Nortel and Redback Settle Suit
Nortel Networks Corp. (NYSE/Toronto: NT) has settled a patent dispute with Redback Networks Inc. (Nasdaq: RBAK), according to a company spokesperson. The suit was the latest in a series of motions filed by Nortel in defense of its patents over the past couple of years.
"The parties have entered into a patent cross-licensing agreement with each other, and Redback will pay Nortel undisclosed fees under the agreement," the Nortel spokesperson says.
Redback declined to comment.
Redback launched the suit in December 2001 as a sort of preemptive strike, because Nortel had been so vigorously defending its technology with Redback's competitors (see Suing for Revenue?).
The lawsuit involved several patents, including:
When Nortel contacted Redback, it supposedly demanded an upfront fee and a running royalty on all Redback products using Nortel's patents. Redback's complaint alleges that Nortel demanded an upfront fee ranging from $50 million to $100 million from Extreme, F5, and Foundry, plus a running royalty of 7 percent to 9 percent from each product sold. "These terms are commercially unreasonable and anti-competitive," Redback's complaint stated.
The Redback/Nortel settlement is the latest of several to emerge from Nortel's licensing litigation:
- Nortel v. Ciena: In March 2000, Nortel sued ONI Systems, and in January 2003, it settled the suit with Ciena, which had purchased ONI (see Nortel, Ciena Settle Suit). Nortel granted Ciena a license for two patents -- 6084694 and 6493117, both related to WDM optical networking with passive pass-through at each node -- and Ciena made a one-time payment of $25 million to Nortel.
- Nortel v. Extreme and F5: In September 2002, Nortel and Extreme brought an end to their court fight by entering a cross-licensing agreement involving several patents. That settlement also led to the dismissal of Nortel's complaint against F5, which shares some technology with Extreme. None of the companies have publicly talked about the details of the settlement.
- Nortel v. Foundry: Nortel's case against Foundry is still being contested by Foundry in U.S. District Courts in California and Massachusetts.
— Phil Harvey, Senior Editor, Light Reading