SK Hynix Sued By SanDisk And Toshiba Over Alleged Theft Of Trade Secrets

Toshiba and Sandisk have filed separate lawsuits seeking damages from SK Hynix, and have alleged that the company has profited from the theft of data relating to NAND flash memory technology.  Toshiba and SanDisk have been partners for a number of years on the production of flash memory chip technology for mobile devices, such as smartphones and tablets.  Toshiba currently is the world’s number two producer of NAND memory chips, both by revenue and market share.

Toshiba filed their civil suit at Tokyo District Court late last Thursday (3/13), shortly after Japanese police took 52-year old Yoshitaka Sugita into custody.  He is facing charges for allegedly copying sensitive data and research of Toshiba’s NAND-type flash memory, and then handing it to rival SK Hynix.  Sugita worked for SanDisk at the time the alleged theft took place.  He then handed the stolen technology info to his new employer, SK Hynix.  Sugita is no longer employed there.

Neither SanDisk nor Toshiba have specified how much they are seeking in damages, however Toshiba made the following statements:

“Toshiba filed the suit on learning that a former employee of SK Hynix has been arrested in Japan for alleged criminal infringement of the Unfair Competition Prevention Act.  The employee is alleged to have illegally taken Toshiba’s proprietary technical information in 2008, and to have subsequently provided it to SK Hynix.”

Toshiba acknowledged that the two companies are business partners, “However, the companies are also competitors in NAND flash memory, one of Toshiba’s core technologies, and given the scope and importance of the  misappropriated technical data involved, Toshiba has no reasonable option other than to seek legal redress.”

SanDisk has filed a separate claim in Santa Clara Superior Court, California, and has also filed a criminal complaint against the engineer.  According to Judy Bruner, executive vice president, administration, and chief financial officer at SanDisk, “SanDisk strongly believes in the value of IP, and takes protecting trade secrets very seriously.  We are working diligently with the authorities as well as our partner on these matters and are aggressively pursuing all legal remedies available to us.”

SK Hynix has had previous legal issues with Toshiba.  Back in 2004, Toshiba filed a patent infringement suit against SK Hynix related to memory patents.  That suit was settled in 2006 after a Tokyo court ordered SK Hynik to pay $76,000 in damages to Toshiba, and ordered SK Hynix to cease selling its products in Japan.  The sales ban was removed after Toshiba and SK Hynix were able to come to a cross-licensing agreement.

SK Hynix has yet to comment on any aspect of the situation.