A semiconductor manufacturing equipment unit is set to become the latest onetime Hitachi subsidiary to be spun as the Japanese company continues to re-engineer its business strategy. Hitachi Kokusai Electric was delisted from the Tokyo Stock Exchange last week following buyout firm KKR's completion of a $2.2 billion takeover, a deal which includes thousands of patents. The strength of that portfolio will be tested for the first time in a US litigation battle with a Dutch rival that was expanded this week.
On 1st December last year, Hitachi Kokusai initiated its first patent litigation going back at least to 2009, when it became a subsidiary of the Hitachi Group. Hitachi Kokusai accused Dutch competitor ASM International of infringing seven US patents related to semiconductor manufacturing. On the same day, ASM’s IP holding subsidiary asserted three of its own patents against the Japanese company. Both cases were filed in the Northern District of California, and while it is unclear which party played the role of aggressor, the fact that the suits were filed one after another suggests the two parties were well prepared for conflict.
On Tuesday, Hitachi Kokusai added a second suit with four more patents against ASM, this one in the District of Oregon. It appears that the patents in both cases protect the Japanese firm’s thin film process solutions business, which is the focus of the buyout process that is currently underway. A quick search of ktMINE’s database turns up several thousand EPO publications and US patents owned by the company, with the largest share classified as covering “semiconductor devices” and “coating metallic material”.
Apart from semiconductor equipment, Hitachi Kokusai’s other main operating unit is dedicated to Video and Communications Solutions. This part of the business has applications including video security and IoT wireless, according to a recent press release. The restructuring will see KKR take over and spin off 100% of the chip-making equipment unit, while sharing control of the communications business with Hitachi and a Japanese equity firm.
It will be worth keeping an eye on both IP portfolios. With a major US private equity firm in management starting in June, it seems likely that the IP function will need to make a compelling case for how much value its portfolio brings to the company. The litigation against ASM may be an opportunity to demonstrate a way in which strategic use of patents can be used to secure better licence deals or other forms of competitive advantage.
It is worth noting that other businesses have become more active in IP transactions and assertions after leaving the Hitachi stable. Maxell is the prime example. Formerly known as ‘Hitachi Maxell’, the company is asserting patents against seven major corporate defendants in the US, and has dealt patents to Fujifilm and NPE Microconnect in the past several months.