Video on demand (VoD) company nCube Corp. scored a legal victory in its patent disputes with rival SeaChange International Wednesday. A district court jury found SeaChange had violated nCube's video-server software patent and awarded the company over $2 million, in addition to 7 percent royalty of all sales of SeaChange products that have infringed on the patent after Feb. 1, 2002.

The jury in Delaware District Court upheld Portland, Ore.-based nCube's claim that SeaChange's ITV system willfully infringed on nCube's 1998 patent on its VoD (define) delivery method using set-top boxes.

"We believed all along in the validity of our patent and are pleased that the jury agreed," nCube CEO and President Michael Pohl said in a statement.

The afternoon news of the nCube's victory sent SeaChange's stock tumbling nearly 15 percent before the market closed. Company's executives expressed shock at the ruling during their scheduled earnings conference call.

"What we really considered a harassment suit turned out to be a surprise for us," said William Styslinger, SeaChange's chairman, CEO and president.

"We believe there are good reasons for this finding to be put aside," he said. "We also believe that this is a relatively easy patent to workaround."

Styslinger said the company would implement a workaround within 90 days and immediately appeal the finding. In the meantime, the company delayed officially releasing its quarterly earnings until next week while it takes into account the ruling. Styslinger added, "The effect on our earnings in the short-term could be quite substantial."

NCube and SeaChange have a history of patent tangles. In June 2000, SeaChange filed a patent infringement suit against nCube, alleging it ripped off SeaChange's MediaCluster technology with its MediaCube-4 video server. In September 2000, a jury found in favor of SeaChange. The case is continuing to the damage phase.

NCube fought back by filing the patent case against SeaChange in January 2001.

Maynard, Mass.-based SeaChange has been a leader in developing video server technology, particularly with its MedaCluster product. The company inked deals with six of the country's eight largest cable operators to use its VoD systems. Recently, it also signed deals with MTV Italia and Virginia public television stations. Last year, SeaChange pulled in $115 million in revenues, with a $400,000 profit.

Privately held nCube has signed up some big names to roll out its VoD products, including a deal two months ago with Time Warner Cable.