Quantum counter sues Imation

Network storage company Quantum has filed a suit alleging that Imation has misappropriated trade secrets and is engaged in...

Network storage company Quantum has filed a suit alleging that Imation has misappropriated trade secrets and is engaged in deceptive and misleading advertising by releasing DLT (digital linear tape) products without meeting Quantum's qualifications.

The suit comes two days after Imation filed a federal antitrust suit against Quantum, charging the company with conspiring to monopolise the DLT storage market.

Quantum has said in its suit that Imation is taking "illegal and unfair advantage" of proprietary information received after Imation signed a 1999 licence agreement giving it access to Quantum's DLT intellectual property.

Imation went ahead with a launch on 1 October of its own DLT tape line of Black Watch DLT IV data cartridges - compatible with DLTtape 4000, 7000 and 8000 drives - branding them "Imation-certified" instead of carrying Quantum's certification.

Quantum's chairman and chief executive officer Michael Brown said that Imation could not have produced DLT tapes without using proprietary production methods revealed in the certification process.

Imation "came into this market late," Brown said. "They wanted a piece of the biggest storage market out there." About half the money spent on tape storage each year is for DLT tape.

Quantum had offered to arrange for two of its DLT tape-manufacturing licensees - Fuji and Hitachi Maxell - to sell Imation tape at below market prices for rebranding, according to an internal e-mail sent to Imation from a Quantum manager. In return, Quantum required that Imation cease its efforts to get its own manufacturing certified.

While Quantum executives acknowledged that a Quantum manager sent the e-mail, they maintained that without context, the message was false and misleading.

In the e-mail, Quantum manager Phil Ritti offered a "special arrangement... for a specific quantity that approximates current unit purchases. In exchange we would want Imation to suspend plans to manufacture Tape IV and all related qualification activities."

Quantum planned to obtain tape from its manufacturers and then sell it below-market cost to Imation, according to Barbara Nelson, Quantum's DLT tape division president. Imation would then be able to enter the market by reselling the tape under its own label for a profit, while working to certify in another format, Super DLT. Quantum would have been willing to absorb the cost of lower pricing for the arrangement, she said.

Imation wants the court to grant an injunction barring Quantum from further antitrust violations in the DLT market and is asking for damages of at least $150m (£102m), which would be tripled under antitrust law to a minimum of $450 million.

In its injunction filed yesterday, Quantum is seeking an injunction barring Imation from selling DLT tape products or, failing that, unspecified monetary damages, Brown said.

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