History (1994): Skimpy Agreement Between SyQuest and Nomaï

After several million dollars spent in procedure expenses by both parties, SyQuest (Fremont, CA) settled its litigation with Iomega (Roy, UT) and Nomaï (Avranches, France) on 5.25-inch HDD cartridges.

Nomaï had started manufacturing SyQuest-compatible cartridges in the beginning of 1993 taking advantage of the fact that the Californian company hadn’t correctly protected the patents on its invention.

In mid-93, SyQuest’s main competitor in the removable disk segment, Iomega, was signing an exclusive agreement to distribute Nomaï’s cartridges throughout the world, except France. Then a half a dozen suits followed, in England, Germany, France, to the ECC, without mentioning those in the US. All this turned out to be quite expensive.

“Nomaï and Iomega spent close to $2 million, and SyOuest probably more,” said Marc Frouin, CEO, Nomaï.

An agreement was necessary to stop the expenses. It says that SyOuest will receive royalty payments, of an undisclosed amount from Iomega and Nomaï in exchange for a licence of certain IP rights relating to SyQuest 44 and 88MB 5.25 cartridges. It does not include newly-introduced 200MB 5.25- nor 3.5-inch cartridges. Nomaï can now manufacture and sell or let Iomega sell its cartridges without worrying.

The comments on the press releases concerning this announcement show SyQuest’s resentment in reaching this settlement.

SyQuest writes: “(We) will not provide any technical information, support or assistance to Iomega and Nomaï, it reiterated its warning to customers that Iomega and Nomaï’ cartridges are being ‘passed of’ as genuine SyOuest cartridges by certain resellers. (They) have clearly recognized the superiority of SyOuest’s Winchester technology but they must now pay us compensation before offering this technology to their customers. Our consistent legal position has been that manufacture and sales of cartridges by Iomega and Nomaï illegally infringed SyOuest’s IP rights. Our position has now been vindicated. The settlement provides us with new revenues and eliminates litigations expenses.“

The position is different at Nomaï: “Nomaï is now a licencee of SyOuest with the officially recognized full right to produce and sell 44 and 88MB cartridges for use in SyOuest 5.25-inch drives. We did not recognize any technology rights to SyOuest and our purpose was to remove the legal harassment that had been created based on fictional claims. Royalties during a short period will be less expensive than litigation for an unknown period, and much more reassuring for our customers.”

Nomaï has shipped about 400,000 cartridges and is announcing that its plant has just been ISO 9002 certified

This article is an abstract of news published on the former paper version of Computer Data Storage Newsletter on issue 78, published on July 1994.