Patent Infringement Squabbles Between Tellabs & Fujitsu

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Tellabs, a developer of advanced telecommunications network technology, announced in June 2008 that it had filed a patent infringement lawsuit against Fujitsu Limited and Fujitsu Network Communications Inc in the US District Court for the Northern District of Illinois. The suit sought monetary damages and an injunction to stop Fujitsu from future infringement of Tellabs’ intellectual property. Tellabs asserted that Fujitsu infringed on their US Patent No. 7,369,772, which had been granted to the company under the title: ‘Optical line terminal arrangement, apparatus and methods’.
The lawsuit specifically related to several Fujitsu products, including reconfigurable optical add/drop multiplexing (ROADM) systems and components that Fujitsu markets within its FLASHWAVE product line. An executive with Tellabs said that the company invests hundreds of millions of dollars each year in research and development to create innovative products, and has earned hundreds of valuable patents which must be protected from poaching.
The patent lawsuit that Tellabs Inc filed against Japan’s Fujitsu Ltd was in fact a countersuit, since Fujitsu had fired a similar suit against Tellabs in January 2008 in a Texas court. Both firms are seeking monetary damages and injunctions in the patent squabble over high-speed networks using fiber-optic cables. On the one hand, Fujitsu claimed that Tellabs infringed on four of its patents covering optical communication technologies. On the other hand, Tellabs claims that Fujitsu is using technology in the Tellabs 7100 series, which was a hot product that saw sales grow rapidly in 2008.
However, the patent lawsuit has not benefited Tellabs and growth slowed down for the company in 2010. This demonstrates that not all patent infringement lawsuits are in the best interests of a company, as it can lead to excessive costs, wasted time and even bad press. Tellabs’ latest earnings report was a shock to investors as the company unexpectedly reported a loss, raising fears that they are losing market share to rivals like Cisco. The news sent Tellabs shares down 19% on the day.