Toshiba Wins Appeal in Flash Memory Case

Toshiba has won the right to a reconsideration of the $465 million in damages levied against it in a case brought by Lexar Media, both sides in the case say. But Toshiba's appeal of the verdict finding it liable was denied.

A jury in California ruled in March that Toshiba should pay Lexar $381 million in damages for breach of fiduciary duty and theft of trade secrets and $84 million in punitive damages in a case concerning flash memory chip technology. Flash memory is widely used in computers and digital consumer electronics products because of its ability to retain data when its power supply is disconnected.

From Partners to Rivals

Toshiba and Lexar became partners on the technology in 1997 when Toshiba invested $3 million in Lexar and received a seat on the company's board. Toshiba sat on the Lexar board for two and a half years and through that position gained access to the company's technology and its business plans while at the same time working with SanDisk, a rival of Lexar, on plans to jointly develop flash memory chips, Lexar said during the case.

Last week, the Superior Court of the State of California granted Toshiba and Toshiba America Electronic Components a motion for a new trial on the damages. Toshiba had argued that there was insufficient evidence to support the damages awarded by the jury.

"The Court's granting of a limited new trial on damages does not impact the jury's finding that Toshiba and Toshiba America Electronics Components misappropriated trade secrets from Lexar and each breached their fiduciary duty to Lexar and that the breach was fraudulent, oppressive, and malicious," said Eric Whitaker, executive vice president and general counsel of Lexar, in a statement. "We are confident that another jury will award us the damages we are entitled to recover."

The court denied a further Toshiba motion for judgment notwithstanding the verdict that would have led to a reconsideration of the verdict on liability, according to Toshiba in Tokyo. The company said it plans to appeal this decision.