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Court rules against Iomega

Nomai scores a major victory against Iomega as a court lifts a restraining order that prevented it from selling its Zip-compatible disks.

Move over, Iomega (IOM), here comes Nomai.

The French disk maker today scored a major victory in its battle with Iomega when a U.S. district court lifted a temporary restraining order that effectively prevented Nomai from selling its Zip-compatible disks in the United States.

The ruling means that Iomega, for the first time, will have to face competition for its Zip disks in the American marketplace.

"This is a huge victory for the consumer," said Nomai attorney Jeff Kingston, of Brobeck, Phleger, and Harrison. "It's going to give the consumer a choice."

Iomega counsel Laurie Keating said that she had not yet seen the decision but that, based on what NEWS.COM had learned, she was disappointed.

"What's really disturbing about the ruling is that we have had independent labs saying that a very significant number of drives exhibit catastrophic head damage and unrecoverable data loss following use with a Nomai cartridge."

Keating pointed out that damaged heads could go on to damage new disks made by either company.

"I thought we had demonstrated that...there was a very serious incompatibility between the Nomai XHD cartridge and Iomega's head media interface," she said.

While today's decision was a victory for Nomai, it was only a partial one. The company did not succeed in having the entire restraining order lifted, and as a result will have to label its cartridges in such a way as to reflect the fact that they are not compatible with Iomega's Zip drive for notebook computers, a point Nomai conceded.

The court said that Iomega's new notebook drive has "a significant design change that causes it to reject XHD disks." Nomai plans to design a notebook-drive-compatible disk, according to Kingston.

Much of today's ruling hinged on the methods used to assess the quality and compatibility of Nomai's products.

"Iomega's continuous-mode and start/stop tests provide no credible evidence of XHD disk incompatibility with Zip non-notebook drives," wrote Judge Claudia Wilkin. Citing tests that subjected disks to temperatures of up to 58 degrees Celsius for 16 days in a row, the judge wrote, "Iomega has provided no evidence that testing under these conditions reliably duplicates ordinary lifetime wear of a computer disk, or even maximum expected wear under actual working conditions."

Keating said such tests commonly were used to accelerate normal wear on disks. "The tests were fair and reasonable," she said.

Product testing data entered into evidence also included problems with clicking sounds coming from the drive, a problem popularly known as the "click of death." (See related story) Nomai cartridges manufactured in September 1997 were found to cause the clicking sound in the drive, but later versions of the product did not cause the same problem.

Judge Wilkin noted that independent testing showed Iomega's products were prone to the clicking problem even without the introduction of Nomai's disks.

Kingston said the decision meant Nomai would come to market in the U.S. with a Zip-compatible cartridge.

"It's full steam ahead for Nomai," he said, predicting that competition would force Zip-disk prices down from their current price of about $12. "They cost next to nothing to make."

Iomega's Keating said any decision by Nomai to sell its products would be "highly foolhardy," noting that on February 27 U.S. District Judge Martin Jenkins will decide on a preliminary injunction against Nomai--this time based on claims of copyright and trademark infringement, rather than on the compatibility issue.

Iomega also has legal actions pending against Nomai in France, Germany, the Netherlands, and the United Kingdom.