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Seagate Claims SSD Maker Violates Patents
Posted April 15, 2008
Seagate Claims SSD Maker Violates Patents
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By Richard Koman. Updated April 15, 2008 1:52PM

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Apple's MacBook Air laptop features a solid-state drive (SSD). So does HP's new Mini-Note. While still a tiny part of the market, SSDs are starting to worry traditional hard-drive manufacturers. A lot.

In a sign of the showdown between old and new storage technologies, Seagate, the market leader in traditional hard drives, filed a lawsuit in federal court Tuesday, claiming that SSD manufacturer STEC has violated four of its patents covering the interface between storage and computer.

Seagate CEO William D. Watkins said SSDs don't yet present "a big financial issue, because the market is just taking off. But that's why we want to set things straight now." The patents at issue appear to be rather recent. Watkins told the New York Times that Seagate spent $7 billion over the last year on the technology at the heart of the suit.

But STEC says the lawsuit is meritless and is "primarily motivated by competitive concerns rather than a desire to protect [Seagate's] intellectual property." Patrick Wilkison, vice president of marketing and business development at STEC, said the lawsuit is a case of Seagate "defending its turf," and is a sign that the company is threatened by the emerging technology. Wilkison said Seagate lawyers never contacted his company before filing the lawsuit.

Attack on SSDs?

Manouch Moshayedi, STEC's chief executive, said his company has been "entirely respectful of the intellectual property that has been developed by others." He said SSD technologies simply pose a competitive threat to the hard disk drive industry, and that Seagate is trying to "slow down the growth that STEC's SSD business is experiencing, particularly in the enterprise segment. We have a high degree of confidence in STEC's intellectual property portfolio."

In particular, STEC believes its technology predates Seagate's patents -- by more than a decade. According to the company, "STEC was one of the originators of stacking technology, with patents dating back to the mid-1990s, while Seagate's patent on this matter was issued in 2005."

Indeed, it may be Seagate, rather than STEC, that is misappropriating intellectual property, STEC said, promising to "take appropriate action to protect its interests, including seeking the invalidation of Seagate's patents."

Playing the Patent Game

Without commenting on the validity of the patent claims, Jim Handy, an industry analyst with Objective Analysis, said the suit is indeed mostly about competition. "We have been watching the technology business long enough to understand the way the patent game is often played," he said.

The result of this gamesmanship may be to drive up prices of SSDs -- or at least keep prices from falling, Handy said. The typical result of such lawsuits is cross-licensing deals between the parties, which would mean that hard drives -- which are markedly less expensive than SSDs -- will continue to be attractive to OEMs. Indeed, Seagate's Watkins flat-out told the Times that obtaining a cross-licensing arrangement was the point of the suit.

STEC is hardly the biggest name in the SSD industry. Both Intel and Samsung are major players in SSD manufacturing, and the suit against STEC may be aimed at bringing those big boys to the licensing table.

For his part, Watkins issued an open letter claiming the high ground. "This is not about stifling innovation or threats to our business from solid state technology . . . What this lawsuit is about is preserving for our shareholders the value we have created by building an industry-leading patent portfolio."

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