EMC Notches a Win in Court Against Pure Storage

By Jeffrey Burt  |  Posted 2016-03-18 Print this article Print
data storage

Federal jurors this week found that Pure Storage violated an EMC patent and should pay $14 million, though they rejected to other EMC claims.

One of the more interesting rivalries in the data storage industry took another turn this week when market leader EMC got a partial victory against fast-growing Pure Storage in a patent infringement lawsuit filed more than two years ago.

A federal court jury found March 15 that Pure Storage violated an EMC patent related to deduplication, and that the smaller rival should pay $14 million. However, the same jury found that Pure did not violate two other patents, and the $14 million Pure was ordered to pay pales in comparison to the more than $80 million that EMC was looking for from the lawsuit, which the company filed in 2013.

EMC initially claimed that Pure Storage had infringed on five patents, but two of the claims were dropped—one by EMC itself, and one by a judge who decided during a pretrial hearing no violation had occurred.

EMC has long been the dominant player in the data storage market, where it continues to hold the number-one spot. According to numbers from market research firm IDC, EMC in the fourth quarter 2015 held 21.5 percent of the market, followed by Hewlett Packard Enterprise with 15.1 percent. Pure Storage, which specializes in all-flash storage arrays, was not in the top five, but has seen its quarterly financial numbers grow. In 2015, the company generated $440.3 million in revenue, a 152 percent increase over the previous year.

The day before the verdict was announced, Pure Storage made news with the launch of the FlashBlade, the industry's first storage blade server.

Pure Storage officials are weighing their options regarding an appeal of the verdict against the company, according to Joe FitzGerald, vice president and general counsel at the storage player.

"Our view has been and remains that EMC's litigious approach to competition primarily reflects efforts to stabilize its storage business as customers around the world abandon the kind of disk-based storage systems EMC pioneered in favor of flash-based storage from innovative companies like Pure," FitzGerald wrote in a post on the company blog. "As the trial proceedings made clear, EMC built its own flash-based storage products via acquisition, rather than organic innovation."

He said company officials were "gratified that the jury agreed with our view of the facts on most of the issues at trial, although we are disappointed with the one ruling not in our favor on one of EMC's de-duplication patents. We continue to believe that both the facts and the law are on our side on that issue—and we are considering our options for appealing that aspect of the decision."

FitzGerald also wrote that the verdict won't prohibit Pure Storage from selling any products, and that officials don't expect to have to pay ongoing royalties to EMC. Pure Storage has "alternatives ready to go for the software feature that the Court found to be infringing EMC's de-dupe patent," he wrote.

In a statement sent to Forbes, Kish Gupta, senior vice president and deputy general counsel at EMC, said company executives are "gratified that the court and jury held Pure accountable for infringing EMCs' pioneering patent related to in-line data deduplication technology. We will continue to remain vigilant in protecting EMC's substantial intellectual property from unauthorized use, whether by Pure or others."

The jury's decision comes as Dell seeks to buy EMC and its federated companies—including VMware, RSA, Pivotal and VirtuStream—for $67 billion, the largest deal in tech history. EMC shareholders are expected to vote on the proposed acquisition within the next few weeks, and officials with both companies hope to close the deal by October.

Such a deal would make Dell the world's top storage vendor. According to IDC's fourth-quarter numbers, Dell ranked third with 8.9 percent of the enterprise storage market, just ahead of IBM.


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