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Jury rules in nCUBE's favor in VOD patent spat

Tue, 05/28/2002 - 8:00pm
Jeff Baumgartner

Video-on-demand vendor nCUBE Corp. said Wednesday that a Delaware District Court jury has unanimously upheld the company's patent for VOD delivery and ruled that rival vendor SeaChange International has "willfully infringed the patent."

Additionally, nCUBE said the jury ruled that SeaChange must pay nCUBE "over two million dollars" in damages, plus a seven percent royalty on all sales of infringing products after Feb. 1, 2002.

"Now it's back to business," nCUBE President and CEO Michael Pohl said in a statement.

SeaChange officials were not immediately available for comment. However, the company is expected to hold a conference call today at 5 p.m. ET to discuss first quarter earnings figures. The patent case is expected to be a top item of discussion. SeaChange is expected to appeal the decision.

Still, investors became skittish once news of the ruling spread. SeaChange shares dropped more than 13 percent to $10.56 apiece in late afternoon trading Wednesday.

It's expected that the ruling won't spell an end to the legal battles between the two VOD competitors, which already have a long litigious history between them.

In June 2000, SeaChange filed a lawsuit against nCUBE for patent infringement. In that case, SeaChange is defending U.S. Patent No. 5,862,312, which was granted on Jan. 19, 1999. The '312 patent describes a "loosely coupled mass storage computer cluster." More specifically, it describes a method to redundantly store data, including video data objects, at the computer system level and at the processor system level.

In that case, a Delaware District Court jury rejected nCUBE's challenge on Sept. 25, 2000, ruling that SeaChange's patent was valid. SeaChange has since asked the court to enter a judgment of infringement and a permanent injunction against nCUBE's MediaCube-4 video servers. No final judgment has been entered in the '312 case.

On Jan. 8, 2001, nCUBE countered with a suit of its own, alleging that SeaChange's iTV System infringed on U.S. Patent 5,805,804, which was issued to nCUBE on Sept. 8, 1998. The '804 patent describes "a unique video server architecture specially suited for VOD delivery." Further, the patent describes how video servers under that architecture can be made compatible - "while requiring only minimal changes" — with the existing systems of other providers. The '804 patent is the subject of Wednesday's ruling.

Judge Joseph J. Farnan Jr. is presiding over both cases.

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