Judge Reverses Odetics Award in Patent Suit

A federal judge in Virginia has thrown out a $70.6-million jury award to Odetics Inc. in a patent infringement lawsuit, sending the Anaheim company’s stock into a tailspin.

Odetics’ shares, which had surged after the jury award was announced late in March, slumped nearly 40%, or $3.75, to $5.75 on the Nasdaq market.

Judge T.S. Ellis III threw out the award against Storage Technology Corp., which had been accused by Odetics of infringing on an Odetics patent related to data storage in network computing.

In his opinion issued Friday, Ellis said that while the two companies produced devices that did the same job, they were physically different and used different mechanisms.

Odetics said it will appeal.

Jurors concluded in March that StorageTek, which makes computer data storage systems, infringed on Odetics patents covering data storage systems.

Jurors found Odetics’ technology was used in StorageTek’s ACS 4400, Powderhorn and Wolfcreek automatic computer tape-library systems from June 1995 to March 1998. It was the second time a jury had ruled on the case.

Odetics’ stock surged 24% to $8 per share after the award, then climbed to $17.13 in June--a 52-week high--after the judge barred Storage Technology from selling computer data storage systems that infringe on Odetics’ patents.

Ellis, however, then decided to review his earlier rulings because a May 14 appellate court ruling in another case appeared to cast doubt on his own decisions in the Odetics-StorageTek dispute.

Odetics said in a statement that the jury acted properly in its ruling and “it is an error for the judge to substitute his judgment for that of the jury on this factual issue.”

StorageTek’s stock dropped 6 cents a share to $37.69.