Toshiba And SanDisk Sue Hynix For Industrial Espionage

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The engineer who leaked proprietary information is in custody

Tokyo police has arrested an engineer suspected of leaking Toshiba’s flash memory trade secrets to a South Korean competitor. Yoshitaka Sugita, a 52-year old former SanDisk employee, is accused of supplying research on flash memory to SK Hynix, the world’s second largest memory chipmaker after Samsung.

Toshiba partnered with the US flash manufacturer SanDisk over a decade ago to produce NAND chips. Both are now suing Hunix for stealing proprietary technology, and claiming damages. Toshiba has also filed a criminal complaint – an extremely rare occurrence in these types of cases.

Industrial espionage

According to Nikkei Asian Review, Sugita allegedly acquired the data on NAND flash memory, the type most frequently used in mobile devices, sometime between April 2007 and May 2008, when he worked for SanDisk. He then offered this information to the predecessor of SK Hynix, which offered him employment.

091215_64GB_NANDHowever, the relationship must have gone sour at some point, because the engineer left Hynix in 2011, and is currently unemployed.

The case appears pretty obvious, since the police have discovered the exact USB stick used to store proprietary information.

Toshiba claims it lost at least 100 billion yen (£590m) as a result of the leak. It sued Hynix in a Tokyo District Court, while SanDisk filed a similar complaint in Santa Clara Superior Court in California, and is seeking additional injunctions.

Flash chips are a key source of profit for Toshiba – the Japanese company actually invented NAND memory way back in 1989, and ships flash and hybrid storage with its own silicon on board, unlike Seagate, which has to buy them from Samsung.

This is not the first time Toshiba and its South Korean rival have locked horns. In 2004, the company filed a lawsuit against the Japanese unit of Hynix for patent violations, asking for the court for an injunction on some products. The case was ultimately settled, but Hynix was forced to discontinue some product lines and pay 7.8 million yen (£46,000) in damages.

Toshiba is planning to overtake Samsung as the world’s largest flash manufacturer once it completes a new chip foundry in Yokkaichi.

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