UPDATE:Emulex Sues Broadcom, Alleges Anticompetitive Conduct
(Updates with Broadcom comment, additional details, background, share price.)
By Jerry A. DiColo
Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Emulex Corp. (ELX) filed a lawsuit Monday against
Broadcom Corp. (BRCM) that accuses its rival of squashing competition in parts
of the networking market and making defamatory statements during a failed
acquisition attempt earlier this year.
In the suit, filed in the U.S. District Court for the Central District of
California, Emulex accuses Broadcom of engaging in anticompetitive conduct in
the market for storage networking, which helps connect the servers in company
data centers.
Emulex also alleges that in Broadcom's takeover attempt, and in a more recent
patent-infringement lawsuit, Broadcom has made false, misleading and defamatory
statements about Emulex to customers and stock traders and the general public.
A Broadcom spokesman said the company is evaluating Emulex's claims, adding
that Broadcom's actions to defend its patents are "entirely appropriate."
"We believe this is a diversionary tactic to take the focus off of Emulex's
alleged infringement," spokesman Bob Marsocci said in an email. "Contrary to
Emulex's misleading statements, we believe their infringement is likely to
extend far beyond the examples cited in Broadcom's complaint."
The Emulex lawsuit, which seeks unspecified punitive damages and injunctive
relief, represents the latest legal sparring between the two tech firms that has
grown increasingly nasty over the past year.
Broadcom, which designs chips used in communications and networking, had been
pursuing a takeover of Emulex since late last year and in April went public with
an unsolicited offer of $9.25 a share. Broadcom eventually raised its bid to $11
a share and attempted a hostile takeover, before dropping the offer entirely in
July.
Then in September, Broadcom filed a lawsuit against Emulex alleging that
Emulex infringed on 10 of its patents, covering "a broad range of high-speed
data and storage-networking technologies."
Broadcom has said it wanted to add Emulex's specialty--so-called Fibre Channel
chips that help connect server systems with storage devices--to its current
technologies serving that market.
Emulex's latest complaint centers around what are called 10-gigabit-per-
second Ethernet controllers, chips used to transmit and receive information over
a network.
"Broadcom has engaged and continues to engage in anticompetitive and malicious
conduct directly aimed at its competition in an effort to maintain and
strengthen its admittedly dominant market position," Emulex said in the lawsuit.
Emulex alleges, among other charges of defamation, that Broadcom's senior
director of investor relations misrepresented to stock analysts that Emulex's
entire business line is threatened by alleged patent infringement. In addition,
at an industry conference, a senior financial officer at Broadcom said Emulex
engaged in unlawful conduct across its product line.
The complaint also dredges up stock-options backdating charges from earlier
this decade against Broadcom executives, in what the company refers to as a "
history of criminal and civil misconduct."
Amid the acquisition battle, both firms lobbed lawsuits at the other, with
Emulex attacking Broadcom's former leadership and Broadcom attempting to have a
shareholder rights provision, often known as a "poison pill," thrown out.
Emulex shares ended a penny up at $10.01, while Broadcom added $1.41 to $
28.29.
-By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155; jerry.dicolo@
dowjones.com
(END) Dow Jones Newswires
11-09-091636ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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