History (1992): Conner Peripherals Wants Money From 2.5-Inch Patents on HDDs

Rodime plc of Scotland was the first one to ask and obtain royalties on form factor patents, in this case 3.5-inch ones.

This time, Conner Peripherals (San Jose, CA) is trying to do the same with its less than 16mm high 2.5-inch disk drive patents.

Most of these patents were recently acquired by Conner with a bid over $30 million, with $12 million paid back to the defunct PrairieTek (Longmont, CO), owner of the patents and who keeps the manufacturing rights. This offer covered close to a $20 million proposal from a consortium including DEC, Fujitsu, IBM, JVC, NEC, Quantum and Western Digital.

Strengthened by this expensive acquisition, Conner is now trying to make money by asking each 2.5-inch HDD drive manufacturer a $5 million fee, plus 5% on each drive already sold.

There actually are 14 manufacturers of 2.5-inch drives worldwide, without Conner. According to Dataquest, 3.4 million of 2.5- inch drives have been shipped just in 1991, but more than half of them by Conner.

This market was not as successful as it should have been on account of sales of notebook computers beyond expectations, and you can wonder if most manufacturers are not going to produce smaller form factor drives to avoid paying royalties.

On its side, a group of HDD manufacturers, headed by Seagate, and including Areal Technology, DEC, Fujitsu, Hitachi, Kalok, Micropolis, Toshiba and Western Digital, are trying to put pressure on the US Patent Office to void existing patents on form factors to eliminate royalties and lawsuits, believing that patents for size, and not technology, are not legal.

With its patents, Rodime recuperated several $10 million on royalties these past years from successively IBM, Alps, Conner, Fujitsu, Hitachi and Matsushita.

This article is an abstract of news published on the former paper version of Computer Data Storage Newsletter on issue ≠55, published on August 1992.