Imation sues Quantum over alleged antitrust violations

Imation announced today that it has filed a $450m (£307m) lawsuit in the US charging Quantum with violating antitrust laws by...

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.

Read more on IT legislation and regulation