Update: Sun sues Azul for patent infringement

Sun also claims that Azul abused trade secrets

Sun Microsystems Inc. asked a California court on Wednesday to order network-attached processing specialist Azul Systems Inc. to stop infringing Sun patents on memory technology, and to order the company to pay damages.

The filings, made in the San Jose division of the U.S. District Court for the Northern District of California, counter a suit Azul filed in March, asking the court to block just such a move.

In March, Azul announced that Sun had threatened to sue it for patent infringement and abuse of trade secrets, and filed suit to prevent Sun from doing so.

Now Sun has made good on the alleged threat, asking for a jury trial to consider its claim for exemplary and punitive damages to deter Azul from infringing its patents.

The case relates to technology for improving the performance of microprocessors through the use of "speculative locking" and transactional memory, which Azul is now using in its products. Sun claims Azul is infringing patents related to Sun's prior research in the field, and that it abused trade secrets by poaching Sun employees familiar with the technology. Sun also said the employees had signed agreements not to disclose or make use of their knowledge of Sun's intellectual property.

One of the former Sun executives named in the suit is Stephen DeWitt, the former chief executive officer (CEO) of server appliance manufacturer Cobalt Networks Inc. He joined Sun when it bought Cobalt in 2000, signing a noncompete agreement at that time, according to Sun. Later, while still bound by the agreement, DeWitt went on to become CEO of Azul.

Sun said that by hiring DeWitt and nine other former Sun employees named in the court filing, Azul improperly accessed Sun technology, allowing Azul to bring products to market more quickly.

In response, Azul said that Sun has continued to demand cash, royalty payments and an ownership stake in the company.

"This suit is not about Azul technology; this suit is about Sun and its predatory attempt to thwart Azul's innovative solution from penetrating the market," said Bob Haslam, an attorney for Azul.

Still, Sun insists the case is only about infringing patents, misappropriating trade secrets and breaching noncompetition agreements, according to a statement from Sun spokeswoman Stephanie Von Allmen.

Sun's demands for payment from Azul were not coercive, but merely business proposals intended to allow Azul to continue using Sun's intellectual property, she said.

"We can understand that Sun's T2000 eliminates the market opportunity for Azul, but resorting to litigation is no way to achieve viability. Compelling products with unique value-add, built by employees not subject to noncompete agreements, is probably a better strategy," she said. Sun Fire T2000 server uses the UltraSPARC T1 chip and CoolThreads technology to manage 32 processing threads at once.

Ben Ames in Boston contributed to this report.