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Pirelli Announces Positive Resolution

1 June 1998

Pirelli Announces Positive Resolution in Dispute Against Ciena on Optical Systems Patent Infringement

    MILAN, Italy, June 1 -- Pirelli Spa announced today it has
successfully ended the litigation it had brought against Ciena Corporation
for infringement of Pirelli's optical transmission systems
patents by Ciena Corp.  The agreement was reached following discussion between
Dr. Giuseppe Morchio, CEO of Pirelli Cables and Systems, and Dr. Patrick
Nettles, CEO of Ciena Corp.
    Pirelli Cables and Systems had made several important patented inventions
since it started developing, manufacturing and selling optical transmission
systems in the early 1990s.  In December 1996, the company started a lawsuit
in Delaware against Ciena, asserting that Ciena products were infringing
several Pirelli patents in this field.  Ciena countered Pirelli with actions
before U.S. ITC.
    The above litigations and proceedings are dismissed by the settlement
agreed upon by the two parties.  The agreement provides for the payment by
Ciena to Pirelli of $30 million at execution and running royalties on future
Ciena sales.  The parties also agreed on a non-exclusive cross patent license.
    "We confirm the international value of Pirelli's intellectual property,"
said Giuseppe Morchio, Chairman and CEO of Pirelli Cables and Systems, "and of
our consolidated know-how in optical communication systems, where we have
reached a technological and market leadership at world-wide level."
    A pioneer in photonic technologies for advanced telecommunication
networks, Pirelli Cables and Systems has developed a full range of optical
systems ranging from optical amplifiers to Wavelength Division Multiplexers,
earning substantial market shares in the United States and in Europe and
established technological partnerships with leading carriers such as MCI,
Sprint, US West, France Telecom, British Telecom, Deutsche Telekom, Telecom
Italia, Telefonica and Telebras among others.
    Pirelli Cables and Systems in 1997 showed sales of Lire 5,843 billion with
an increase of 14.1% over the prior year, largely due to volumes.  The
operating profit rose to nearly Lire 500 billion; net income rose by 20% and
reached Lire 260 billion.