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Cipher Data Gets Boost in Patent Fight : Settlement Gives S.D. Firm Edge With Rival

June 14, 1988|CHRIS KRAUL and DAVID OLMOS | Times Staff Writers

"The problem with the Wangtek settlement is that they (Wangtek) don't have the opportunity to go through the appeals process to overturn the jury verdict," said Tag Merrick, Archive's corporate counsel.

Archive contends that the Wangtek case will have little effect on its court fight because its tape drive products are designed differently from Wangtek's products.

"What one jury may find as a valid (patent) claim, another might not," said Merrick. "We think we have some additional defenses to the patent claim. We think we will be able to prevail."

"It's a little early to know what the financial impact will be" if Archive loses the suit, Merrick said. "Right now, we don't see a significant financial impact on the company."

If the San Diego company does come out on top, "it could give Cipher the impetus to recapture market share, Sinsabaugh said. "It puts them on a more favorable financial footing. "

Although both companies are treating the legal battle as a serious matter, the outcome is "not of monumental significance," Sinsabaugh said. "There will be a financial impact on both companies, but it's not going to make one company skyrocket and send the other to the poorhouse."


The legal dispute centers on loading technology that enables the cassette of 5.25-inch computer tape drives to be side-loaded into the drives. Cipher Data Products claims its rights to that technology are covered in two patents received in 1986. At right, a tape drive made by Archive Corp.

Employees: Archive Corp.: 900 Cipher Data Products: 1,950

Headquarters: Archive Corp.: Costa Mesa Cipher Data Products: San Diego

Products: Archive Corp.: Cartridge tape drives for computer data storage. Cipher Data Products: Cartridge tape drives and optical disk drives for computer data storage.


Revenue: Archive Corp.: *$88.8 million Cipher Data Products: ***$178.2 million

Net income: Archive Corp.: $6.1 million Cipher Data Products: $4.3 million

Per share: Archive Corp.: $0.55 Cipher Data Products: $0.30

52-week stock price range: Archive Corp.: $12.625-$4.625 Cipher Data Products: $12.625-$3.50

Monday's close (national OTC): Archive Corp.: $6.25, up 12.5 cents Cipher Data Products: $9.50, up 12.5 cents

Common shares outstanding: Archive Corp.: **13.2 million Cipher Data Products: ****14.4 million

Market valuation of common stock: Archive Corp.: $82.5 million Cipher Data Products: $136.8 million * Fiscal Year ended Sept. 25, 1987

** at March 25

*** Fiscal Year ended June 30, 1987

**** at March 31

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