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Litigation Against Western Digital Corporation

28 Jun, 2017

TOKYO—Toshiba Corporation (TOKYO 6502) and Toshiba Memory Corporation (“TMC”) today filed a petition with the Tokyo District Court against Western Digital Corporation, a U.S. company, and its subsidiary Western Digital Technologies, Inc. (collectively, “WD”) (NASDAQ: WDC), seeking a provisional disposition order for an injunction against acts of unfair competition, and also brought suit for a permanent injunction, damages and payment of 120 billion yen, alleging violation of the Unfair Competition Prevention Act, among other things.

The lawsuit states, as detailed in Toshiba’s June 2, 2017 press release, “Update on Status of Third-party Investment in the Memory Business,” that WD has continually interfered with the bid process related to the sale of TMC.

Citing joint venture agreements between Toshiba and SanDisk LLC (including its affiliates, “SanDisk”), the lawsuit also says that WD has exaggerated its consent right – in both public statements and private communications to bidders and others involved in the sale process – in order to interfere with the sale of TMC which does not hold the ownership interests in joint venture companies co-owned with SanDisk.  The complaint goes on to state that proceeding with the sales process for TMC does not violate any consent rights held by WD; WD’s claims are false, designed only to interfere with the sale process, and have damaged Toshiba and TMC.

Toshiba and TMC have filed litigation in Japan because WD has improperly obtained Toshiba and TMC’s trade secrets by transferring employees of SanDisk to WD who have access to confidential information of Toshiba and TMC through their participation in the collaboration between SanDisk and Toshiba/TMC. 

Toshiba considers that WD’s actions are damaging to both Toshiba and TMC, violate the Unfair Competition Prevention Act (Article 2(1) (iv), (vii), (viii), (xv)), and are tortious acts under the Civil Code (Article 709), Toshiba and TMC have filed the petition for a provisional disposition order seeking an injunction to put an end to WD’s damaging actions, and a suit seeking permanent injunction and damages.

In addition to intentionally interfering with the TMC sale process via its false claims, the suit says that Toshiba did not object to WD access to information related to the joint venture and development under the assumption that WD will be entering into a contract in respect of information access, however WD had rejected to such contract. Accordingly, to prevent further damage to TMC, TMC believes it has no choice but to block WD’s ability to access such information, starting today.

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