Japan's Toshiba filed patent infringement lawsuits in Japanese and US courts on Monday against South Korea's Hynix Semiconductor.
The Japanese suit alleges that Hynix violated three of Toshiba's patents covering NAND-type flash memory chips, Toshiba said. The suit seeks monetary damages and a halt to sales of the Hynix products that Toshiba alleges infringe upon its patents.
Toshiba also filed a broader suit against Hynix and some of its US subsidiaries in the US District Court for the Northern District of Texas. That suit alleges Hynix has infringed upon four patents on NAND-type flash memory and three relating to DRAM (dynamic random access memory). Like the Japanese suit, it asks for an injunction against sale of the products and monetary damages.
Both lawsuits relate to a patent cross-licensing agreement signed between Toshiba and Hynix in August 1996. The agreement expired on December 31, 2002, and despite negotiations the two companies have been unable to agree on a revision of the arrangement, Toshiba said.
Hynix could not be immediately reached for comment.
All about the money, honey
"Toshiba want money and they want to protect their technology," said Kim Soo-Kyoum, program director for semiconductor research at market research company IDC.
Kim said that the suits filed by Toshiba are in support of legal moves made in mid-October by its flash memory development and production partner SanDisk against STMicroelectronics, which partners Hynix in making flash chips.
On October 18, SanDisk filed a complaint with the US International Trade Commission alleging that NAND-type flash memory chips made by STMicroelectronics infringed a SanDisk patent. SanDisk requested that STMicroelectronics' NAND flash memory chips be barred from sale in the US. SanDisk also filed suit over the patent, and sought an order declaring that its products did not infringe 14 US patents assigned to STMicroelectronics.
Flash memory has the ability to maintain its contents even after power to the chip has been turned off.
Flash market in global growth
Toshiba is the world's second biggest NAND flash memory maker with about 34 per cent market share, according to IDC. Meanwhile, Hynix, which has started volume production of NAND flash recently has only a very small share, according to Kim.
However, if Toshiba forces Hynix to pay royalties through successfully prosecuting the patent dispute, Toshiba will benefit from any success Hynix and STMicroelectronics have in the market.
"It's a win-win situation for Toshiba," Kim said.
The total NAND flash memory market is expected to be $6.8 billion in 2004 and will grow to a value of $8.2 billion in 2008, according to IDC estimates.
Another reason for Toshiba to file its actions is concern that increasing flash memory production by Hynix and STMicroelectronics may further erode prices that are already falling, cutting into Toshiba's and SanDisk's profits, according to an industry insider.
Toshiba was the fourth largest manufacturer of flash memory in 2003, according to data from market research company IDC. Toshiba had a 13.3 per cent share of the global $10.7 billion market on a revenue basis, behind Samsung Electronics, Fujitsu AMD Semiconductor and Intel, according to IDC's estimates. Hynix was not ranked in the top ten.
In the DRAM market, Hynix was the number two producer of chips in the second quarter of this year, according to IDC. The company had a 16.1 per cent share of the $7 billion global market behind market leader Samsung Electronics.