JDSU buys Metconnex's remains for $2.5M and adds an explanation to its Optium lawsuit

Craig Matsumoto, Editor-in-Chief, Light Reading

October 17, 2006

2 Min Read
Metconnex Sells to JDSU

The collapse of optical startup Metconnex began with a JDSU (Nasdaq: JDSU; Toronto: JDU) lawsuit last year, and has just ended with JDSU picking up the company's patents and technology for $2.5 million.

The deal, being announced Tuesday, officially dissolves Metconnex and kills off its Hi-PLC line of wavelength selective switches (WSSs), a central element to some reconfigurable optical add/drop multiplexers (ROADMs). JDSU will not continue to sell Hi-PLC, nor does it intend to continue any ongoing Metconnex R&D, says JDSU director of marketing Enzo Signore.

None of Metconnex's employees or facilities are included in the deal.

JDSU describes the purchase as opportunistic. Metconnex, unable to withstand the expense of defending itself against the lawsuit, shut its doors in September and was looking to sell its assets. JDSU saw the chance to lace its ROADM portfolio for cheap, although it has no immediate use for the technology, Signore says. (See Metconnex Denies Claims and Competition Kills Metconnex.)

Metconnex's options were limited, considering anyone buying the intellectual property would open themselves to the JDSU suit. Signore says he isn't aware of any other companies that were vying to purchase a piece of Metconnex.

One key aspect to the deal is that it halts all lawsuits between the companies. That means the JDSU suit against Metconnex has been dropped, as has the reciprocal suit filed by Metconnex that charged JDSU with abusing the legal process to crush a competitor.

Metconnex accused JDSU of accelerating Metconnex's demise by getting the startup's two suppliers to stop selling to the company. One, Memscap S.A. (Euronext: MEMS), got hit with a JDSU patent suit. The other supplier, Micralyne, which is partly owned by JDSU, told the Ottawa Citizen its decision was related to credit terms not being met.

Remaining competitors in the WSS market include Capella Photonics Inc. and CoAdna Photonics Inc. The latter claims it had a hand in Metconnex's downfall by stealing a key account with Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA), the equipment supplier to Verizon Communications Inc. (NYSE: VZ).

JDSU has a separate ongoing patent suit against Optium Corp. (Nasdaq: OPTM), the 10-Gbit/s transceiver maker that's on the verge of going public, but Signore describes JDSU as more of a bystander in that case. (See JDSU, Emcore Sue Optium and Optium IPO Rolls On.)

That's because Emcore Corp. (Nasdaq: EMKR) owns the patents in question, having purchased them from JDSU in a May 2005 deal that involved some technology licensing between the companies. (See Emcore Buys JDSU's Cable Biz.) The suit against Optium is Emcore's, with JDSU being dragged along for the ride, as Signore describes it. "We're just called in because of the licensing agreement," he says.

— Craig Matsumoto, Senior Editor, Light Reading

About the Author(s)

Craig Matsumoto

Editor-in-Chief, Light Reading

Yes, THAT Craig Matsumoto – who used to be at Light Reading from 2002 until 2013 and then went away and did other stuff and now HE'S BACK! As Editor-in-Chief. Go Craig!!

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