M Systems Flash Disk Pioneers Ltd. (FLSH)

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Ceedo countersues M-Systems over U3 technology

20.2.06 | 13:36 By Oded Arbel

M-Systems (Nasdaq: FLSH) released a flood of press announcements in the last week, all good things, but today it transpires that the Israeli company is under counter-attack in a patent claim.

In fact, both M-Systems and its affiliate U3 are being charged with patent infringement, by a fellow Israeli company, Ceedo Israel and Ceedo Technologies. The Ceedo group filed its grievances at the Tel Aviv District Court.

Actually, it is a countersuit after M-Systems sued Ceedo in January, claiming it was illegally making use of M-Systems' trade secrets. Specifically, M-Systems claims that Ceedo copied key components of its users interface.

In the countersuit, Ramat Gan-based Ceedo claims it had contacted M-Systems and shown it an innovative way to run applications on M-Systems hardware. Its method is the result of research it conducted through four or five years, Ceedo adds. In 2004, the two companies began working together.

Shortly after the two companies started working on the U3 project, Ceedo claims, M-Systems grasped the technological treasure it had in its hands and suspended work on the project, based on various claims. Half a year later, M-Systems "invented" the U3 concept using reverse engineering, Ceedo accuses.

The concept in question turns the mobile memory into a mobile working environment. A user can take the memory device with him on travels, plug it into any compatible PC and receive his usual desktop and environment.

Ceedo charges that M-Systems is the one that stole trade secrets, and added salt to the wound by suing. Its real purpose, Ceedo charges, is to impair its good name and buy it for a low price.

The startup is asking the court for a declarative ruling that M-Systems copied its technology and knowhow, and is asking for half a million shekels in compensation.

M-Systems' legal counsel commented that the lawsuit is merely designed to counter the original claim. The claims were groundless, he added.

Last Wednesday M-Systems announced that together with Orange and Oberthur Card System, it created a partnership to launch the world's first 512 megabyte high-density SIM Card. This SIM card will have 8000 times more memory than standard 64 kilobyte SIM cards, M-Systems said.


The day before, it and its subsidiary Microelectronica announced a plan to produce 1 gigabyte 2G and 3G SIM cards by the end of 2006. As the first part of the new offering, the companies said they would provide 512 megabytes M-SIM MegaSIM series SIM cards for pilots with mobile network operators in the second quarter, and that commercial availability should begin in the third quarter. The 1 gigabyte M-SIM MegaSIM series SIM cards are planned for rollout by the end of 2006 it said.

That same day M-Systems announced that it was teaming Up with RSA Security to provide two-factor authentication technology for Internet-based services.

http://www.haaretz.com/hasen/spages/685065.html

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