Spansion Becoming an IP Company

Struggling to achieve profitability in its core business, Spansion has now turned to monetizing its portfolio of 3,000 patent and patent applications. Its first victim: Samsung. Spansion has filed two separate patent infringement claims against the company with the International Trade Commission and in the U.S. District Court in Delaware. Spansion is seeking an injunction in both cases on the sales of electronic devices containing Samsung flash memory and requesting treble damages in the Delaware claim for knowingly violating the patents.

Spansion is claiming Samsung infringed on 10 patents with four of them filed in the ITC complaint and six in the Delaware claim. The patents in question are related to NAND flash memory and include process patents describing methods of forming of the interpoly dielectric, shallow trench isolation as well as programming schemes. The patents, granted between 1998 and 2002, were filed by AMD, the pedigree of Spansion. AMD developed NAND technology and introduced a 64Mb UltraNAND on 0.25um technology in 1998. UltraNAND was supposed to do one better than NAND - 100% good blocks and 100k program/erase cycles without ECC - but it never took off and was subsequently shelved.

Why didn't Spansion instead go after Samsung, the No. 3 NOR vendor, with its much larger portfolio of floating gate NOR flash patents? Any successful claims against Samsung are likely to hurt more on the NAND side because of the size of Samsung's NAND business and the more diversified customer base. In addition, it's harder for Samsung to strike back because Spansion has no products based on floating gate NAND.

Spansion also claims to have the strongest portfolio of patents related to charge-trapping (CTF) technology which may be required to extend NAND flash below 30nm. However, it's not clear how applicable Mirrorbit patents are to SONOS NAND because the programming/erase mechanisms and gate stack are different. Spansion may be trying to plug that hole by commericalizing the first SONOS NAND - ORNAND2. In addition to satisfying its own demand for a NAND device in its MCPs, ORNAND2 is also a learning vehicle for developing CTF NAND IP. It'll be interesting to see what innovations Spansion introduces when ORNAND2 starts ramping in production the 2nd half of 2009 on 43nm.