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Cisco Snagged in French Suit

Light Reading
News Analysis
Light Reading
3/20/2000

NEW YORK -- When Cisco Systems Inc. bought Monterey Networks for $500 million last summer it thought it was getting its hands on a red-hot wavelength router. Turns out that the Monterey product might be even ‘hotter’ than it anticipated.

Alcatel has taken Cisco to court, accusing its Monterey division of stealing trade secrets, including some of the code in the Monterey router, by hiring almost 30 Alcatel employees. And the case could potentially prevent Cisco from selling the Monterey box.

There’s no word on when the suit -- being heard at Dallas District Court -- is likely to be settled. Both Alcatel and Cisco refused to comment, although Cisco recently told Light Reading that it will ship the Monterey router into field trials next month.

However, legal precedents indicate that those plans could be upset by the current litigation. At the end of last year, a district court judge banned Cisco from using proprietary information obtained when it hired employees away from Fujitsu Network Communications Inc. http://www.fujitsu.com. A delay to the Monterey rollout would embarrass Cisco as it attempts to compete with vendors like Ciena Corp. http://www.ciena.com, Sycamore Networks Inc. http://www.sycamorenetworks.com, and Tellium Inc. http://www.tellium.com in the race to dominate the market for core optical switching products.

However some observers question how seriously the case will impact Cisco’s business. “It’s Cisco. They might have made a $500 million mistake. What’s that to them? That’s like a little sneeze,” says R. Scott Raynovich, New York bureau chief for Red Herring http://www.redherring.com.

This is not the first lawsuit that Alcatel has pursued. In January, Alcatel settled a case that it had brought against Samsung Electronics Co. http://www.samsung.com. Samsung was accused of hiring engineers away from DSC Communications – a company that Alcatel subsequently acquired. The company also is rumoured to be considering taking legal action against Bernard Daines, president of World Wide Packets http://www.worldwidepackets.com, after he accused the company of reneging on promises it made to his last company, Packet Engines, in an interview with Light Reading last month (see Bernard Daines).

—Stephen Saunders, US editor, and Marguerite Reardon, senior editor, Light Reading http://www.lightreading.com

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