Toshiba sues Western Digital and shuts out WD staff from factories in Japan

Toshiba accuses Western Digital of 'interfering' in its sale of Toshiba Memory Corp, claiming $1bn in compensation

Toshiba is to sue Western Digital in the Tokyo District Court, claiming that its NAND flash joint-venture partner has been interfering in its sale of Toshiba Memory Corporation.

Toshiba is claiming compensation of 120 billion yen ($1.07bn) and has also shut out Western Digital employees from the two company's joint-venture NAND flash manufacturing plant in Yokkaichi, near Nagoya.

Toshiba is claiming that Western Digital's hard ball response to the sale of Toshiba Memory Corp violates Japan's Unfair Competition Prevent Act, and that the company has repeatedly interfered in the auction process.

Toshiba needs to raise funds from the sale of Toshiba Memory Corp to make good a financial black hole caused by an accounting scandal and the descent into Chapter 11 bankruptcy protection of its US nuclear subsidiary Westinghouse, which it bought more than ten years ago from British Nuclear Fuels for £2.9bn.

The two companies have 50-50 stakes in the Yokkaichi plant, which is effectively controlled by Toshiba, following Western Digital's acquisition of original joint-venture SanDisk for $19bn last year.

"The lawsuit also says that WD [Western Digital] has exaggerated its consent right - in both public statements and private communications to bidders and others involved in the sale process - in order to interfere with the sale of TMC [Toshiba Memory Corporation] which does not hold the ownership interests in joint venture companies co-owned with SanDisk," claimed Toshiba in a statement issued today.

It continues: "The complaint goes on to state that proceeding with the sales process for TMC does not violate any consent rights held by WD; WD's claims are false, designed only to interfere with the sale process, and have damaged Toshiba and TMC."

Toshiba has also accused Western Digital of improperly obtaining Toshiba semiconductor trade secrets "by transferring employees of SanDisk to WD who have access to confidential information".

As a result, Toshiba Memory Corporation "believes it has no choice but to block WD's ability to access such information, starting today".

The outbreak of legal hostilities comes a day after Western Digital resubmitted its bid for Toshiba Memory Corp, and just days after it had filed suit against Toshiba in a US court in an effort to stop any sale to a consortium that Western Digital did not consent to.

As a result of the dispute between the two companies, Toshiba has put back plans to announce its preferred bidder, which had been expected last week.

Computing's DevOps Summit returns on 19 September. Attendance is free to qualifying IT leaders and other senior IT professionals, but places will go fast, so secure yours now.