U.S. Judge Puts nCUBE’s Win in Writing

4/18/2004 8:00 PM Eastern

A year after a jury found in favor of nCUBE Corp. in its patent suit against SeaChange International Inc., U.S. District Court Judge Joseph J. Farnan Jr. issued a 71-page ruling backing the jury’s claim.

“The publicly available information of the underlying design information of the [nCUBE] patent, along with the similarity of the media server described in the [SeaChange] … systems, coupled with the jury finding of willfulness, all support the conclusion that SeaChange deliberately copied the invention of the [nCUBE] patent,” Farnan wrote.

SeaChange said it now plans to appeal the decision, which was held up until the judge’s ruling was made public.

Final damages in the case are still unknown. The judge awarded “enhanced” damages to nCUBE of roughly $4 million, plus prejudgment interest of $62,000 and legal fees amounting to $1.8 million.

Since the initial verdict, SeaChange said it has instituted a workaround — basically new server software. “We are confident it does not infringe on the patent,” a SeaChange executive said.

An nCUBE spokesman countered that the privately owned company hasn’t seen details of the workaround, and no court has ruled on whether it violates any patents. To that end, nCUBE contends that a final damage figure is unknown.

At the same time, a SeaChange executive said it hasn’t seen an nCUBE workaround associated with a different lawsuit.

SeaChange said in its most recent quarterly financial filing that charges linked to the case totaled $14.4 million. It said in late 2003 that it had set aside cash to cover the costs of any jury award.

In a research report last Tuesday on publicly owned SeaChange, IRG Research noted the judge’s order contained no “additional potential damage reward” against SeaChange and said the litigation had no effect on the research firm’s financial projections for the vendor. IRG restated a “buy” rating and $27 price target.

SeaChange’s closing price last Tuesday (April 13) was $14.36, up from $13.95 on April 12.

Separately, nCUBE last week said Charter Communications Inc. will deploy nCUBE VOD servers in four more of its markets, bring the total number of nCUBE Charter markets to 15.

The rollouts include Worcester, Mass.; Charleston, W. Va.; Riverside, Calif.; and Hysperia/Victorville, Calif.

“nCUBE’s approach centers around simplification and keeping overall operating costs down,” Charter senior vice president of engineering and technical operations Wayne Davis said in a statement.

Charter is using nCUBE’s server system and nABLE on-demand management system. The vendor’s technology also has been deployed by Charter in Fort Worth, Long Beach and Birmingham, Ala.

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