Corvis Corp. (Nasdaq: CORV) is getting closer to resolving a patent infringement lawsuit filed by competitor Ciena Corp. (Nasdaq: CIEN).

The patent case, filed by Ciena in the summer of 2000 just before Corvis’s blockbuster initial public offering, finally went to trial at the end of last month in Delaware (see Ciena Sues Corvis). Overall, the jury’s findings were a mixed bag for Corvis.

Of the four patents the company is accused of infringing, Corvis was found to violate one of them. The jury found that the company didn’t infringe on two of the patents and was deadlocked on a decision regarding the fourth. All of the patents were related to DWDM transport.

A lawyer for Corvis says the legal matters are far from over. The court still has other issues to hear, and appeals will also likely be filed. In the end, it could be another year or longer before damages are even discussed.

Ciena, which settled a case with Nortel Networks Corp. (NYSE/Toronto: NT) in January, is claiming a partial victory (see Nortel, Ciena Settle Suit). “Obviously it’s important when we’re able to protect our patents,” says Glenn Jasper, a spokesperson for Ciena. “But we still don’t have a sense of finality yet.”

While the initial outcome may also be viewed as a partial victory for Corvis, analysts say it will likely have little impact on the company. Much bigger issues loom for Corvis, as its latest move to purchase assets from one of its troubled service provider customers, Broadwing Inc. (NYSE: BRW), looks to be a major shift in business model and strategy. The company announced it was spending $129 million in cash to buy Broadwing's assets (see Corvis & Broadwing: Together At Last).

Citing uncertainty about the move, two major research firms, Merrill Lynch & Co. Inc. and Thomas Weisel Partners, have suspended coverage and put the stock under review. This means the firms will no longer provide investment advice on the company. It’s an unusual move for Wall Street research houses and indicates that the analysts don’t feel comfortable with the information that is being disclosed by Corvis.

"Corvis, by investing in Broadwing, is changing the identity of the company,” writes Hasan Imam, the Thomas Weisel analyst who covered Corvis, in an email to Light Reading. “If they take a majority stake, they will consolidate revenues, which will likely be significantly higher than the revenues expected from Corvis. So essentially this would turn Corvis into more of a service provider than an equipment vendor.”

CIBC World Markets, RBC Dominion Securities Inc., and Salomon Smith Barney are still covering Corvis stock.Corvis, which closed at $83 on its first day of trading in July 2000, finished today up $0.02 (3.77%) to $0.55.

— Marguerite Reardon, Senior Editor, Light Reading