Flash-memory maker files lawsuit in US
By Liu Baijia (China Daily)
Updated: 2006-02-17 08:31

Chinese flash-memory product maker Netac launched a lawsuit against its US counterpart PNY Technologies for infringements of its patent, a move to try to get a level playing field in its overseas development.

Shenzhen-based Netac said yesterday in Beijing that it filed a lawsuit against PNY Technologies in a federal court in the Eastern District of Texas on February 10.

The company claimed PNY Technologies violated its patent, registered in the United States, on electronic flash-memory external storage method and device. It is asking for compensation on the alleged infringement, but the company declined to reveal the amount.

It also requested the court to suspend the sales of PNY's flash-memory storage devices.

"We want to get a fair competition in the United States, while Netac is expanding its presence in the overseas market," said Deng Guoshun, president of Netac.

The lawsuit is one of the rare cases of a Chinese company suing a US firm for infringements of intellectual property rights (IPRs) in the United States, while many Chinese companies got complaints from foreign companies on similar accusations.

"It is an encouraging sign that Chinese companies become mature in using IPRs to protect their interests, as more and more Chinese companies have developed their own innovations and the country is trying become an innovative nation," said Hu Zuochao, vice-president of Patent Protection Association of China.

PNY is a computer-related peripheral maker based in Parsippany, New Jersey. Deng said the company was one of the top three flash-memory product makers in the United States.

The flash-memory product market is estimated at US$2 billion.

The US company was not immediately available to comment.

Netac hired Morgan Lewis & Bockius LLP, one of the top 10 US law firms, to represent itself.

Courts in the Eastern District of Texas are known for their tough protection of IPR and quick progress in ruling on such cases.

Netac said it was also studying how to take action against other players in the market.

The patent application got protests from 19 other international makers because it covered very wide areas and might stop any other player outside the game.

However, it was finally approved by the US authorities. After that, Netac began to contact makers of those devices in the United States, including PNY and SanDisk, and sent a letter to ask for negotiations with the latter.

"We have spent a huge amount of money and energy on research and development, so we hope other makers will honour our intellectual property rights," said Deng.

Netac had also launched a legal action in patent infringement against the domestic company Beijing Huaqi Information Digital Technology Co Ltd in 2002 and won the case in the first trial in 2004.

In addition, it sued a factory of the Japanese giant Sony in Wuxi of East China's Jiangsu Province, in October 2004 and demanded compensation of 10 million yuan (US$1.2 million), but the court has yet to judge on the case.

Deng said that about 10 companies already licensed the technology from Netac, including the South Korean giant Samsung Electronics.

Netac claimed to make over 3 million flash-memory devices a year, and its revenues in 2005 were less than US$100 million. It also invested about 10 per cent of that on research and development as well as IPR.

(China Daily 02/17/2006 page9)