Imation announced today that it has filed a $450m (£307m) lawsuit
in the US charging Quantum with violating antitrust laws by price
fixing and monopolising the digital linear tape (DLT) tape drive
market.
The complaint alleges that Quantum forced Imation to pay more for
DLT tapes "than it otherwise would have paid and has been...
excluded from the manufacture and sale of data storage tape
compatible with DLT tape drives."
Imation said Quantum kept it from selling compatible DLT tape
cartridges by not allowing them to pass test requirements. DLT tape
is a widely adopted technology for backing up and archiving data.
Imation is suing for triple damages under the Sherman Antitrust
Act, claiming that Quantum's unfair practices cost it $150m (£102m)
in research and development and lost sales since 1999, when it was
prepared to produce the tape cartridges.
Quantum chairman and chief executive officer Michael Brown called
the lawsuit "preposterous". He maintained that his company had
wasted its time and money during the past two years helping Imation
to qualify its DLT cartridges.
"They've repeatedly failed our tests... and now they're using this
as cover to allow them to sell unqualified products on the market
place, which I think is very confusing for customers," he said.
The lawsuit charges that Quantum "invited Imation to join an
illegal tape cartel" comprising Fuji and Hitachi Maxell, and
"inappropriately extended patents on licensed tape drives to tape
media as a way to enforce its monopoly hold on the tape market and
misrepresented DLT-compatible tape as an open standard with
competitive pricing."
Brown said that Imation, which is a reseller of Quantum's DLT
cartridges, is also using its lawsuit as a "bait-and-switch"
approach to selling its new product by building a customer base
through Quantum's cartridges only to then introduce its own
unqualified products.
Brown warned customers that using Imation's unqualified product
could void Quantum's tape drive warranty.
Quantum charges Fuji and Maxell a royalty for each certified
cartridge they sell, and in 1999 and 2000 collected about $386m
(£263m) from the Tokyo-based companies.
Frank Russomanno, vice-president and general manager of data
storage media and services at Imation, said in a statement that
Quantum's "monopolistic practices hurt the market with higher,
fixed prices and limited supply.
"The purpose of our suit is to bring them back to that promise of
an open and fair market," he said. "Imation has met with - and
remains willing to meet with - Quantum, to try to resolve our
differences and reach a negotiated settlement."
When Imation refused Quantum's price demands, Quantum introduced a
new qualification process for DLT-compatible tape manufacture,
requiring Imation to restart the lengthy process under new and
different standards that have yet to be defined.
Until this year, Quantum had been the industry's largest
manufacturer of hard disk drives for 22 years. But it recently
decided to sell off that part of its business to focus on being a
pure-play enterprise storage provider.