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Optical/IP

Litton, Corning to Settle Suit

Litton Systems Inc. must have been starved for attention.

About a month after a profit warning knocked its shares down nearly 24 percent, Litton and Stanford University last week filed a patent infringement lawsuit against 15 companies (see Component Lawsuit: What's It Mean?). Litton’s concerns were not news to the companies it sued — some had been talking with Litton for years, apparently unaware that there was serious bad blood.

The suit alleges that the defendants — which include Alcatel SA (NYSE: ALA), Ciena Corp. (Nasdaq: CIEN), Corning, JDS Uniphase Inc. (Nasdaq: JDSU), Lucent Technologies Inc. (NYSE: LU), Nortel Networks Corp. (NYSE/Toronto: NT), SDL Inc. (Nasdaq: SDLI), and others — are illegally using a design for fiber amplifiers that was invented by Stanford researchers and licensed exclusively to Litton. In return, Litton and Stanford are asking the courts for damages, royalties, and an injunction to prevent further patent infringement.

On Sunday, Litton dropped its lawsuit against Corning, and Corning announced the two companies would settle their differences out of court. Corning admitted it was surprised by the Litton lawsuit because it rehashed an issue that Corning and Litton had been discussing “for quite a while,” says Dan Collins, vice president of corporate communications for Corning.

Collins says Corning’s lawyers had reviewed the matter once in 1994 and again in 1998 and never advised the company to take action of any sort.

Litton, Nortel, SDL, and others didn’t return calls for comment by press time.

It still remains to be seen whether the damages Litton is seeking from the companies involved will in any way affect the manufacturing plans of components firms, who already are struggling to keep up with industry demand for their products.

-- Phil Harvey, senior editor, Light Reading http://www.lightreading.com

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