History (1997): SyQuest Files Suit Vs. Nomaï

SyQuest Technology must have waited until only a few days before the date of the general meeting of Nomaï stockholders in order to announce that it has again filed suit vs. the French company in the Federal district court in San Francisco, CA, for “patent, copyright, and trademark infringement as well as breach of contract and unfair competition.”

Recall that SyQuest tried in vain to acquire Nomaï following the joint signing of a letter of intent, but that the Frouin brothers, Nomaï’s major shareholders, rejected the offer in the end.

It seems obvious that SyQuest is once again leaping at the chance to take on its eternal rival, especially since the letter of intent anticipated penalties in case of a unilateral break on the part of Nomaï. The lawsuit includes a claim for damages of at least $2 million for breach of contract arising from the alleged breach of the letter of intent.

SyQuest filed its first lawsuit vs. Nomaï back in December of 1993 for theft of proprietary secrets, unfair competition and other wrongful acts. A “letter of intent to find an agreement” (eloquent phrasing!) was signed by both parties in April 1994, and finalized verbally 2 months later.

In June 1995, SyQuest rekind led the feud, by announcing a new plan to seek relief and damages from Nomaï, for manufacturing and selling compatible 200MB 5.25-inch removable HDD cartridges.

At CeBIT 1996, the 2 firms teamed up at the same press conference, hand in hand (if visibly straining to appear harmonious), in order to launch a 3.5-inch standard known as PDC. This attempt also ended in a volley of lawsuits, none of which were followed through.

On the subject of the most recent complaint, Nomaï CEO Marc Frouin said: “SyQuest was supposed to pay $3.5 million, then stopped payment on the check. We’re not yet informed of this suit by SyQuest but we have the evidence necessary to defend ourselves.“

In addition to taking on Nomaï, SyQuest is attacking 2 other firms in court.

Also named defendants with respect to the infringement and unfair competition claims were Electronique D2, a French distributor of Nomaï products, and its US affiliate, LaCie Ltd.

D2 was for a considerable time the largest distributor of SyQuest products in the world, and surely SyQuest must realize that a lawsuit is no way to win over a reseller.

Pierre Fournier, CTO, D2, said: “We have no idea why we are being involved in this matter. We have always ordered from SyQuest, and we have an enormous customer base. Have the new heads of SyQuest lost their memory entirely?“

Several days after the announcement of this lawsuit, the general assembly of Nomaï shareholders decided on an increase of the firm’s capital, with FF30 million coming in equal parts from disk platter manufacturer StorMedia and Xyratex, which makes MCD540 drives for Nomaï as a subcontractor, in addition to some FF32 million from the offering of 195,430 new shares to the public.

In its fourth quarter, ended December 31 1996, the French firm reported sales of FF56.6 millon ($10 million), increasing 148% compared to 4Q95. In its FY96, turnover grew 97%, from FF73 to FF145 million ($13 to $26.5 million). Net income or loss was not announced yet, but according to a sposkeswoman from Nomaï, profit could be released in 1996, despite a FF5 million ($.9 million) loss before tax in the first 6 months.

The company should soon announce a new 3.5-inch HDD removable cartridge drive with 570MB on one single platter. It will also accept 135, 270 and 540MB cartridges from Nomaï or SyQuest and maybe SyQuest’s EZFlyer 230 230MB cartridges.

This article is an abstract of news published on the former paper version of Computer Data Storage Newsletter on issue 109, published on February 1997.