Ciena and Nortel just can

Despite trying to work together for two years, network gear makers Ciena Corp. and Nortel Networks simply couldn’t come to see eye to eye on technology licensing, according to a spokesperson for the former firm.

Nicole Anderson, representing Linthicum, Md.-based Ciena, said that as a result of a communication breakdown between the two firms, her company is suing Nortel for infringing six patents.

Ciena and Brampton, Ont.-based Nortel agreed in 2003 not to sue each other over intellectual property issues for two years. Back then the companies said they aimed to build licensing agreements between each other to avoid future litigation.

But the situation didn’t pan out as hoped. “Unfortunately, the companies were unable to reach a licensing agreement during that timeframe,” Anderson said. She said she can’t explain exactly what went wrong between the networking rivals.

“I can only say that the parties were not able to reach a licensing agreement.”

In a complaint filed Jan. 18, Ciena claims Nortel is infringing three ATM patents, two WDM patents and one SONET patent. Ciena says its intellectual property is used in various Nortel gear, including the DWDM Terminal and the Cross Connect HDX.

Ciena filed its suit in the United States District Court, Eastern District of Texas, Marshall Division.

Nortel spokesperson Tina Warren said her company is working through Ciena’s court complaint these days; Nortel plans to defend itself “vigorously,” she said.

Ciena and Nortel have a history of court battles, starting in 2000 when Nortel brought a lawsuit against ONI Systems Corp., an optical networking firm, complaining that ONI infringed Nortel’s patents and misappropriated trade secrets. Ciena took up ONI’s defence when the former firm acquired the latter.

In 2003 Ciena and Nortel agreed to dismiss the ONI lawsuit, and Nortel granted Ciena a licence to use certain technologies for a one-time, US$25 million payment. The companies also agreed not to sue each other for two years.

Ciena’s Jan. 18 court complaint is the second legal action to hit Canada’s tech world in 2005. The first came on Jan. 13 when the Department of Justice filed an amicus curae brief on behalf of Research In Motion Ltd. (RIM), the Waterloo, Ont. BlackBerry creator beset by serious cross-border crossfire courtesy of NTP Inc., a Virginia patent-holding company. NTP successfully sued RIM for patent infringement and won from the U.S. Court of Appeals a US$54 million payout and RIM royalties. The court also granted NTP’s injunction against RIM selling BlackBerries in the U.S.

But the Appeals court sent the case back to a district court for a procedural matter. In a final push to overturn the verdict, the DoJ said in its brief that the decision against RIM is flawed; it over-steps its bounds and shouldn’t stand.

Might the federal government likewise intervene on Nortel’s behalf in its Ciena defence? Michael Geist, an Ottawa lawyer specializing in high-tech issues, said he thinks not.

“I don’t believe Ottawa waded into the RIM dispute because a Canadian company might be affected,” he said. “Rather, it got involved because the jurisdictional implications of RIM court’s decision were troubling to all Canadian companies.”

— With files from Vanessa Ho and IDG News Service

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