Verdict in Hand, Lexar Wants More
Updated from 9:55 a.m. EST
A state jury will hear arguments Thursday in the punitive damages phase of
Lexar Media's
(LEXR)
triumphant lawsuit against Toshiba. Last night, the suit resulted in a $380 million damages award to the tiny Freemont, Calif., technology shop.
Lexar's shares have doubled since the jury found Toshiba breached its fiduciary duty and stole trade secrets in the development of a flash-memory architecture that has dominated the industry for years. Lexar argued that Toshiba lifted the technology from a mid-1990s collaboration between the two firms and then claimed it as its own.
In Thursday morning trading, Lexar -- whose market capitalization before the ruling was about $250 million -- was up $3.24, or 102%, to $6.41. About 50 million shares changed hands in the first 90 minutes of trading. Shares of Toshiba, which declined to comment on the ruling, fell in Tokyo.
CIBC upgraded the shares to outperform from underperform, saying a realistic estimate of punitive damages is $1 billion, or more than $12 a Lexar share.
The verdict could mark a seismic shift in the flash-memory market because Lexar plans to seek an injunction barring Toshiba from selling products that incorporate the technology, known as "NAND," in the U.S. The company expects the first hearing on that request to occur next month.
On Thursday, the jury will begin hearing evidence and arguments in the punitive-damages leg of the trial. According to Lexar, the jury found Toshiba's actions in stealing the trade secrets, which it then allegedly shared with
SanDisk
(SNDK)
, were "oppressive, fraudulent or malicious."
"This verdict validates Lexar's core intellectual property and contributions to the flash-memory industry," the company said in a statement. "It holds Toshiba accountable for its conduct -- building Lexar's trust to acquire our technology and then betraying that trust to partner with our competitor and compete against us."
Flash memory is used in cell-phones and other devices as a means to save electronic data in the absence of an active power supply. Lexar is pursuing a separate patent-infringement complaint against Toshiba in federal court.
Shares of SanDisk were recently down 95 cents, or 3.4%, to $27.