Riverstone gets $12 million judgement from Tellabs

In an odd legal twist proving that not all partnerships and legal action prove profitable, Riverstone Networks will end up with a $12 million check from Tellabs as the result of litigation filed against Riverstone by Tellabs. The two companies revealed today that they settled their litigation on “mutually acceptable terms.”

Tellabs originally sued Riverstone in August of 2001 in a circuit court in Cook County, Illinois over an alleged breach of the two companies’ Strategic Alliance Agreement. That agreement, struck in November 2000 called for Riverstone to integrate its cable modem termination systems into the Tellabs product line.

Riverstone failed to meet the set terms and developmental milestones dictated for the relationship, according to a Tellabs spokeswoman, which prompted Tellabs to file suit. Tellabs also alleged that Riverstone committed fraud with regard to the relationship.

Tellabs originally planned to purchase $100 million worth of equipment from Riverstone. Riverstone later sought $60 million from Tellabs. “We thought it was in the best interest of our employees and shareholders to settle the suit quickly rather than drag it out in court,” the spokeswoman said.

Tellabs will make a one-time payment of $12 million to Riverstone.