Flash memory inventor, Toshiba settle landmark litigation

July 27, 2006 – Toshiba Corp. has agreed to settle a dispute with an ex-engineer who was instrumental in the creation of flash memory, two years after he sued them for reimbursement for his work while at the company.

Under terms of the settlement, Fujio Masuoka will receive 87 million yen (about $745,000), a fraction of the 1 billion yen he had initially sought, but far exceeding the 6 million yen Toshiba originally gave him years ago in recognition of his invention’s contributions.

Masuoka, now a professor at Tohoku U., filed suit in early 2004 in Tokyo District Court seeking 1 billion yen ($9.2 million) from his former employer — down from his original demands of 8 billion yen (~$75 million) — for his contributions toward the creation of flash memory. It was among the first such lawsuits in Japan where a former employee sought reimbursement for technology developed while working at the employer. Masuoka claimed Toshiba had reaped tens of billions of yen (>$150 million) since the 1980s from transferals of patent rights to flash memory, which is now ubiquitous technology in digital consumer devices.

“The sum is not so satisfactory when compared with what I had demanded but, if I take into account that I had been given six million yen as the reward, it is a big step forward,” he said, quoted by various press reports. “The court has helped establish a reward system encouraging inventors… a growing number of Japanese companies have been highly rating engineers. Right treatment of engineers can help advance Japan’s industry.”

Also in 2004, the Japanese court handed out 20 billion yen (~$180 million) to Shuji Nakamura, who developed blue LED technology while working for Nichia in the 1990s. Nichia appealed, and Nakamura settled for 840 million yen (~$7 million) in early 2005. And a case filed against Hitachi Ltd. relating to optical disk technology is still pending.

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