Crossroads Systems Wins Patent Infringement Lawsuit Against Chaparral Network Storage.

Business Editors & Technology Writers

AUSTIN, Texas--(BUSINESS WIRE)--Sept. 17, 2001

Jury Decision Validates Patent; Extends Patent Infringement

to RAID and Storage Routers

Crossroads Systems, Inc. (NASDAQ:CRDS), a global provider of connectivity for storage networking solutions, announced that a jury found Chaparral Network Storage, Inc.'s RAID and router products using LUN zoning willfully infringe the Crossroads 5,941,972 ("972") patent.

The jury has awarded damages with a royalty amount of 5% for Chaparral's router product line and 3% for their RAID product line. Crossroads will be pursuing an injunction based on the jury's finding of infringement. The federal judge in this matter will consider assessing punitive damages.

"Crossroads pursued this litigation on principle, in order to ensure a vigorous and uncompromising defense of its patents", said Brian R. Smith, chairman and CEO, Crossroads Systems. "We are pleased a jury has found in favor of Crossroads and validated our patent with their decision. We will continue to protect innovations that have made our company the industry leader."

As a company, Crossroads has seven US patents issued, one issued abroad and over fifty additional patent applications pending worldwide with respect to their technology. In June 2001, Pathlight Technology, a wholly owned subsidiary of Advance Digital Information Corporation (ADIC), settled their lawsuit, obtained a license to the 972 patent for $15 million dollars, and admitted both the validity of the patent and that they infringed.

About Crossroads Systems, Inc.

With headquarters in Austin, Texas, Crossroads Systems (Nasdaq:CRDS) is a leading global provider of connectivity for storage networks regardless of technology or location. Crossroads enables protocol-independent connectivity at gigabit speeds for a wide range of devices that scale for small businesses to global enterprises. Crossroads' products are in solutions from ADIC, ATL, Compaq, Dell, Fujitsu, Siemens, Groupe Bull, Hewlett-Packard, Hitachi Data Systems, IBM, McDATA, StorageTek, Sun Microsystems, Unisys, ACAL, Bell Micro, Cranel/Adexis, Datalink and Tech Data. Crossroads is a voting member of the Storage Networking Industry Association (SNIA). For more information about Crossroads Systems, please visit www.crossroads.com or call 800/643-7148.

Forward-Looking Statements

This release may contain forward-looking statements that involve risks and uncertainties. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: the quarterly fluctuations of Crossroads' operating results and Crossroads' inability to accurately predict revenues and budget for expenses for future periods; the extent of Crossroads' future operating losses and negative cash flow; the company's ability to maintain its operating margins; the deteriorating economic environment, including in particular related expense reductions by organizations affecting their IT spending and budget; the dependence of Crossroads' business on the storage area network market which is evolving and unpredictable; the possibility that the pending shareholder class action lawsuits could result in an adverse outcome to the company; Crossroads' ability to develop new and enhanced products that achieve market acceptance; the effect of competition; the effect of undetected software or hardware errors, which may affect the company's results or reduce demand for Crossroads' products in the long term; Crossroads' inability to protect its intellectual property rights, including any adverse outcome in the company's pending patent litigation with certain of its competitors; the continuation of Crossroads' successful relationships with its limited number of OEM customers, including its ability to replace revenue from ADIC and Compaq Computer Corporation and/or to realize the benefit of the new agreement with Compaq; Crossroads' ability to retain and recruit key personnel to manage its business successfully; Crossroads' ability to successfully achieve the benefits of the acquisition of Polaris Communications and any subsequent acquisition or strategic relationship; and that Crossroads' stock price could be volatile regardless of Crossroads' actual financial performance and other factors detailed in Crossroads' filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on 10-Q.