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IBM sues EMC
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December 23, 1999: 2:56 p.m. ET
Claims violation of licensing agreement; EMC calls suit ‘frivolous’
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NEW YORK (CNNfn) - Computer maker IBM has sued EMC Corp., claiming the data-storage equipment maker violated the terms of a cross-licensing agreement the two companies forged late last winter.
At the heart of the suit, first reported in the Wall Street Journal Thursday, are the patents involved in an ongoing lawsuit between IBM (IBM) and Data General Corp., which EMC (EMC) acquired in October.
In a complaint filed against EMC in U.S. District Court in Worcester, Mass., last Friday, IBM claims that the company "conspired to commit wrongful acts” by transferring those patents to a newly-formed company, called DG Patent Holdings LLC.
By doing so, EMC violated the terms established in a cross-licensing agreement the two companies signed last Match, IBM’s complaint alleges.
Historically, IBM and EMC have been fierce rivals in the data-storage equipment market. But in the licensing pact, the two companies agreed to work together by sharing their technology and design patents.
IBM claims that the company "is licensed to EMC’s patents and released from any and all claims for infringement of EMC’s patents,” even those that it obtained through mergers and acquisitions.
"EMC understood that, upon consummation of the merger, Data General’s patent infringement claims against IBM would be extinguished by the license agreement,” IBM’s complaint says.
EMC, which filed a response to IBM’s complaint on Thursday, denied the allegations, saying that it has complied fully with the terms of the licensing agreement.
"IBM’s case is frivolous and a waste of the court’s time,” Mark Fredrickson, an EMC spokesman, told CNNfn.com Thursday.
In its response, EMC says that IBM is itself in violation of the very licensing agreement it is attempting to enforce because it did not first attempt to resolve the dispute out of court, which is the procedure that has been established by the licensing agreement.
"The IBM-EMC licensing agreement contains very explicit provisions requiring either company to seek specific dispute-resolution steps prior to initiating litigation,” Fredrickson said.
IBM’s patent dispute with Data General, which involves the design of its high-end AS/400 computers, has been ongoing since 1994, but has yet to be settled or heard in court.
"We believe this is a tactic, on IBM’s part, to attempt to delay or avoid the hearing of that case on its merits,” Fredrickson said.
In its complaint, IBM also names Data General's former chairman and chief executive, Ronald Skates, and its former general counsel, Jacob Frank, as defendants. 
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