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Lucent Sues Rivals Over Tech Patents

May 29, 2003|Phil Milford | Bloomberg News

Lucent Technologies Inc., the biggest telephone equipment maker in the nation, sued California-based rivals Extreme Networks Inc. and Foundry Networks Inc. on Wednesday in federal court in Delaware over five patents for managing communications data.

The suit contends that the two companies are making and selling equipment that uses Lucent's patented inventions for organizing voice and data transmissions.

At issue are patents covering "packet-switching" technology, which divides information for more efficient transmission into small segments sent independently and reassembled at their destination.

Lucent's annual report predicts voice communications will shift over time from circuit-switched technology to packet-switched infrastructures. Protecting its intellectual property is part of a strategy for competing in an industry marked by tight money, overcapacity and weak demand, Lucent said in a report this month to the Securities and Exchange Commission.

"It's our intellectual property and we tried to negotiate with them and weren't able to come to a mutually agreeable settlement," Lucent spokesman John Skalko said. He also said the company is seeking fair compensation for use of the inventions.

Murray Hill, N.J.-based Lucent, which introduced the transistor and helped pioneer radar as AT&T Corp.'s research and manufacturing arm before the Bell System's 1994 breakup, has suffered 12 straight quarterly losses. The company has said it is forming a team to boost sales in the $40-billion global market for network services.

Extreme Networks reported a $183.9-million loss last year, and Foundry Networks had a $22.5-million profit.

Extreme Networks spokeswoman Valerie Bellofatto said the company is reviewing the allegations and "doesn't believe it has infringed on any patents." Officials of Foundry Networks weren't available for comment

In September, Extreme Networks and Canada's Nortel Networks Corp. said they agreed to cross-license each other's technology to settle patent-infringement disputes in federal court.

Lucent shares fell 8 cents to $2.28 on the New York Stock Exchange. The firm reported $12.3 billion in fiscal 2002 sales and an $11.7-billion loss.

Shares of Santa Clara, Calif.-based Extreme Networks, with $441.6 million in fiscal 2002 sales, rose 17 cents to $6.06 on Nasdaq. San Jose-based Foundry Networks, with $300.7 million in fiscal 2002 sales, fell 4 cents to $14.79 in Nasdaq trading.

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