A jury awarded Lexar Media $381.4 million in damages after
it decided rival Toshiba stole trade secrets of its Flash memory technology
and shared them with Lexar rival SanDisk.
The Superior Court for the State of California, County of Santa Clara, is
expected to hold a hearing to award Lexar punitive damages after deciding
the actions of Toshiba were willfully harmful. Lexar also will ask the court
for an injunction barring the sale of certain Toshiba Flash chips and cards
that include Lexar technology in the United States.
The victory should resonate loudly in the market for Flash memory
Unsworth said he expects Toshiba to appeal the ruling, noting that an
injunction prohibiting Toshiba from selling its products in the United States has the potential to be very damaging.
“They ship a lot of their Flash to the U.S. in the form of cards, and SanDisk
also gets some Flash from them,” Unsworth said.
Appeal aside, the money from the ruling could also help a struggling
Lexar, which competes in a multi-billion-dollar market with Samsung, Toshiba, SanDisk and others.
“Lexar has been having some major financial problems over the last few
quarters, and that’s really hurt them in terms of having available cash,”
Unsworth said. “A verdict that goes their way to the tune of $381 million is
significant.”
Lexar is expected to announce earnings, which Unsworth expects will be weak,
after the market closes today. Meanwhile, shares for Lexar jumped more than
100 percent Thursday in morning trading, from $3.17 from the previous close
to $6.41.
The Fremont, Calif., Flash vendor has other cases pending against Toshiba.
Lexar expects that the court will hold a hearing on Lexar’s request for an
injunction on April 13. Discovery has now begun in Lexar’s case for patent
infringement against Toshiba on more than 10 of its patents pending in
federal court. Lexar’s other claim for unfair competition is also
pending.
The issues of contention between Lexar and Toshiba go back to 1996, said
Lexar spokesman Eric Thomas. Toshiba invested in and secured a seat on
Lexar’s board.
After becoming privy to Lexar’s technical information, it began talks with
Lexar foe SanDisk. Toshiba later resigned its seat on the board, and
announced its relationship with SanDisk. Lexar sued Toshiba in 2002.
Toshiba tried to argue that it developed the technology in question but
Lexar’s counsel discovered a paper trail of Toshiba’s own internal
documents.
Lexar Awarded Millions For Toshiba Indiscretions
