Toshiba Settles Floppy Disk Lawsuit

Vendor sets up billion-dollar fund for notebooks that allegedly cause data loss.

Terho Uimonen, IDG News Service

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Filed earlier this year, the lawsuit alleged that a "condition" in the floppy disk controller circuitry in Toshiba notebook PCs under certain circumstances can cause data loss or corruption to information stored on a floppy disk, according to a statement issued by Toshiba. The lawsuit was filed against Toshiba and some of its U.S. affiliates.

The Texas federal court has given the settlement agreement its preliminary approval, Toshiba says.

In connection with the settlement, the Japanese PC and electronics vendor says its financial statements for fiscal 1999, ending March 31, 2000, will reflect a $1 billion extraordinary loss. On Friday, Toshiba released a revised version of its expectations for fiscal year 1999, and now expects its losses to be more than double what the company had predicted earlier this week.

Although settling the lawsuit, Toshiba has not admitted any legal liability and denied that the floppy disk controller constitutes a problem or defect in Toshiba notebooks, the statement adds.

The statement does not say how many shipped notebook PCs feature the floppy disk controller cited in the lawsuit, nor does it say how many owners are expected to be affected. The condition cited in the lawsuit is not present on floppy disk controllers used in any Toshiba desktop PCs or servers, the statement adds.

Taking Steps

Effective November 8, Toshiba will begin manufacturing notebooks for sale in the U.S. that will be equipped with new floppy drive controllers, the company says.

By November 10, owners of Toshiba notebooks will be able to download a software patch from the company's Web site. Depending on when they purchased their notebooks, some customers may also have the option to request a hardware solution, and cash refunds will be available for more recent purchasers, Toshiba says.

According to the statement, Toshiba will provide coupons with a value of $100 to owners whose notebook PCs were out of warranty as of March 5, 1999. Owners whose notebooks were still under warranty as of that date will receive a coupon with a value of $225 or $200, determined on the basis of their choice of the software patch or hardware solution, respectively. The coupons can be used for the purchase of Toshiba computer products sold through Toshiba's U.S. subsidiary.

Any unclaimed amount from the settlement fund will be donated to a newly created charitable organization, the statement says.

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