Barron's: SanDisk's Patent Battles 'Getting Ugly' (SNDK, STM)

Dec. 5.05 | About: Western Digital (WDC)

A new lawsuit brought by STMicroelectronics (ticker: STM) against flash memory producer SanDisk (ticker: SNDK) goes right for the jugular -- alleging that SanDisk founder and CEO Eli Harari developed SNDK's key intellectual property while working at another company (now owned by STMicro) that should have exclusive rights to that IP. In Saturday's Barron's (sub. req.), Bill Alpert writes a second consecutive cautionary column on SanDisk, calling the STMicro case 'astonishing'. Excerpt:

STMicro alleges that Harari's contract promised his inventions to WaferScale, but that he concealed the four applications from his employer. Those four applications eventually yielded 27 patents to SanDisk. In April 1989, less than a month after resigning from WaferScale's board, Harari filed patent applications that led to 24 more SanDisk patents, STMicro alleges.

STMicro bought WaferScale in 2000, and claims that it only discovered this ancient history while preparing for the current patent litigation against SanDisk. Now, STMicro wants SanDisk's patents. SanDisk has answered STMicro's fraud claim in federal court, where SanDisk wants them handled, and denies that Harari wronged his prior employer.

SanDisk said that Harari wasn't available to answer my questions, but spokesman Mike Wong said SanDisk would vigorously defend itself and said: "Dr. Harari is known in our industry to have the utmost integrity."

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