Sun, Mar 20, 2005 - Page 11 News List

Toshiba faces judgement in IP suit

BLOOMBERG

Toshiba Corp, Japan's second-biggest chipmaker, argued that it didn't steal Lexar Media Inc technology used to make memory chips that store and transmit data in digital cameras, cell phones, and MP3 players.

Toshiba lawyer Michael Jacobs, during closing arguments in state court in San Jose, California, rebutted Lexar's claims that Toshiba broke a 1997 agreement to use and co-develop the flash memory technology, and then covertly shared it with SanDisk Corp., Lexar's largest competitor.

Flash memory is Toshiba's "flagship technology, its premier semiconductor technology," Jacobs told the jury today. "The technology that you have seen is Toshiba's technology, that it has earned. False accusations are a terrible thing."

Lexar is seeking more than US$1 billion in damages in the case after earlier this week saying it expects to report a loss of as much as US$65 million in the fourth quarter. Fremont, California- based Lexar is also seeking a court injunction stopping the sale of Toshiba products using its flash memory.

"The stakes are huge for both sides," said Lexar lawyer Matt Powers. "Trust and betrayal, that's what this case is about, right and wrong."

Powers told the jury, which began deliberations today, that 6 weeks of testimony and 400 exhibits boiled down to a "simple case."

Powers displayed a document labeled "top secret" that he said were shared at the "highest levels" of Toshiba's management in Tokyo. The memo described Toshiba's intent to "sustain Lexar" and simultaneously "associate with SanDisk" to "share a strategy" to develop the flash memory market.

"That's what we thought they were doing with us," Powers said. "They made billions off of that, and didn't pay us a dime."

The cooperation was a matter of necessity, Jacobs said, as SanDisk was threatening patent litigation over the technology, and in any case wasn't "an irreconcilable conflict."

"SanDisk had Toshiba over a barrel," Jacobs told the jury. Toshiba determined that "we cannot be in worldwide patent litigation at this stage" in 1997.

Powers told jurors that from 1999 to 2004 Toshiba earned US profits of US$3.7 billion on devices using flash memory covered by Lexar trade secrets. He showed them a Toshiba document saying Lexar may be responsible for generating as much 50 percent of US sales over a three-year period.

Jacobs warned jurors that Lexar's estimate of damages was speculative, and said the company failed to provide them with a meaningful method for determining an award.

"It's their fault that you have a very complicated task and no tools" to calculate damages, Jacobs said. "You cannot speculate about damages."

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