MAN BITES DOG: CHINESE COMPANY NETAC SUES U.S. COMPANY FOR INFRINGEMENT - Digital Mobile Storage Equipment manufacturer Netac Technology Co., Ltd. announced today in Beijing that the company filed a complaint in the U.S. District Court in the Eastern District of Texas on Feb. 10, 2006, alleging that U.S. company PNY infringed Netac’s U.S. patent 6, 829, 672. While Chinese companies are often accused of infringing the patents of U.S. companies, this is one of the rare cases where the roles have been reversed. And, if Netac CEO Frank Deng means what he says, this lawsuit will be the first of many that will be initiated against the multibillion dollar flash-memory market.

According to the USPTO, the '672 is one of two patents that are assigned to Netac, and there are 5 pending applications working their way through the USPTO. The '672 patent was granted in December of 2004, and claims priority to applications filed in China back in February 23, 2000 and November 14, 1999. The patent has 22 claims, with 5 being independent (see USPTO transaction history here). The claims are somewhat awkward to read, but exemplary claim 1 reads as follows:

1. An electronic flash memory external storage method, comprising the steps of:

establishing data exchange channel between a data processing system and a
portable external storage device based on USB or IEEE1394 bus upon plug said
portable external storage device into said USB or IEEE 1394 bus interface of
said data processing system;

acquiring a DC power supply from said data processing system for said external storage device through said USB or IEEE1394 bus upon plug said portable external storage device into said USB or IEEE 1394 bus interface;

configuring a flash memory storage module built-in said external storage device, wherein the data storage structure of the flash memory storage module is arranged on a block basis;

directly accessing data or information in the said flash memory storage module based on USB or IEEE1394 bus standard through said established data exchange channel by implementing and processing the data access operation requests issued by users, wherein said data processing system assigning and displaying a device symbol for said external storage device and processing the operation request in magnetic disk operation format issued from users upon plug said external storage device into said USB or IEEE 1394 interface of said data processing system.

Oddly enough, Netac claims to be the first to have developed the mobile USB Flash Memory Drive, despite the fact that the USB 1.0 specification was already under development in 1997 and USB 1.1 was being distributed by 1998. Not to mention, the PC/SC Development Group was making progress in implementing USB capabilities to smart cards as early as 1996. It's no wonder that over 19 companies protested the prosecution of the patent application for having an overly-broad scope of protection

It will be interesting to see where this one is going to lead - Netac has already won infringement cases in China against Beijing Hua Qi Information Digital Technology Co., Ltd. (Product brand: Aigo) and Shenzhen Fu Guang Hui Electronics Co., Ltd. (OEM factory for Hua Qi). Additionally, Netac has pending litigation against electronic giant Sony in China, in which Netac is asking for $1.2 million in damages.