Menu
Memory rivals brace for legal battle after alleged trade secrets theft

Memory rivals brace for legal battle after alleged trade secrets theft

The Toshiba-SanDisk joint venture has filed lawsuits against SK Hynix for misappropriating trade secrets

A former SK Hynix employee is at the center of a brewing legal battle between top flash memory rivals after allegedly stealing trade secrets.

Toshiba and NAND flash joint-venture partner SanDisk on Thursday filed lawsuits against competitor SK Hynix and its subsidiaries, alleging theft and misuse of confidential trade secrets.

The lawsuits, filed in Japan and the U.S., came after Tokyo's Metropolitan Police Department on Thursday arrested former SK Hynix employee Yoshitaka Sugita on charges of stealing trade secrets. The trade secrets were allegedly stolen by Sugita when he was employed by the SanDisk-Toshiba joint venture, and the information was passed to SK Hynix, his next employer. The lawsuits allege misuse of proprietary information by SK Hynix to gain competitive advantage.

Toshiba and SanDisk, which jointly manufacture NAND flash at a fabrication plan in Yokkaichi, Japan, provided information on the alleged trade secrets theft that led to Sugita's arrest on or around Thursday by the police in Tokyo. Sugita is cooperating with the authorities, SanDisk said.

Toshiba filed a lawsuit against SK Hynix in the Tokyo District Court under Japan's Unfair Competition Prevention Act, according to a statement. Toshiba is seeking damages for the "wrongful acquisition and use of Toshiba's proprietary technical information related to NAND flash memory," according to a statement.

A separate lawsuit filed by SanDisk in the Santa Clara Superior Court in California on Thursday against SK Hynix and its U.S. subsidiary alleges that the defendants cashed in on the stolen trade secrets. SanDisk is seeking damages, and remedies for trade secret misappropriation under California's Uniform Trade Secret Act.

SanDisk in its civil suit also alleged that SK Hynix "solicited" Sugita to steal the trade secrets from SanDisk-Toshiba. The confidential information was later used by SK Hynix for technical and operational purposes, including to lay out its future NAND flash roadmap, according to the complaint filed with the court.

A spokesman for SK Hynix in South Korea said the company is still in the process of verifying the lawsuits and has no immediate comment.

Sugita worked at SanDisk-Toshiba from February 2003 and resigned in June 2008, where he analyzed defective products and had access to trade secrets related to NAND flash memory designs, devices and manufacturing processes, according to the document. Sugita allegedly stole trade secrets in May 2008, including "SanDisk's most sensitive and valuable flash memory trade secrets." The 10GB of sensitive information that was downloaded is said to have included data on research and development, design and circuit layouts, process technology, tools, testing, device and business information.

After leaving SanDisk-Toshiba, Sugita commenced work for SK Hynix in July 2008 and was employed there until June 2011. But it was only in January 2014 that SanDisk-Toshiba learned about the trade secret misappropriation through an informant aware of Sugita and SK Hynix's activities. Despite signing a non-disclosure agreement after leaving SanDisk-Toshiba, Sugita allegedly delivered "substantial technical, operational and business trade secret information" which SK Hynix used despite "knowing that it was acquired by improper means," according to court documents.

Toshiba said SK Hynix is a partner, but had to file a lawsuit as a means of redressal. The company said it would will establish "a more robust system for protecting its intellectual property and preventing its loss."

Research firm IC Insights placed SK Hynix as the fifth largest vendor of semiconductors, estimating US$13 billion in sales for 2013. Toshiba was in sixth spot with projected sales of $12.2 billion. In NAND flash, Toshiba ranked second in sales during the fourth quarter of 2013 with sales of $1.5 billion, while SK Hynix was in fourth place with sales of $730.5 million.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Tags intellectual propertyCivil lawsuitslegalpatentComponentstoshibaSK Hynixmemory

Featured

Slideshows

Educating from the epicentre - Why distributors are the pulse checkers of the channel

Educating from the epicentre - Why distributors are the pulse checkers of the channel

​As the channel changes and industry voices deepen, the need for clarity and insight heightens. Market misconceptions talk of an “under pressure” distribution space, with competitors in that fateful “race for relevance” across New Zealand. Amidst the cliched assumptions however, distribution is once again showing its strength, as a force to be listened to, rather than questioned. Traditionally, the role was born out of a need for vendors and resellers to find one another, acting as a bridge between the testing lab and the marketplace. Yet despite new technologies and business approaches shaking the channel to its very core, distributors remain tied to the epicentre - providing the voice of reason amidst a seismic industry shift. In looking across both sides of the vendor and partner fences, the middle concept of the three-tier chain remains centrally placed to understand the metrics of two differing worlds, as the continual pulse checkers of the local channel. This exclusive Reseller News Roundtable, in association with Dicker Data and rhipe, examined the pivotal role of distribution in understanding the health of the channel, educating from the epicentre as the market transforms at a rapid rate.

Educating from the epicentre - Why distributors are the pulse checkers of the channel
Kiwi channel reunites as After Hours kicks off 2017

Kiwi channel reunites as After Hours kicks off 2017

After Hours made a welcome return to the channel social calendar last night, with a bumper crowd of distributors, vendors and resellers descending on The Jefferson in Auckland to kickstart 2017. Photos by Maria Stefina.

Kiwi channel reunites as After Hours kicks off 2017
Arrow exclusively introduces Tenable Network Security to A/NZ channel

Arrow exclusively introduces Tenable Network Security to A/NZ channel

Arrow Electronics introduced Tenable Network Security to local resellers in Sydney last week, officially launching the distributor's latest security partnership across Australia and New Zealand. Representing the first direct distribution agreement locally for Tenable specifically, the deal sees Arrow deliver security solutions directly to mid-market and enterprise channel partners on both sides of the Tasman.

Arrow exclusively introduces Tenable Network Security to A/NZ channel
Show Comments