Bookham, JDSU Settle Laser Tiff

JDSU (Nasdaq: JDSU; Toronto: JDU) has emerged as the victor in a patent case against Bookham Inc. (Nasdaq: BKHM; London: BHM), although in dollar terms, you wouldn't call it a high-stakes battle.

Bookham is going to pay JDSU up to $8 million as part of a settlement that erases lawsuits the companies had filed against each other.

Details were disclosed in an SEC filing Monday. The payments will start with $1.5 million due today and another $1.5 million within the next year, followed by royalties of up to $1 million a year for five years. For its money, Bookham gets a license to the JDSU patents.

The maximum $2.5 million-per-year payout reflects how relatively small the tunables market is. Bookham reported that tunable lasers represented 15 percent of its revenues in the December quarter -- which represents about $8 million, for an annual revenue rate of $32 million.

Bookham shares were up 6 cents (12.5%) at 54 cents each in midday trading today. JDSU shares were down 6 cents (1.4%) at $4.19.

That might be because the settlement should defuse JDSU's request for the U.S. International Trade Commission (ITC) to ban tunable laser imports from Bookham, which uses a U.K. fab to build the devices. (See Tunable Wars.)

The patent fight appears to have started in March 2008 when JDSU sent Bookham warnings about possible infringements of three patents. Bookham countered by suing to invalidate JDSU's patent, which in turn led to a JDSU countersuit and then, in November, the ITC filing.

The concept at issue is a monolithically integrated tunable laser made of indium phosphide (InP), the idea being that other InP parts such as the modulator can be housed on the same chip as the laser.

Such devices have become a signature product for Bookham, which packed them into integratable, tunable laser assemblies (iTLAs) in 2006.

But JDSU is making a push in this area, too. It showed its own integated laser and modulator in 2007 -- fruits of the 2005 acquisition of Agility Communications -- and packed the device into an XFP module this year, creating a tunable, pluggable interface. (See JDSU Advances PICs, JDSU Tunes In Agility, and JDSU, Emcore Shrink Tunables.)

The settlement erases the lawsuits JDSU and Bookham had with each other, and it frees Bookham from the ITC complaint. But JDSU has other legal battles around tunables.

The ITC complaint also mentioned CyOptics Inc. and Syntune AB -- and potential customers ADVA Optical Networking , Ciena Corp. (NYSE: CIEN), Nortel Networks Ltd. , and Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA). Separately, JDSU sued Syntune for patent infringement last summer.

Unrelated to any of that, Syntune happens to be under consideration for an acquisition by European components company Ignis ASA , whose Ignis Photonyx AS subsidiary is a big supporter of WDM-PON. (See Ignis Eyes Syntune.)

— Craig Matsumoto, West Coast Editor, Light Reading