Fujitsu Must Submit to Discovery in Patent Case

CHICAGO (CN) - Fujitsu must produce the documents regarding its purchase and inspection of a competitor's optical scanner after Fujitsu lost a major deal with Verizon to said competitor, a federal judge ruled.

In 2008, Fujitsu Limited sued Tellabs Operations Inc. for patent infringement, and Tellabs counter-sued. Fujitsu claims to be the world's third-largest IT services provider and that it holds 102,000 patents worldwide.

Tellabs, a telecommunications company, boasts that it is "a medium-sized company that can innovate more quickly than giants," on its website.

The lawsuit came on the heels of Tellabs' deal with Verizon Communications in 2005 in which it beat out Fujitsu for the sale of more than a quarter billion dollars of optical transport equipment used to increase network bandwidth.

When Fujitsu's representatives spoke with Verizon to find out why they lost the deal, they were told that Tellabs' 7100 optical amplifier was more advanced than theirs and that Fujitsu's product was "old" and "weak." "Fujitsu was in a state or what may fairly be called corporate panic," according to the judgment.

In response to this criticism, Fujitsu bought a 1,400 lb Tellabs 7100 optical scanner through eBay for Fujitsu engineers to examine, hoping that its engineers could learn from the product itself and "leap frog" Tellabs' technology. The company ensured that the identity of the purchaser remained anonymous.

Fujitsu sought a protective order prohibiting Tellabs from taking discovery regarding this inspection, but U.S. Magistrate Jeff Cole denied their motion last week.

"The issue has always been, whether the preparation of a document - or, here, undertaking of and reporting on an inspection of products - was done in anticipation of litigation or in the ordinary course of business," Cole said.

"Merely because litigation eventually ensues does not, by itself, cloak materials with work product protection. ... But the prospect of litigation cannot be one that is merely possible. All things are possible," the judge continued.

According to the judgment, "The only thing that is clear from the evidence is that Fujitsu was in significant competitive straits following the award of the Verizon contract and was consumed with the competitive business need to examine the Tellabs optical amplifier, whose technology Verizon had concluded was far superior to Fujitsu's. There is absolutely nothing in the evidence submitted by Fujitsu that could remotely support the conclusion that in 2006, there was any colorable or articulable claim that Fujitsu had against Tellabs for violation of Fujitsu's patents. Indeed, there was not even a remote prospect of litigation."

Last week, Fujitsu filed a new complaint alleging additional patent infringement claims against Tellabs' 7100 optical transport systems.

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