nCube Wins VoD Patent Fight with SeaChange

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 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
.

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