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Follow UsTOKYO: Data storage systems provider EMC Corp and Japanese electronics giant Hitachi Ltd said on Tuesday they settled a year-old patent dispute and would share technology in data storage, a once-hot business now mired in a slump.
The two announced a five-year agreement that includes cross-licensing of patents that had been under litigation and payment of an undisclosed sum by Hitachi to EMC. The possibility of a patent-related payout had already been factored into Hitachi's earnings targets for the business year to March 31, Hitachi spokesman Hirotaka Ono said.
The legal dispute broke out after Hitachi made a sudden splash two years ago in the market for data storage systems for big corporations, one of the hottest areas of the 1990s info-tech boom and a business that U.S.-based EMC dominated.
But the data storage market went cold as the info-tech boom turned to bust, and by the time EMC filed patent infringement suits against Hitachi in the United States in April 2002, its revenues had shrunk by nearly half in just one year.
Hitachi responded with its own suits. EMC also took its case to the U.S. International Trade Commission, which was set to begin hearing evidence next week.
Interface value
This announcement included an exchange of interface technology to make the two companies' storage systems work together more smoothly. "Data storage industry groups are urging a move toward open systems and this agreement is going with the flow," Hitachi's Ono said.
Both companies have a lot at stake as they try to breathe life back into the data storage market, where they also compete with International Business Machines Corp and Hewlett-Packard Co. EMC has cut its payroll by 28 percent from peak levels and its share price is less than one-tenth of its high during the info-tech bubble.
Hitachi, a sprawling industrial conglomerate with operations ranging from washing machines to nuclear power plants, is struggling to bolster its anaemic profitability by exiting loss-making business and focusing on growth areas.
A restructuring plan announced a month ago lists data storage, where the company's technology has received high marks from analysts, as one of several areas targeted for growth. Hitachi expects data storage revenues of 260 billion yen ($2.21 billion) in the current business year to March, up a marginal 10 billion yen from last year, but it is aiming for 50 billion yen a year in growth over the next three years.