Ciena Corp. of Linthicum has settled its patent litigation with Pirelli SpA, a rival maker of capacity-boosting communications network equipment.
In the settlement, which the companies announced yesterday, Ciena will pay Pirelli $30 million and a royalty on future sales.
The litigation battle between the two firms began when Milan, Italy-based Pirelli brought a patent-infringement suit against Ciena in December 1996.
After this initial suit, Ciena and Pirelli filed additional patent actions against each other. All of those suits will be abandoned, and the companies said there will be a five-year moratorium on litigation between them.
As a result of the deal with Pirelli, Ciena will record a one-time charge of $20 million for its fiscal quarter ending July 31.
It will not post the full $30 million settlement payment, because it already charged $10 million in accrued litigation fees on its last earnings report.
Analysts said the settlement will help Ciena focus on its future.
"It just puts a lot of questions to bed," said analyst Kenneth Leon of ABN-AMRO Inc. in New York.
Pub Date: 6/02/98