Samsung Is Hit With Patent Suits
Spansion, a struggling Silicon Valley maker of flash memory chips, filed a pair of broad patent infringement suits on Monday against Samsung of South Korea, the world’s largest producer of the chips.
In a complaint to the International Trade Commission in Washington, Spansion is seeking to bar the import into the United States of more than 100 million music players, cellphones, cameras and light laptop computers that use Samsung’s flash memory chips. The chips store data in a wide range of products.
In a federal court in Delaware, Spansion is seeking an injunction and triple damages for its claim of patent violations in Samsung flash products. It estimated that Samsung sells $7 billion of infringing chips a year.
Spansion executives said they had tried to negotiate a licensing agreement with Samsung over the last few years, with no progress. “This is not something we wanted to do, but Samsung has closed the door,” the chief executive of Spansion, Bertrand Cambou, said. “And they are infringing.”
Ideally, he added, the two companies can reach a “reasonable licensing agreement.”
If not, Spansion is prepared to pursue a legal strategy. In the 43-page complaint filed with the trade commission, the company details 10 patented technologies that it claims Samsung has used without compensating Spansion.
A spokeswoman for Samsung declined to comment.
Cases move through the trade commission quickly, usually within 16 months, unlike the federal courts, where litigation can drag on for years. The trade commission has the authority to bar the offending goods from the American market. But given the pace of change in the marketplace, and the potential damage to the economy and industry of such a step, the chances of that actually happening in this case are low, according to analysts.
“If you have strong patents, a complaint before the trade commission can be a very powerful tool for a patent holder,” said Jeffrey D. Neuburger, an intellectual property lawyer at Proskauer Rose. “Litigation can always be used as a tool in negotiation.”
Spansion, based in Sunnyvale, Calif., began in 1993 as a joint venture of Advanced Micro Devices and Fujitsu. In 2005 it was spun off as an independent company.
Spansion has suffered financially as flash-memory prices have plummeted; they are down 62 percent this year and could fall another 50 percent in 2009, according to iSuppli, a market research firm. During the third quarter, Spansion lost nearly $119 million on revenue of $631 million.
When product markets turn sour, it is not unusual for high-tech companies to seek to harvest profits from their ideas with more aggressive licensing tactics and patent infringement suits, Richard Doherty, director of research at Envisioneering, a technology consultant, said.
A year ago, Spansion bought Saifun, an Israeli company that specializes in licensing intellectual property for chip makers. “These suits are a sign of the strategy that began last year with that acquisition,” said Jim Handy, director of Objective Analysis, a semiconductor market research firm.