Samsung’s Patent Woes

Kodak filed against Samsung and LG in the United States District Court for the Western District of New York, as well as in the US International Trade Commission. Kodak’s District Court complaints request compensation for damages resulting from the companies’ infringement, and both the District Court and ITC actions seek injunctions prohibiting Samsung and LG from further importation and sale of products cited in the complaints. Kodak did not disclose the amount of damages it is pursuing.

“Kodak has a long history of innovation and we have invested many millions of dollars developing our digital camera technology,” said Laura G. Quatela, chief intellectual property officer, and vice president of Eastman Kodak Company. “We’ve held discussions with both companies in an attempt to resolve this issue and have not been able to reach a satisfactory agreement. Consequently, we must take this legal action in order to ensure that we protect the interests of our shareholders and existing licensees of Kodak digital camera patents.”

Kodak has licensed its imaging patents to several leading technology companies including: MEI/Panasonic, Motorola, Nokia, Olympus, Sanyo, Sharp, Sony, Sony Ericsson and others.

Spansion Inc., a pure-play provider of Flash memory solutions out of Sunnyvale, Calif., is filing two separate patent infringement complaints against Samsung with the International Trade Commission and in the US District Court in Delaware.

In one of the largest patent infringement claims ever filed, Spansion is seeking the exclusion from the US market of well over one hundred million mp3 players, cell phones, digital cameras and other consumer electronic devices containing Samsung's infringing flash memory components. The complaint in the US District Court in Delaware also seeks an injunction and treble damages for patent violations relating to Samsung Flash memory, which Spansion estimates has accounted for more than $30 billion in Samsung's global revenues since 2003.

"Samsung's infringement of our intellectual property not only harms Spansion, but it threatens the foundation of technology innovation," said Boaz Eitan, executive vice president, Spansion, CEO of Saifun.

Flash memory, which retains data in devices when the power is turned off, is found in virtually all electronic devices and is one of the largest segments of the semiconductor industry, with nearly $130 billion in total revenues since 2000.

The Spansion patents named in these law suits are fundamental to floating gate technology, which is the foundation for approximately 90 percent of the Flash memory market. Spansion is also leading the industry with MirrorBit, a charge-trapping technology that represents a growing share of the Flash memory market and is expected to replace floating gate technology in the future. Flash memory companies including Samsung have publicly announced their plans to transition to charge-trapping type technologies for their future generation products.

"Spansion has patents that are fundamental to Flash memory. Samsung itself has cited these patents many times in its own patent filings, underscoring industry acceptance of the fundamental nature of Spansion's IP," said Robert Melendres, executive vice president and general counsel for Spansion. "Spansion will vigorously protect its intellectual property and is entitled to be compensated by Samsung for its use of our IP."

The acquisition of Saifun Semiconductor earlier this year expanded Spansion's IP portfolio and was a key milestone in Spansion's strategy to create a major licensing business, and generate new streams of significant revenue with very high margins.

"The combination of Spansion and Saifun's patent portfolio is the foundation for Spansion's transformation into a licensing leader," said Eitan. "As the industry transitions to charge-trapping technologies, Spansion is in a strong position to be the technology provider at the core of the future Flash memory market."

Although Samsung is the target of the litigations, Spansion is required to name the manufacturers of downstream products containing Samsung's infringing devices in its ITC complaint. Companies named in the ITC case include: Samsung, Apple, Asus, Kingston, Lenovo, PNY, RIM, Sony, Sony-Ericsson, Transcend, some of their subsidiaries and third party manufacturing companies.

With $2.5 billion in revenue in 2007, US-based Spansion is now the third largest provider of Flash memory in the world, behind Korea-based Samsung and Japan-based Toshiba. A long-time technology innovator and one of only three major US Flash memory suppliers, Spansion has invested approximately $2 billion in research and development and holds 3000 patents and patent applications.