Toshiba Won’t Amend Projections Despite $465.4 Million Judgment
Toshiba won’t revise its 2005 financial projections despite the $465.4 million judgment against it in Cal. over charges of misappropriating trade secrets from rival memory-chip maker Lexar Media.
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Toshiba’s comment came late Fri. after Judge Jack Komar, Cal. Superior Court, Santa Clara, rendered judgment on a jury verdict in March that Toshiba stole Lexar’s trade secrets involving CompactFlash, Secure Digital, xD and NAND memory. Lexar sued Toshiba in 2002, alleging theft of trade secrets and breach of fiduciary duty in connection with Toshiba’s 1997-1999 representation on its board (CED July 12 p5). Lexar’s charges came after then- partner Toshiba entered into a deal with SanDisk, Lexar’s biggest competitor. At the time, Toshiba had a representative on Lexar’s board.
Toshiba said it will fight the Cal. judgment. “The Entry of Judgment is a procedural step in a trial that comes after a jury verdict and before the filing of certain post-trial motions,” Toshiba said. “The procedures at the trial court are ongoing, and as this litigation moves to its conclusion, we will continue to pursue all legal avenues available to us to correct what we believe to be an erroneous jury verdict in this case, including filing post-trial motions or applicable appeals. At this time, Toshiba does not plan to revise projections for fiscal 2005 business performance due to this matter.”
Under Cal. law, 10% interest on a judgment begins accruing during an appeal, Lexar said. The company also has sued Toshiba on patent infringement allegations in federal court. Toshiba claimed it had invented NAND flash memory technology and has been a pioneer throughout its development. “Flash memory remains a strategic product for Toshiba and one in which Toshiba owns original technologies,” the company said.
In July, Judge Komar rejected Lexar’s request for an injunction barring shipment of Toshiba-made flash memory products, saying the company was “adequately compensated” by the jury’s $465.4 million damages award and failed to provide “specific evidence” that Toshiba and partner SanDisk enjoy a “commercial advantage” beyond that covered by the jury award. “The multiple other parties who are innocently intertwined in the defendant’s products.. would make it unreasonable to require that all production or sales cease,” Komar wrote. Additionally, Komar ruled, there’s “no longer any possibility” that Toshiba could breach its fiduciary duties as it’s no longer represented on Lexar’s board.