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Spansion, Samsung Settle Patent Disputes

Samsung Electronics will pay Spansion Inc. $150 million under an agreement that will settle patent litigation disputes between the two companies. The flash memory suppliers also agreed to sign a seven-year cross-license agreement of each other's patents.

Under the agreement, Samsung will pay Spansion $150 million over five years. Samsung will make an initial payment of $25 million in August 2011, followed by 20 quarterly payments of $6.25 million starting in fiscal fourth quarter of 2011.

Spansion agreed to purchase Samsung's bankruptcy claim for $30 million, which Samsung will apply against the first $30 million Samsung owes Spansion. The purchase of Samsung's bankruptcy claim will enable Spansion to retire between 1.65 million and 1.85 million shares, providing a bankruptcy court approves the claim.

Spansion filed for bankruptcy in early 2009 because of heavy debt. It emerged from bankruptcy last year.

Spansion had initiated litigation against Samsung in 2008, claiming the South Korean chipmaker infringed on its flash memory patents.

Spansion filed two separate patent infringement complaints against Samsung with the International Trade Commission and in the U.S. District Court in Delaware.

Both Spansion and Samsung said they were glad to bring an end to the litigation. John Kispert, president and CEO of Spansion, said the agreement benefits both companies. "The agreement, establishes a solid foundation from which to grow our licensing business," said Kispert.

Dr. Seung Ho Ahn, executive vice president and the head of Samsung's corporate intellectual property center, said, "The real winners here are Spansion's and Samsung's customers."

The settlement covers all ongoing litigation including the ITC complaint.