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Chinese flash-memory product maker Netac launched a lawsuit against its US counterpart PNY Technologies for infringements of its patent, a move to try to establish a level playing field for its overseas development.

Shenzhen-based Netac said yesterday in Beijing that it filed a lawsuit against PNY Technologies in a Texas federal court on February 10.

The company claims that PNY Technologies violated its patent, registered in the US, on electronic flash-memory external storage technology and devices. It is demanding compensation but the declined to say how much.

It has also requested the court to order PNY to suspend the sale of flash-memory storage devices.

"We want fair competition in the US we expand in overseas markets," said Deng Guoshun, president of Netac.

The lawsuit is one of the rare times that a Chinese company is suing a US firm for infringements of intellectual property rights (IPRs) in the US. It is usually the case that complaints are made against Chinese companies by foreign companies with similar allegations.

"It is encouraging to know that Chinese companies are protecting their IPRs. More and more Chinese companies are innovating," said Hu Zuochao, vice-president of Patent Protection Association of China.

PNY is a computer peripherals maker based in Parsippany, New Jersey. Deng said the company is one of the top three flash-memory product makers in the US.

The flash-memory product market is estimated at US$2 billion.

PNY was not immediately available for comment.

Netac is represented by Morgan Lewis & Bockius LLP, one of the top 10 US law firms.

Netac said it was also studying how to take action against other players in the market.

19 other international makers protested Netac's patent application because it was prohibitively wide.

After their application was approved, Netac contacted other device makers in the US including PNY and SanDisk, asking to set up negotiation meetings.

"We have spent a huge amount of money and energy on research and development, so we hope other makers will honor our intellectual property rights," Deng said.

Prior to this lawsuit, Netac had also brought legal action against Chinese company Beijing Huaqi Information Digital Technology Co Ltd in 2002 for patent infringement. A decision was made in Netac's favor in 2004.

It also sued a factory belonging to the Japanese giant Sony in Wuxi, Jiangsu Province, in October 2004 and demanded compensation of 10 million yuan (US$1.2 million), but the court has yet to make a judgment.

Deng said that about 10 companies have licensed the technology from Netac, including the South Korea's Samsung Electronics.

Netac claims that it makes over three million flash-memory devices a year, and its revenues in 2005 were less than US$100 million. It has invested about 10 percent of that in research and development as well as IPR.

(China Daily February 17, 2006)