nCUBE Takes Loss to SeaChange in Stride

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Even though a federal jury in Wilmington, Del., upheld SeaChange International Inc.'s patent for its "MediaCluster" video server last Monday, nCUBE Corp., which lost the case, found some good news in the verdict.

Michael Pohl, nCUBE's president, said the ruling "helped me define what to do and how to be in the right place" with his company's MediaCube-4 server. "It gave us a safe harbor that we can now steer our ship into."

Although Morgan Keegan & Co. analyst Murray Arenson said that decision "has got to hurt nCUBE in that it's been found that they infringed," Pohl begged to differ.

Pohl said his company can "easily adjust our system so that it does not infringe upon the patent, while having no material impact on our design or engineering."

SeaChange intends to seek a separate hearing on its request that privately owned nCUBE pay damages and attorneys' fees. The companies said no such hearing date had been set.

Seeking a swift decision, SeaChange CEO Bill Styslinger last June told the U.S. District Court for the District of Delaware that summer is a crucial time, because that's when MSOs would be budgeting for 2001 video-on-demand deployments.

Seeking a swift decision SeaChange filed for a permanent injunction last Wednesday.

But SeaChange vice president of research Branko Gerovac said last week that the damages phase may be a few months away. He said "nCUBE needs to demonstrate to us and to the court's satisfaction that they're not continuing to infringe."

MediaCluster forms the basis for a number of SeaChange products, including VOD, near VOD and video-streaming applications. All told, there are "about 1,000" deployments of the technology for unspecified clients worldwide, Gerovac said.

According to SeaChange, MediaCluster can store hundreds of movies and provide simultaneous video streams to thousands of consumers, as is the case with its GuestServe hotel system via Time Warner Cable.

Styslinger told the court his company had projected that MediaCluster shipments in 2000 could hit $40 million, but nCUBE's infringement could cost SeaChange business with Time Warner, Charter Communications Inc. and other buyers.

SeaChange and nCUBE would likely compete for VOD business from Time Warner Cable (which he said was eyeing $100 million in purchases for 20 of its markets), AT & T Broadband (about 10 markets), Adelphia Communications Corp., Charter, Cablevision Systems Corp. and Cox Communications Inc, Styslinger added.

The Delaware jury found for SeaChange on 36 counts.

The highest-profile VOD client win for nCUBE so far has been with Blockbuster Inc. and Enron Corp.'s planned on-demand venture.

SeaChange's system has been deployed by Time Warner in Austin, Texas; and Rogers Cablesystems Ltd. in Toronto and Ottawa, among others.

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