Spansion Inc. (CODE)

[elephant]

Spansion, Samsung to Resume Patent Feud

By PATRICK FITZGERALD

Spansion Inc. and Samsung Electronics Co. are set to resume their legal dispute after a bankruptcy judge rejected a $70 million patent settlement between the two companies.

Spansion is resuming litigation against Samsung over what it says are Samsung's violations of its patents covering technologies used in flash memory, a type of chip that is a mainstay in portable devices such as music players, digital cameras and computers, according to court papers.

Samsung, in papers filed Monday in U.S. Bankruptcy Court in Wilmington, Del., asked Judge Kevin J. Carey to lift the Bankruptcy Code's automatic-stay provision blocking lawsuits against companies in Chapter 11, so it can pursue its counterclaims against Spansion.

Judge Carey last week rejected a $70 million settlement between the two companies, ruling it was unfair to Spansion's estate and its creditors. The judge said he couldn't conclude that the cash from settlement represented a better deal for the chip maker than pursuing a pair of lawsuits against Samsung.

A Samsung spokesman declined to comment on the resumption of the litigation. A Spansion spokeswoman said she couldn't immediately comment on the issue.

Spansion sued Samsung in federal court in Delaware and filed a separate complaint with the U.S. International Trade Commission last November seeking to block U.S. imports of more than one million products, including iPods and BlackBerrys.

In January, Samsung sued Spansion's Japanese subsidiary for infringing on its intellectual property. The company also countersued Spansion in Delaware, alleging patent infringement.

Under the proposed settlement reached in April, Samsung agreed to pay Spansion $70 million and promised "not to assert" any patents owned by its semiconductor division. In return, Spansion granted Samsung a worldwide right to all its existing and future patents - fully paid up and royalty-free - and promised it wouldn't sue Samsung. The lawsuits would be dismissed.

A group of Spansion's floating-rate note holders opposed the deal, claiming it was too one-sided in Samsung's favor and that the change-in-control provision jeopardized the company's chances to find a strategic investor or buyer.


http://online.wsj.com/article/SB124457720986899157.html?mod=googlenews_wsj