SanDisk, Samsung flash fight heats up

Electronic News, March 3, 1997 by Crista Hardie

Washington--An ongoing patent infringement battle between flash memory contenders, SanDisk and Samsung, has taken a turn in SanDisk's favor, with the threat of Samsung's ejection from the U.S. flash market. Yet, Samsung last week vowed to not give up the fight.

The litigation is one of many in the young flash memory market, pointing to an eventual shakeout as new players emerge on the scene and technology pioneers step forward to protect their territory--much like what is occurring in the 3-D graphics world. Observers recalled similar cases concerning DRAM technology before most everyone was forced to pay royalties to Texas Instruments.

Last week, a U.S. International Trade Commission (ITC) judge issued his preliminary finding that South Korea-based Samsung Electronics and its American semiconductor subsidiary infringe two significant SanDisk U.S. patents involving flash memory and, that the import of Samsung's NAND flash memory chips and electronics products containing those chips violates the Tariff Act of 1930.

Samsung general counsel, Charles Donohoe, said the company will petition the ITC full commission to review the judge's decision concerning one of the patents. Known as the '752 patent, the invention covers multi-block erase, which is important for certain types of flash, but not for Samsung's flash, Mr. Donohoe asserted. "We eliminated multi-block erase from all of our commercial flash memories... (The judge) did not consider our redesign at all," he said.

Meanwhile, Samsung has separately petitioned the U.S. Patent and Trademark Office to re-examine the validity of SanDisk's '338 patent, which Samsung is also accused of infringing. Samsung claims a prior invention by Italy's Olivetti raises the question of patentability. The PTO is expected to make a determination on the matter by the end of the year.

However, that may come too late to allow Samsung to become a bigger player in the 1997 flash market. The ITC said it will issue a final ruling on the '338 patent by May 26, followed by a 60-day presidential review. Samsung has the right of appeal but, the net result is, it could be shut out of the flash market for at least the latter half of the year.

Samsung is a relatively minor player in flash memory but, the manufacturing giant has "big ambitions in the flash market and, as the largest DRAM manufacturer in the world, has the wherewithal to pursue flash every bit as vigorously," according to Bruce Bonner, principal analyst in Dataquest's memories program. Still, the company's attempts to diversify its product focus in the wake of the DRAM market crash could be hurt if it is locked out of one of the major world markets.

The companies have been at war for at least two years, using the U.S. District Court in San Jose, Calif. as a battleground. SanDisk says Samsung is violating five flash patents. Samsung is asking that those five patents be set aside, and is claiming that two of its own are infringed by SanDisk (EN, Oct. 16, 1995).

That district court action is on hold while SanDisk pursues a "fast track" ITC investigation of two of its more significant patents (EN, Jan. 15, 1996). Patent 5,172,338, "Multi-state EEPROM read and write circuits and techniques," relates to how multiple cells on a NAND flash die are programmed in parallel, but with such precision as to terminate voltage levels without under- or over-programming cells. Patent 5,418,752, "Flash EEPROM system with erase sector select," relates to the ability to erase randomly selected sectors of a NAND flash die simultaneously, also known as multi-block erase.

Regardless of the eventual ITC ruling, Eli Harari, SanDisk president and CEO, said SanDisk will proceed with the district court case--a court which tends to be more generous with punitive damages--and may add other patents to the suit.

Samsung said likewise.

"Near-term, if SanDisk got all the NAND business, it wouldn't have much impact on the overall market," said Dataquest's Mr. Bonner. "It is significant in terms of firing a shot across the bow of Samsung and Toshiba." Toshiba is the only other supplier of NAND flash and, if not already negotiating a license with SanDisk, could be the company's next target for legal action.

Currently, NAND makes up about a tenth of the total $2.8 billion flash memory market. Samsung, whose flash products are almost purely NAND, sold about $41 million worth in 1996, a small portion being U.S. sales, according to Dataquest.

Andrew MacLellan contributed to this report.