With Trade Panel Ruling, Overland Storage Moves Ahead With Patent Lawsuits

Overland Storage on Friday said that the U.S. International Trade Commission agreed with the company that several vendors have infringed on one of its tape library patents, and that six claims in that patent are valid.

The ITC's initial determination in the patent infringement lawsuit opens the way for Overland Storage to continue infringement lawsuits against several tape library vendors.

The release of the ITC's initial determination comes about a month after Overland Storage said it was suing them.

[Related: Overland Sues Seven Tape Library Makers Over Alleged Patent Infringement ]

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The lawsuits were filed against San Jose, Calif.-based Quantum; Boulder, Colo.-based Spectra Logic; Irvine, Calif.-based PivotStor; Simi Valley, Calif.-based Qualstar; Germany-based Tandberg Data; Westminster, Colo.-based Tandberg Data; and Singapore-based Venture Corp.

All of these tape library vendors, as well as IBM and Dell, were accused of patent infringement stemming from their purchase of tape libraries from Germany-based BDT Media Automation for resale under their own brands in the U.S.

However, IBM and Dell late last year signed agreements with Overland Storage, and are not parties to the lawsuits. Spokespeople from both IBM and Dell both told CRN on Friday that they have settled with Overland Storage and that they are still selling the BDT-manufactured products.

The patent in question, patent number 6,328,766, focuses on technology for partitioning of a physical tape library into multiple virtual tape libraries which can be accessed by certain servers and not by others. Overland Storage was granted the patent in 2001.

Overland Storage on Friday said the ITC in its initial determination found that all six claims in the '766 patent are valid, and that the IBM and Dell tape libraries manufactured by BDT infringed on all six of the '766 patent claims.

Some of the tape library vendors serving as defendants in the lawsuit told CRN that Overland Storage served papers related to the lawsuit long after announcing that the lawsuits were filed, giving the impression that the timing of the lawsuit was determined more with Overland investors in mind.

NEXT: The Defendants Respond

Dan Nickel, president of PivotStor, said he has yet to be served the papers related to the lawsuit one month after Overland Storage said it was suing his company.

"It's interesting how a company can put out a press release about a lawsuit without filing the lawsuit or serving us papers," Nickel said. "I'm kind of pissed. We read the press, we get a lot of calls about it. We're not violating the patent."

Molly Rector, executive vice president of product management and worldwide marketing at Spectra Logic, said her company only received the lawsuit papers this week, and so it has not had any response to the lawsuit until now.

"For us, its more of a nagging annoyance than a concern," Rector said. "We have a large patent portfolio, and will respect any patents Overland has."

Rector said the timing of lawsuit seems to be aimed more at investors in Overland.

"Overland is a struggling company," she said. "They've been grasping. It's interesting that this is clearly something they want to get in front of investors. The timing of them talking about it before serving the lawsuit is for getting it in front of investors."

Spectra Logic will aggressively defend itself against unwarranted charges, Rector said. "But at this point, we haven't seen enough to see if the charges are warranted."

Qualstar responded to a request for more information from CRN by saying that it was served the lawsuit papers only last week, and that it is declining to comment at this time.

A Tandberg spokesperson said that company was waiting to hear from its European corporate office before responding. A Quantum spokesperson said Quantum is not commenting on the case as it was sued separately and so is not a part of the ITC case. BDT did not respond to a request for more information.

Overland Storage was unable to comment by press time on Friday. However, the company is planning an investor's conference call on Tuesday to discuss the ongoing litigation.

When Overland Storage in late June initially announced the lawsuits, there was also a second patent referenced by the company. That patent, patent number 6,353,581, describes a method for users to securely import or export individual data cartridges within a tape library without impacting the security or other operations of the library.

Overland Storage did not mention the '581 patent in Friday's notification about the ITC's initial determination report.

NEXT: Overland Engages High-powered Law Firm

Online financial opinion and analyst site Seeking Alpha on Thursday wrote that Overland Storage is being represented by DLA Piper, the world's largest law firm, and that John Allcock, the lead counsel, has never lost a case in his career. "He's taken 71 infringement cases to trial and won," Seeking Alpha wrote.

Investors in Overland Storage welcomed the ITC's initial determination about the company's patent case and on Friday drove Overland's share prices up over 12 percent to $2.28.