Rockwell Sues Bay Networks Over Contract Dispute

NEWPORT BEACH — Rockwell Semiconductor Systems said Tuesday that it has filed a lawsuit alleging that Bay Networks Inc. breached an agreement allowing it to make computer networking equipment using Rockwell’s modem technology.

Bay makes networking equipment using technology from both Rockwell and Rockwell rival 3Com Corp. The two companies are locked in a bitter fight to win new customers.

Rockwell was not specific about how Bay broke the licensing agreement except to say that Bay’s actions put companies at a competitive disadvantage if they have licensed Rockwell’s K56flex modem technology.

Bay said Rockwell’s charges are groundless. “Bay Networks is 100% in compliance with its licensing agreement,” Bay Vice President John Sieg said.

Bay makes remote access products that it sells to Internet service providers and telephone companies to handle calls from their millions of customers.

Bay’s remote access products can use either Rockwell’s K56flex technology or 3Com’s rival X2 technology. 3Com became a big player in the modem business in June when it bought U.S. Robotics for $8.94 billion.