Samsung settles with SNDK
techweb.com
August 18, 1997, Issue: 1071
Section: News
Samsung settles with SanDisk
By Andrew MacLellan
Silicon Valley- Samsung Electronics Co. Ltd. and SanDisk Corp. have resolved their longstanding dispute over patents related to flash-memory technology, ending a U.S. embargo of Samsung flash chips imposed by the International Trade Commission in June.
Upon a reversal of the ITC ruling, which both parties described as imminent, South Korea's Samsung and its semiconductor subsidiary will resume the sale of flash-memory products to OEM customers in the United States.
The two companies also dropped the lawsuits each had filed in U.S. federal court alleging infringement on respective flash patents.
The rival chip makers agreed to cross-license each other's patents, with Samsung paying undisclosed royalty fees for rights to NAND-based flash technology held by SanDisk.
Under the embargo, Samsung stood to lose about $35 million in 1997 flash sales, giving the company a strong incentive to return to the bargaining table. Global flash sales will reach about $3 billion this year, according to Semico Research Corp., Phoenix.
Satisfying customers
Samsung said it capitulated to SanDisk's royalty demands both to honor existing OEM commitments and to get its flash chips back on the market.
"The driving force was to satisfy our customers and their production requirements," said W. Keith McDonald, senior vice president of sales and marketing for Samsung Semiconductor Inc., San Jose. "We also believe the flash market will continue to grow."
Details not known
Details of the pact were not disclosed. Cindy Burgdorf, chief financial officer for Sunnyvale, Calif.-based SanDisk, said the agreement will last four to 10 years and grants each party mutual worldwide rights to patents covering design and manufacture of flash-memory products.
Neither company would quantify the royalty rate that Samsung has agreed to pay. However, several industry sources said the sum mentioned prior to the ITC injunction exceeded 10%
"I heard there was a lot of discussion once the ITC decision came down," said Alan Niebel, a Semico analyst. "Apparently, Samsung said they were willing to do a deal as long as it was reasonable and fair."
Reputation as a tough guy
Even before this latest accord, SanDisk had earned a reputation for aggressively asserting its patent rights. In addition to amicable cross-licensing agreements with Hitachi Ltd. and Sharp Corp., SanDisk also inked a deal with Intel Corp. in October 1995 following lengthy legal wrangling.
The two-year battle with Samsung drew to a close just a week after SanDisk brokered a flash agreement with Toshiba Corp., Samsung's primary flash partner. The Toshiba license was a savvy piece of salesmanship, observers said, establishing a royalty base with yet another market competitor, but also eliminating Toshiba from Samsung's legal corner and weakening its defense strategy.
"I don't know if it's a back door or not - going to Toshiba - but it was easy to see that once that first agreement was in place, you'd get into some very sticky issues as to whether a part had a Toshiba or a Samsung label on it," Niebel said.
When asked whether SanDisk's licensing pact with Toshiba was done in part to gain leverage in its negotiations with Samsung, SanDisk's Burgdorf demurred.
"I don't know about that," she said, "but it's an interesting observation."
Copyright (c) 1997 CMP Media Inc. |
