two companies to settle the commercial dispute.

The Canadian telecom technology firm claimed that Arbinet is infringing copyrights and misappropriating trade secrets by using Nortel's proprietary software without authorization.

"In addition, Nortel Networks claims that Arbinet has exceeded the permitted usage level under its right to use license and has failed to meet its contractual obligations . . . with regard to the purchase of certain switching systems," Nortel said.

An Arbinet spokesman, Chris Reid, declined to comment on the litigation, but said his company had disclosed the dispute July 9 in a filing with the Securities and Exchange Commission. The company is preparing to make its initial public offering in the United States.

The New Jersey-based Arbinet was founded in 1996 as Smartgroup Holdings, Inc. and changed its name to Arbinet-thExchange in 2002.

Members of the Arbinet exchange, consisting primarily of communications service providers, anonymously buy and sell voice calls and Internet capacity based on route quality and price through a centralized, automated marketplace.

In afternoon trading on the New York Stock Exchange, Nortel's U.S. shares were down 2 cents at $4.38.

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