Hynix, Toshiba End Legal Battle

Hynix Semiconductor Inc. of South Korea and Japan's Toshiba Corp. declared an end to their legal battles Tuesday, signing accords to share semiconductor patents and products.

The two companies have been embroiled in litigation in Japan and the United States over NAND flash memory chips, used in digital products such as cameras, music players, personal digital assistants and memory cards.

Toshiba, which dominates international patents for NAND, has charged that Hynix's flash memory chips infringe on its patents. Companies that manufacture the products based on the Toshiba's patents must pay royalties to it.

"The agreements settle all pending patent-related litigation between the companies in the U.S. and Japan, including that before the U.S. International Trade Commission," the companies said in a joint statement released by Hynix.

Hynix and Toshiba said that the agreements, covering patents and product supply for semiconductor technology, mean they "will be cross licensed to use one another's semiconductor patents."

The International Trade Commission, an independent government agency that investigates alleged violations of U.S. international trade laws, last month granted a request by Toshiba to investigate the import and sale of NAND chips made by Hynix.

Toshiba had requested that the ITC bar the NAND chips from being imported into the United States.

"With litigation behind us, and through these agreements, we can now strengthen our respective businesses," Toshiba vice president Shozo Saito said in the statement.

James Kim, head of investor and public relations at Hynix, declined to divulge details of the supply agreement, other than to say that "certain kinds of products would be shipped to Toshiba." Hynix also will still pay royalties to Toshiba for its patents, he said.

Under the agreement, Toshiba will get a cross-licensing fee from Hynix, said Keisuke Ohmori, a Toshiba spokesman in Tokyo. He declined to provide an amount or say how that differs from royalty payments.

Toshiba, like South Korean rival Samsung Electronics, manufactures not only consumer electronics but also components such as memory chips. Hynix only manufactures memory chips.

Lee Min-hee, a semiconductor industry analyst at Dongbu Securities in Seoul, estimated that Hynix's royalty payments to Toshiba last year amounted to 5 percent of its NAND sales revenue of $2.4 billion.

Lee said the agreement is likely to benefit both companies.

"As Hynix expands its NAND flash operations aggressively Toshiba's royalty income will grow," he said.