Imation files DLT tape antitrust suit against Quantum

Imation filed a federal antitrust lawsuit against Quantum on Monday, alleging that the company conspired to monopolize the production and sale of DLT (digital linear tape), Imation said.

Quantum holds patents on the DLT tape standard. In the suit filed in the Federal District Court in St. Paul, Minnesota, Imation charged that Quantum invited Imation to join what it calls "an illegal tape cartel." Quantum offered to arrange for two of its DLT tape manufacturing licensees -- Fuji Photo Film Co. and Hitachi Maxell Ltd. -- to sell Imation tape below market prices for rebranding, if Imation ceased attempts to have its own DLT tape manufacturing certified by Quantum.

Imation is seeking an injunction barring Quantum from further violations of antitrust law in the DLT market and recovery of damages of at least US$150 million, which would be tripled under antitrust law to a minimum of $450 million.

Imation also went ahead with a launch Monday of its own DLT tape line of Black Watch DLT IV data cartridges, compatible with DLTtape 4000, 7000 and 8000 drives. The cartridges are 40G-bytes capacity -- 80G-byte capacity with 2:1 compression -- and have a transfer rate up to 6M bps (bits per second).

Rather than mark the tapes as Quantum-certified, Imation will release them as "Imation-certified."

Imation cited a June e-mail it says was sent from Phil Ritti, Quantum's general manager for the DLT tape media division, to Frank Russomanno, Imation's general manager for data storage media and services, as evidence of its claims. According to the e-mail, Ritti offered a "special arrangement ... for a specific quantity that approximates you (sic) current unit purchases. In exchange we would want Imation to suspend plans to manufacture Tape IV and all related qualification activities."

In an interview, Ritti refused to confirm or deny sending the e-mail, citing its use in pending litigation. The idea of a tape cartel is "absurd" and the suit is completely without merit, he said.

"We've worked with Imation for two years to qualify them under our standards, and they've failed," he said. Imation's lawsuit is "a transparent ploy" to cover Imation's failure to meet Quantum's "rigorous standards."

Quantum failed Imation in testing for different reasons each time, and Quantum recently said new qualification processes wouldn't be in place until the first quarter of 2002, said Jim Milligan, marketing director for Imation's data storage media and services.

DLT tape is the most popular format for tape storage in terms of the number of drives used, according to market research. About a third of the revenue for tape drives sold in 2000 came from DLT drives, said Bob Amatruda, an analyst with market research firm International Data Corp. However, companies closely guard market penetration statistics of actual tape media, he said.

Several other formats compete with DLT, like IBM Corp.'s LTO (linear tape open) and Sony Electronics Inc.'s DTF (digital tape format). "The tape market is really rife with other formats, some of which are proprietary," Amatruda said.

DLT has been on the market for so long, however, that it has an installed base of drives that make it difficult for other newer formats to penetrate.

The prevalence of DLT in the market forces Imation to compete in the format, rather than create its own format, Milligan said.

"The tape storage market was $2.3 billion last year," he said. "About 900 million of that was DLT. That's a very significant part of the tape market, and it's important for us to compete."

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