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Toshiba launches $1.4B legal battle against Western Digital

Toshiba launches $1.4B legal battle against Western Digital

The Japanese tech company alleges continued interference with the sale process of its memory business

Toshiba has moved to sue Western Digital to the tune of $1.4 billion over its alleged continued interference with sale process of the company’s memory business.

Toshiba told shareholders on 28 June that it had filed a petition with the Tokyo District Court against Western Digital, seeking a provisional disposition order for an injunction against acts of unfair competition.

The embattled Japanese tech giant also revealed it had brought a suit for a permanent injunction against Western Digital, along with a claim for damages and payment of 120 billion yen ($1.4 billion), alleging violation of the Unfair Competition Prevention Act, among other things.

The US-headquartered storage technology company acquired SanDisk, which has been a long-term memory chip manufacturing partner of Toshiba, last year.

However, after Toshiba moved to put its flash memory business stake up for sale earlier this year in a bid to cover massive losses incurred by its Westinghouse Electric Company subsidiary, Western Digital dug its heels in, seeking arbitration over the proposed sale.

This move by Western Digital (WD) has effectively delayed the bidding and sale process, despite Toshiba having already settled on a preferred buyer for the business.

On 28 June, Toshiba told investors they would have to wait just a little longer for the long-awaited sale of its memory business to close.

“It is taking time to reach a consensus because the consortium comprises multiple parties, and closure was not achieved by Toshiba’s target date,” the company said in a statement.

Now, Toshiba’s lawsuit alleges that WD has “continually interfered with the bid process related to the sale of TMC [Toshiba Memory Corporation]”.

Citing joint venture agreements between Toshiba and SanDisk, the lawsuit also alleges that WD has exaggerated its consent right – in both public statements and private communications to bidders and others involved in the sale process – in order to interfere with the sale of TMC.

The complaint goes on to allege that proceeding with the sales process for TMC does not violate any consent rights held by WD, and that WD’s claims are false and designed only to “interfere with the sale process, and have damaged Toshiba and TMC”.

“Toshiba and TMC have filed litigation in Japan because WD has improperly obtained Toshiba and TMC’s trade secrets by transferring employees of SanDisk to WD who have access to confidential information of Toshiba and TMC through their participation in the collaboration between SanDisk and Toshiba/TMC,” Toshiba said in a statement to shareholders.

The legal action comes after a drawn-out bidding process for the sale of Toshiba’s memory chip business, which has seen a number of big ticket players reportedly come forward for a stake in the business.

Google, Amazon, Apple, Foxconn Technology Group and Kingston Technology are among those that had been rumoured to be among the potential bidders for stock in the business.

In the end, Toshiba settled on a consortium of buyers, including the Innovation Network Corporation of Japan, the Development Bank of Japan and Bain Capital, as the preferred buyers.


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