Epoch Partners Comments on Lawsuit Filed by Board of Trustees of Stanford University, Litton Systems

Epoch Partners Inc. has issued a research commentary to a lawsuit filed in California by the Board of Trustees and Litton Systems against a group of companies including Corning, Alcatel, Nortel, Lucent, and JDS Uniphase alleging patent infringement.

Oct 6th, 2000

By Michael Sciannamea, Web Editor

Epoch Partners Inc. has issued a research commentary to a lawsuit filed in California by the Board of Trustees and Litton Systems against a group of companies including Corning, Alcatel, Nortel, Lucent, and JDS Uniphase alleging patent infringement.

The lawsuit alleges that the companies infringed on U.S. patent number 4,859,016, entitled "Fiber Optic Amplifier," invented by Herbert Shaw (Stanford) and Michel Digonnet (Palo Alto). The suit alleges patent infringement on an enabling technology behind fiber optics, and an enabling technology for wavelength division multiplexing (WDM).

According to the research commentary issued today by Mark Langley, Senior Analyst, Communications Equipment with Epoch Partners, the lawsuit may have far-reaching implications for the fiber-optic industry implications.

Among the highlights of the commentary are that the lawsuit was filed in the U.S. District Court for the Central District of California, Western Division, with a demand for a trial by jury. The plaintiffs have asked for undisclosed damages including a royalty, with interest, enhanced damages and attorney fees, and an injunction enjoining the defendants and others from further infringement.

The patent was assigned to Stanford University, and licensed exclusively to Litton Industries. While the plaintiffs did not specify damages, Litton claims in the suit that it discontinued its own manufacture of optical fiber amplifiers as a result of the "alleged" patent infringement.

Epoch says the lawsuit presents a much larger opportunity for the plaintiffs than burden for the defendants, unless an injunction is granted. JDS Uniphase, SDL, and Corning shares are likely to react the most in a "knee-jerk" fashion. In addition, Epoch does not expect the suit to be resolved soon, and believes investors should focus on ongoing business prospects over (real or potential) one-time payments for past damages.

Epoch Partners is a technology-enabled investment bank focused on high-growth companies and electronically connected institutional and individual investors.

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