Marimba, Novadigm settle patent suits

The struggling enterprise-software company wrests a monkey off its back with the settlement of its years-long patent litigation battle with Novadigm.

Paul Festa Staff Writer, CNET News.com
Paul Festa
covers browser development and Web standards.
Paul Festa
2 min read
Struggling enterprise-software company Marimba wrested a monkey off its back with the settlement of its years-long patent litigation battle with Novadigm.

Marimba has been wrangling with Novadigm over patent lawsuits for most of its short life. Novadigm fired the first shot in March 1997, 13 months after Marimba's launch. That suit alleged that Marimba's Castanet product, through its Distribution and Replication Protocol (DRP) for updating software over a computer network, treaded on a patent granted to Novadigm in December 1996.

Conflict between the companies spilled into public view after Marimba submitted the contested technology to the World Wide Web Consortium (W3C) for consideration as an industry standard.

Marimba fired back at Novadigm with a patent suit of its own in July 1999. Both companies termed each other's suits baseless.

Novadigm's suit against Marimba went to trial one year ago, from Nov. 15 to Nov. 18, 1999. The court struck down Marimba's first line of defense, which accused Novadigm of "inequitable conduct," and subsequently blocked Marimba's attempts to appeal.

The court in August struck down Marimba's motion for a summary judgment in the case.

Marimba's second defense, on the actual patent infringement claims, was scheduled to go to trial this week.

The settlement, which puts both suits to rest, comes as the companies struggle to retain momentum and as they may be finding themselves with dwindling energies to spend in the courtroom.

Marimba's stock has taken a beating in the wake of an earnings warning last month. The company subsequently posted a third-quarter loss of $3.6 million, or 15 cents per share, compared with a loss of $164,000, or 1 cent per share, in the year-ago period, missing analysts' estimates of a 14 cent per share loss, according to First Call. The issue now trades at less than $5, down from a 52-week high of $68.87.

Marimba's shares remained flat in Monday trading, suggesting that the settlement helped it resist the Nasdaq stock market's sharply downward trend.

The settlement may signal a change in legal strategy from Marimba's new chief executive, John Olsen, who succeeded founding CEO Kim Polese on July 21. Olsen also presided over the launch of Marimba's foray into rented services last month.

Novadigm posted its own earnings warning last month and subsequently reported net income of $800,000, or 4 cents per diluted share, compared with $1.3 million, or 7 cents per diluted share, a year ago. First Call does not cover Novadigm and did not report an analysts' expectations consensus.

Novadigm has been trading around $9, off its 52-week high of $27.62.