Iomega said today it settled a patent infringement case over its "Zip" removable hard disks with France's Nomai SA. Iomega also agreed to buy a majority stake in Nomai for US$21 million.
Iomega had been fighting its intellectual-property lawsuit against Nomai in several countries for 15 months. Nomai made the XHD 100 MB Super Floppy diskette, a cheaper substitute for Iomega's Zip diskette. Iomega claimed Nomai was competing unfairly, had misappropriated its intellectual property, and had violated its copyrights.
Iomega (IOM) said the settlement came after Nomai came to the conclusion that it would eventually lose the lawsuits.
During the settlement talks, they also began to discuss either an investment in Nomai by Iomega, or an outright purchase. Iomega said Nomai had a strong research and development team that was working on interesting technology, including a low-cost, 2-gigabyte cartridge drive, a recordable CD drive and DVD technology.
Under the stock purchase agreement, Iomega will purchase a majority interest in Nomai for $21 million, or about F188 per share. In addition, Iomega will pay $3 million for technology in making the XHD diskette and DUO storage cartridges. The agreement is expected to close on 1 July, Iomega said.
In exchange, Nomai agreed not to license, manufacture or sell its XHD cartridges without Iomega's permission.
On 28 May, Iomega was denied a request for a preliminary injunction to stop Nomai from selling the disks in the United States by a California court. But a German court upheld a preliminary injunction previously granted against a Nomai distributor, which it then fined for violating the injunction.
Reuters contributed to this report.
