It wasn't a purely positive or negative quarter for water and air purification company Calgon Carbon (NYSE:CCC).

On the plus side, the company ended a long, drawn-out legal dispute with Danaher (NYSE:DHR) subsidiary Trojan Technologies over its cryptosporidium-thrashing UV disinfection technology. Reduced legal fees, in addition to solid top-line growth of 8.4%, helped the company turn in a profit of $2 million, vs. a year-ago loss of $1.4 million. On the flip side, a court invalidated Calgon's UV patent about a month later. Ouch.

Another big win for the company was the passage of antidumping tariffs on Chinese-activated carbon. This material, used in applications ranging from poison control to gas masks, is Calgon's core product, and the company has been suffering margin declines for years. At least some of that pressure has come from cheap Chinese imports. The recently imposed duties run as high as 228.1%, so it seems like great news for Calgon, if not for activated carbon end users. The flip side here, of course, is that this market intervention indicates that the company's commodity business may not be sustainable in the long run without political support.

There very well may be a bright future for Calgon in the increasingly attractive global water infrastructure space. The company's best shot might be to take a cue from General Electric (NYSE:GE) and sell off the commodity business. Higher-margin services are where it's at, after all. It appears the company is presently breaking even on equipment sales, but cash flows from long-term service contracts could likely support a leaner business model.

Even if Calgon does manage to reinvent itself, it's a very small player compared to international giants Suez (NYSE:SZE) and Veolia (NYSE:VE). If you insist on sticking to the smaller end of the spectrum, there still appear be more attractive water-related companies out there. Take Motley Fool Hidden Gems pick Mueller Water Products (NYSE:MWA-B), a water distribution, rather than filtration, company, for example. Mueller appears to be the cheaper company on a cash flow basis, and it has stronger margins in a non-commoditized business.

Disagree with me? Sound off in Motley Fool CAPS! Calgon only sports 37 ratings at present, so go ahead and make your opinion known.

Related Foolishness:

•   The Best Small Cap for 2007: Walter Industries

•   Mueller Opens the Profit Spigot

•   Water, Water, Everywhere -- Forever?

Fool contributor Toby Shute is currently ranked 1,256 out of over 29,000 CAPS players. He doesn't own shares in any company mentioned. Suez is a Global Gains selection. The Motley Fool has a disclosure policy.