Atlanta -- Scientific-Atlanta Inc. is dropping its lawsuit
against Blonder Tongue Laboratories Inc. for patent infringement, opting instead to sell
the subject of the litigation to Blonder Tongue.
Last week, S-A agreed to sell its entire interdiction
business to Blonder Tongue, including the products, inventory, manufacturing assets and
intellectual property. For it, S-A will receive $19 million and Blonder Tongue stock
valued at $1 million and an option to acquire additional shares.
The deal also calls for S-A to drop its pending patent
litigation suit it filed in late 1996, when S-A filed suit against Blonder Tongue for
violating two patents.
Interdiction is a technology that involves the installation
of boxes outside subscribers' homes, then sending basic and premium channels in the
clear until they hit the box, where they're scrambled. S-A introduced the technology
in 1989 and has since installed about 30 systems, said David Alsobrook, product line
manager for S-A.
Steve Necessary, vice president and general manager of S-A,
said that the move from sue to sell is the outcome of "creative
problem-solving," as S-A and Blonder Tongue worked to settle their differences.
"We were looking for a mutually attractive solution,
and I think that's what we structured here," Necessary said.
Necessary said the sale will enable S-A to focus its
resources on other subscriber businesses, like advanced analog and digital systems.
"It's been good business, but not one that was
really hitting S-A's strategic interests," he said.
James Luksch, president and CEO of Blonder Tongue, said in
a statement that Blonder Tongue will continue to make the S-A interdiction line.