Court Orders Sales by Data General : Digidyne Claims Software Victory
Digidyne Corp., a small Tustin computer manufacturer, said Tuesday that it has won a federal court injunction against giant Data General Corp. that could give it a chance at winning a piece of a computer market worth $400 million a year.
Granted late last Thursday by Judge Marilyn Hall Patel of the U.S. District Court in San Francisco, the action essentially orders Westboro, Mass.-based Data General to sell its software to users of Digidyne’s line of mini-computers.
Digidyne’s products are similar to those made by Data General, a fact that prompted Data General to sue the smaller company in 1978 for alleged patent infringement. Digidyne countersued, charging Data General with violating anti-trust laws for refusing to make its software available to Digidyne customers.
Won Anti-Trust Suit
Digidyne prevailed in the anti-trust suit after a series of appeals that went to the U.S. Supreme Court. The two companies now are scheduled to face off in the penalty phase of the trial. Digidyne is seeking $100 million in damages.
A spokesman for Data General declined to comment Tuesday on the injunction, citing ongoing litigation with Digidyne. However, he said the order would not “have any material effect on the company (Data General) or its business.”
Digidyne executives, however, hailed the order, claiming that it gives them an opportunity to market their products. Although Digidyne had been free to manufacture and sell its line of mini-computers, the company claimed that without Data General’s software, the machines were not marketable.
Digidyne stopped making its computers last year after selling 7,000 systems. The company’s business now consists primarily of servicing those machines, but new shipments of Digidyne’s computers are expected to begin by the end of December, said Ronald Murray, the company’s president.
$400-Million Annual Market
The total market for the Data General systems, Murray said, is worth about $400 million a year, all of which currently is going to Data General. He acknowledged that the latest court action would not guarantee Digidyne any new business.
But he said he believes his company could capture about 10% of the market within the next year with an aggressive sales campaign.
The injunction is the latest move in a complex battle that has been waged between the two companies for eight years. A federal jury in 1981 found in favor of Digidyne, but the ruling was overturned by the presiding judge, who in turn was overruled by an appellate court. In June, 1985, the U.S. Supreme Court refused to hear a Data General appeal, paving the way for the penalty phase of the trial, scheduled to get under way in early 1987.
Data General posted a net loss of $2 million on revenues of $325.3 million for its fiscal third quarter, ended June 28.
Murray refused to disclose Digidyne’s most recent revenues and earnings, but the company had sales of about $2.8 million in 1982, the last period for which figures are available.
