Ciena Corp. of Linthicum and Broadwing Corp. of Columbia, both in the telecommunications business, announced yesterday that they have settled a nearly 5-year-old patent dispute, dismissing all claims.
Broadwing will pay Ciena $35 million over three years but can get credit for $33 million of that by buying Ciena equipment and services at market prices.
The two companies have a complex, intertwined history.
Ciena, which makes telecommunications equipment, was launched in 1992 and went public in 1997 with an initial public offering that raised $3.4 billion, a record at the time. Soon after the spectacular IPO, one of its founders, David R. Huber, left and started Corvis Corp., which also made telecommunications equipment.
Ciena took Corvis to court in July 2000, charging infringement of four of its patents for equipment that allows fiber-optic networks to carry more information.
In 2003, Corvis bought Broadwing Communications Services, which had been a Ciena customer, and continued to buy equipment from Ciena as the patent case proceeded.
As the demand for equipment plummeted, Corvis changed its emphasis from manufacturing to telecommunications services, with its Broadwing division providing voice, data and video connections. Last fall, Corvis adopted the Broadwing name for the company.
"We have a customer-vendor relationship," Dawn Benchelt, a Broadwing spokeswoman, said of Ciena. She said the companies had decided they could use their resources better if the case were settled.
Shares of Ciena closed yesterday at $1.70, down 2 cents. Broadwing shares closed unchanged at $4.14, down a penny.