Seagate suit against STEC could raise SSD prices
Seagate
Technology filed a potentially far-reaching patent infringement lawsuit
against STEC
on Monday, over flash memory-based solid state drives (SSDs).
Seagate, the world's largest hard-disk drive (HDD) maker, claims that several
STEC products, including SSDs and some DRAM (dynamic RAM) devices, infringe
as many as four of its patents. Seagate filed the lawsuit in the U.S. District
Court for the Northern District of California.
The lawsuit could go a long way in changing the game between HDD and SSD makers.
At a time when demand for storage is exploding as people give up CDs and DVDs
and start storing music, movies and more on their computers, SSDs have gained
ground against HDDs because they use less power and are more reliable, although
HDDs remain far less expensive.
A Seagate victory in the suit, or a settlement, could result in the company
winning cross-licensing agreements and collecting royalties not only from STEC,
but also from other SSD makers such as Samsung Electronics and Intel, or see
them facing similar lawsuits, according to Jim Handy, analyst at Objective
Analysis. The royalties would become like a tax on SSDs and potentially
other flash memory products, increasing prices to end users.
Seagate and Western
Digital partnered with SanDisk
in the 1980s to establish the flash card market, gaining access to key flash
SSD intellectual property, some of which is being used in the complaint against
STEC, Handy said.
"Although we are not in a position to comment on the validity of Seagate's
claim, we have been watching the technology business long enough to understand
the way the patent game is often played," said Handy.
Such cases rarely go to trial. The parties usually settle after squaring off
over which has more patents. The owner of the larger patent portfolio, Seagate
in this case, normally ends up naming the settlement terms, Handy said.
The STEC case will likely be a proving ground for Seagate's patents, but larger
companies may put up more of a fight even if Seagate wins. STEC's revenue was
only US$188.7 million last year, making it a far smaller company than, for example,
Intel at $38.3 billion.
Handy reckons that Seagate is already in talks with all major SSD makers on
the patent issue.
Representatives from Seagate, Samsung and Intel declined to comment on the
case.
But in an open
letter, Seagate CEO Bill Watkins wrote: "This is not about stifling
innovation or threats to our business from solid state technology. We welcome
advances in this, and other technologies, and in fact we continue to invest
considerable R&D funds and now have teams of people focused on the development
of Seagate solid state and related technologies. What this lawsuit is about
is preserving for our shareholders the value we have created by building an
industry-leading patent portfolio."
IDG News Service
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