History 2004: Seagate and WD Vs. Cornice

Seagate Technology, followed by Western Digital, one after another, have filed a patent infringement suit vs. one-inch HDD manufacturer Cornice.

Even worse for the for the Longmont, CO-based start-up, Seagate has filed an additional complaint with the U.S. International Trade Commission to prohibit Cornice’s drives or any products using them from entering USA (these devices are manufactured in Asia by SAE).

None of this will help the small firm’s large customers, such as Philips, RCA, Rio, Creative Labs or Thomson /RCA, as well as many small Asian MP3/video gadget-makers that incorporate Cornice’s Storage Element.

When questioned, Cornice’s CEO Kevin Magenis said he could not comment on the situation at this time.

There are a few points worth underlining, however:

• in a strange coincidence, the suit by the 2 HDD giants comes a few months after Cornice’s announcement that it had raised $51 million during a 2nd round of funding;
• by another coincidence, Seagate has just launched its 1st one-inch HDD;
• by an even odder coincidence, up to now the Chinese Company GS Magicdrive, also a start-up in one-inch HDDs, has not yet been threatened by the specter of these lawsuits;
• not at all by chance, all the major HDD makers often protectively sign patent exchange agreements among themselves in order to avoid this very sort of litigation.

While we’re willing to acknowledge that intellectual and industrial property has an estimable value relating to the R&D funds invested, this type of legal proceeding, if won by the 2 HDD leaders, could definitively hinder any start-up project in HDDs, and thus limit the competition, particularly if the fairly busy consolidation in this domain over the past few years continues.

This article is an abstract of news published on issue 198 on July 2004 from the former paper version of Computer Data Storage Newsletter.