Toshiba Settles Massive Class-Action Suit

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In 1987, engineers at Intel and NEC noticed that there was something funny about the chips they were building to control floppy disk drives. A "definite logic bug," says one document. "A flaw in the microcode," says another. They fixed the problem.

The engineers at Toshiba didn't. That's why the company announced on Friday that it would spend $2.1 billion to settle a class-action lawsuit against it.

It was a former IBM engineer named Phil Adams who actually pinned down the problem and decided to take legal action. According to Adams, the problem — which resides in the chip's "microcode," the instructions that are actually burned into the chip itself — is especially persnickety because it can manifest itself in a variety of ways, randomly deleting or corrupting information on otherwise healthy disks. Once Adams was sure he knew what he was dealing with, he took it to a Texas law firm, which filed the suit. MORE >>