Japanese Firm to Pay Royalties on Disk Drives : Tandon Settles Dispute With Sony
Tandon Corp. said Tuesday that it has settled a legal dispute with Sony Corp., one of three Japanese electronics firms that the Chatsworth company had accused of pirating its disk-drive technology.
The dispute involved 3 1/2-inch, double-sided floppy disk drives, considered a promising data storage system for the next generation of personal computers.
The agreement calls for Sony to make unspecified payments, including royalties, to Tandon when Sony sells 3 1/2-inch, double-sided floppy disk drives. Tandon also gets the right, on similar terms, to use Sony patents for a higher-capacity, 3 1/2-inch double-sided drive. And the two companies said they have opened talks on possible joint efforts to develop, make and market such drives together.
A disk drive has magnetic heads that store and read data electronically on floppy disks.
The agreement does not cover the vastly more common 5-inch or 8-inch drives that are the subject of similar litigation by Tandon against two other Japanese companies, Mitsubishi Electric Corp. and TEAC Corp. Those companies remain defendants in the litigation affecting the smaller drives as well.
The agreement with Sony ought to be important for the beleaguered disk-drive maker, which has suffered three losing quarters in a row largely, it says, as a result of slumping computer sales and competition from low-cost drives made in Japan.
“The real importance of the double-sided drives is in the next round of product introductions,” said Michael Murphy, editor of the California Technology Stock Letter. He said that the number of double-sided 3 1/2-inch drives now in use in this country is negligible but that they will be widespread sooner or later. For example, he said, “virtually everybody expects IBM to commit to 3 1/2-inch double-sided” in about a year.
Ranjit Sitlani, Tandon’s vice president for planning, acknowledged that the agreement with Sony is good news since it should ultimately help the company combat Japanese imports. According to one estimate, the market for 3 1/2-inch double-sided drives should reach $400 million by the end of 1986. Sony now is the leader in that market, Tandon said.
“We didn’t bring this lawsuit to try and reduce our losses,” Sitlani said. “We had intellectual properties we had invested money and time in that had to be defended.”
Late Tuesday afternoon, the International Trade Commission dealt Tandon a potential blow when it said it will review a May decision by an ITC administrative law judge. That decision was to grant Tandon temporary relief from Japanese imports by requiring that an as yet unspecified bond be posted for each imported drive--a bond that would be forfeited if Tandon prevailed. The judge’s order was considered a sign that Tandon was likely to win its case.
