The IP Factor

Sandisk suffered a set-back last week, when the company failed to convince the International Trade Commission, washington, that some 50 companies were infringing their intellectual property.  See In the Matter of Certain Flash Memory Controllers, Drives, Memory Cards and Media Players and Products Containing Same, 337-619, U.S. International Trade Commission (Washington).

On 23 October 2009, the Commission ruled against SanDisk Corp., finding that there had been “no violation.”.

Sandisk is a US-Israeli company. Many of the patents for flash memory were filed by Sandisk or m-systems, another Israeli company bought out by Sandisk for technology developed in Israel.  Flash memory technology is used to store data in MP3 players, memory sticks, digital cameras and cell phones. In the current market, with purchases of electronic goods and upgrades of mobile phones at a low, licensing has become an important source of revenue for the company. According to their July report, Sandisk received over $191 million in licensing and royalty fees in the first six months of 2009, which represents 14% of its total revenue.

SanDisk had originally filed claims against almost 50 companies, including LG Electronics Inc. and Imation Corp., and asked the commission to ban imports to the U.S. of infringing products. However, 21 claims against companies were terminated because of settlements, consent orders and withdrawals. A further five companies defaulted. Companies that were still defendants last week included Phison Electronics Corp., Silicon Motion Technology Corp. and Skymedi Corp. (Taiwan); Power Quotient International Co., Transcend Information Inc. and Apacer Technology Inc. (Taipei); Syscom Development Co. (British Virgin Islands); Kingston Technology Corp. (US); and Dane-Elec Memory of Bagnolet, France.

Following losing the case before the commission, SanDisk shares fell 3.2 percent, to $22.12 on Nasdaq.