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Lucent Sues Cisco, Alleging Patent Violations

Telecom: Phone equipment maker says its technology is being used in San Jose rival's products.

June 19, 1998|From Bloomberg News

Lucent Technologies Inc., the largest U.S. phone equipment maker, on Thursday sued Cisco Systems Inc., alleging patent violations on technologies Cisco uses in several types of computer networking equipment.

Lucent is seeking unspecified damages against San Jose-based Cisco, the No. 1 maker of equipment to link computers to the Internet, in the suit filed in U.S. District Court in Delaware. Murray Hill, N.J.-based Lucent also seeks an injunction to stop further use of the technologies in Cisco products.

As sales to corporate customers slow, Cisco is looking to increase sales to phone companies and Internet service providers, which traditionally have bought Lucent equipment. Now long-distance companies and the regional Bells want new gear that lets them handle growing Internet traffic, and Cisco and Lucent are racing to supply it.

"Lucent is trying to establish that it's really their technology in the core of data networks," said Maribel Lopez, an analyst at Forrester Research in Cambridge, Mass.

Although many of the underlying technologies used in networking equipment were patented by Lucent forerunner Bell Labs, Cisco "has done a lot of their own work" developing their products, making the infringement allegation less than certain, Lopez said.

The suit claims that most of Cisco's major product lines, including its most profitable routers and switches, use patented Lucent technology.

"We're flattered they're using our technology, but we expect them to pay for it," said Lucent spokesman John Callaghan.

Lucent tried for 18 months to negotiate a "fair and reasonable" licensing agreement with Cisco, but the talks failed, Callaghan said.

"We are disappointed by the claim," said Stacey Clark O'Hara, a Cisco spokeswoman. She said the company won't comment further until it reviews the suit.

Shares of Cisco rose $1.56 to close at $82.13 on Nasdaq, and Lucent shares fell $1.69 to $72.94 on the New York Stock Exchange.

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