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Sun Microsystems settles lawsuit with Fenton firm.
From bizjournals.com Friday January 12,
2007 1:12 pm ET
Sometimes the little guy does win.
That's what David York learned last month when a subsidiary of Sun
Microsystems Inc. settled a lawsuit it had filed against York's
computer consulting firm in Fenton.
Sun StorageTek, part of Sun Microsystems since 2005, filed a lawsuit
in 2002 against York and his company, CHE Consulting Inc, over
alleged copyright and patent infringement. After years of
litigation, StorageTek decided to settle the case by paying CHE an
undisclosed amount.
CHE -- whose business includes maintaining and repairing data
storage libraries produced by StorageTek -- had produced a
diagnostic tool based on StorageTek technology, an illegal act
StorageTek claimed in its suit. CHE later countersued, claiming
StorageTek was trying to maintain an illegal monopoly on the
maintenance of its robotic tape libraries by bullying CHE.
"It is referred to in the industry as FUD -- fear, uncertainty and
doubt," said York, who owns CHE with his wife, Phyllis. "What they
would do is... state that my personnel were less than credible,
state that my parts were less than credible. They would also utilize
the litigation to threaten the customers."
Sun Microsystems officials and their attorney didn't return a call
for comment. The settlement became official in early January after
five weeks of trial in U.S. District Court in Boston, where
StorageTek filed the suit.
"We were very pleased with the amount," Anthony Simon, CHE's
attorney, said about the settlement. "We were seeking $140 million
-- not just seeking it, but we had put on evidence of $140 million
in damages -- and we settled for a confidential amount. But we were
very pleased with the amount."
StorageTek, based in Louisville, Colo., produces cabinets that
contain some 6,000 data storage tapes and 80 tape drives that read
them. A robotic arm in the unit shuffles the tapes to and from the
drives for users, which include government agencies and businesses.
"I always thought of it as kind of like a jukebox," said Simon, who
works at the St. Louis firm of Simon Passanante PC.
CHE and other third-party companies maintain and repair the robotic
tape libraries, work that StorageTek also performs. York said CHE
developed its own technology to perform the work and captured 12
percent of the maintenance market by 2000. Two years later,
StorageTek sued, accusing CHE of illegally exploiting StorageTek's
technology to produce its own to maintain and repair the libraries.
CHE's work maintaining the libraries accounts for about 40 percent
of its annual revenue, which in 2004 reached $14.64 million, York
said. The remaining revenue comes from other computer services the
firm offers. About 75 of CHE's customers use StorageTek's robotic
tape library, including IBM, GE Capital, Equifax and Honeywell.
That year, a federal judge granted StorageTek a preliminary
injunction, prohibiting CHE from copying code the company used to
maintain and repair the libraries. However, a federal appellate
judge threw out the preliminary injunction in 2005. The case went to
trial in Boston in late October 2006 and was settled in December
last year.
Simon said CHE was protected by a 1998 federal law aimed at
protecting computer repair companies from the original equipment
manufacturers.
"What they basically said was, copying (code), if it's done by a
maintenance and repair provider for the purposes of maintenance and
repair, then it's not copyright infringement," he said.
As part of the settlement, StorageTek agreed also to drop a patent
suit it had filed against CHE and David York in U.S. District Court
in Colorado. CHE, which employs about 95 people, also may resume
using StorageTek's tools to maintain robotic tape libraries and may
order upgrades from StorageTek for customers, according to the
settlement.
For its part, CHE agreed not to license its maintenance and repair
technology to other third-party companies or to say how much money
it received from the settlement, Simon said.
Published January 12, 2007 by the St. Louis Business Journal
--------------------------------------------------------------------------------
Sun settles old StorageTek lawsuit.
From The Denver Business Journal - January 4, 2007
Sun Microsystems Inc. reached a settlement in a patent infringement
suite against Custom Hardware Engineering & Consulting Inc.,
according to documents filed in U.S. District Court of Colorado in
mid December.
Judge Marcia S. Krieger finalized the agreement.
Originally filed in early 2003, the case involved a dispute over
robotic tape library maintenance code developed by Louisville-based
Storage Technology Co. (or StorageTek), which Sun acquired in 2005.
Sun alleged that Custom Hardware Engineering marketed a "remote
computer monitoring service" previously sold by StorageTek.
Custom Hardware Engineering, a third-party maintenance provider of
StorageTek libraries, filed an antitrust counterclaim later in 2003
-- seeking $140 million in damages against StorageTek.
By agreeing to the settlement, StorageTek and its parent, Sun,
agreed to withdraw all litigation against Custom Hardware &
Engineering and its owner, David York. Sun also ended up paying an
undisclosed sum to settle the counterclaim from Custom Hardware
Engineering and received reassurances that the company wouldn't
pursue further litigation.
The agreement allows Custom Hardware Engineering to continue to
receive upgrades from Sun while using maintenance tools on
customers' robotic tape libraries.
Sun (NASDAQ: SUNW), which is based in Santa Clara, Calif., employs
about 31,000 people.
Custom Hardware & Engineering, which is based in Fenton, Mo.,
employs approximately 95 people.
