Imation sues storage rival Quantum

Imation said Monday that it has filed a $450 million lawsuit against storage rival Quantum, accusing the company of monopolizing the market for the digital tape used in its DLT drives.

The suit, filed in federal court in St. Paul, Minn., charges that Milpitas, Calif.-based Quantum fixed prices on DLT-compatible tape, invited Imation to join an illegal tape cartel, inappropriately extended patents on DLT drives to also apply to tapes for them, and misrepresented DLT-compatible tape as an open standard with competitive pricing.

DLTs, or Digital Linear Tape drives, are a decade-old standard used for backing up data from servers and computers.

Oakdale, Minn.-based Imation is seeking $150 million in damages, which could be raised to $450 million if a court finds Quantum guilty of violating antitrust law.

"Quantum's promise to DLT tape drive buyers has been that the market for DLT-compatible tape is open and competitive," Imation Vice President Frank Russomanno said in a statement. "The purpose of our suit is to bring them back to that promise of an open and fair market."

Quantum CEO Michael Brown denied the accusations, telling CNET News.com that the lawsuit is Imation's response to having repeatedly failed tests to qualify its tapes for use in Quantum drives. Imation is licensed to make tapes for the drives but must first get its tapes certified.

In its statement announcing the lawsuit, Imation said its evidence includes a Quantum executive's e-mail, which Imation claims "essentially lays out a 'special arrangement' inviting Imation to join a Quantum-led cartel."

"We think it is absolutely preposterous that we'd be behind a tape cartel," Brown said.

Brown said that Quantum executives did offer Imation the opportunity to resell Quantum tape as an alternative to manufacturing its media that had failed Quantum's qualification tests.

He also noted that two other companies, Maxell and Fuji, manufacture DLTs, and that more than 10 companies resell the tapes, which he said provides plenty of price competition.

Moving to the offensive, Brown said the DLTs that Imation is shipping are unauthorized and could void the warranty on a drive if the tape were to damage the drive.

"We can't give customers of (Imation's) DLT tape any assurance," Brown said. "If a customer uses unqualified product...under certain circumstances, it could void their warranty."

An Imation representative was not immediately available to respond to Brown's assertions.

Quantum once made hard disks but sold that business to Maxtor earlier this year. It now focuses on tape drives and other storage systems.