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Toshiba contests ruling of US court on memory-chip secrets

Electronics maker Toshiba Corp said yesterday that it will fight recent US court decisions ordering the Japanese electronics maker to pay US$465 million in punitive damages for misconduct related to flash memory chips.

Toshiba is contesting decisions on Wednesday and Thursday by a Santa Clara County jury in California, awarding Lexar Media Inc US$381 million for the theft of trade secrets related to flash memory chips and US$84 million in punitive damages for Toshiba and a subsidiary sharing trade secrets with a rival maker of flash memory chips.

Flash memory chips are widely used in digital cameras, music players and other devices. Lexar, based in Fremont, California, had sought US$1 billion in damages.

"Toshiba believes that the verdict rendered by the jury was in error, and we plan to pursue all available legal avenues to correct it," the Tokyo-based manufacturer said in a statement.

A Toshiba spokesman, speaking on condition of anonymity, said the legal actions were still undecided. Toshiba said in a statement it invented NAND flash memory technologies and flash memory remains a strategic product for the company.

"This verdict sends a clear message that protects all the other companies that don't have the will or means to take on a giant like Toshiba for their fraudulent or abusive business practices," said Eric Whitaker, Lexar's general counsel. "This is a huge victory not just for Lexar, but for innovative companies everywhere."

Next month, Lexar will ask the court for an injunction that bars sales of Toshiba products using Lexar's technology in the US.

Lexar is pursuing an unfair business practices claim, expected to be decided by the judge next month, as well as patent infringement claims in federal court.

In the lawsuit first filed in 2002, Lexar claimed its secrets were misappropriated when then-partner Toshiba entered into a deal with SanDisk Corp, another memory chip maker and Lexar's biggest competitor. At the time, Toshiba had a representative on Lexar's board.
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