SanDisk 2005 Annual Report Download - page 101

ITEM 3. LEGAL PROCEEDINGS
From time to time, it has been and may continue to be necessary to initiate or defend litigation against third
parties. These and other parties could bring suit against us.
On or about August 3, 2001, the Lemelson Medical, Education & Research Foundation, or Lemelson
Foundation, filed a complaint for patent infringement against us and four other defendants. The suit, captioned
Lemelson Medical, Education, & Research Foundation, Limited Partnership vs. Broadcom Corporation, et al., Civil
Case No. CIV01 1440PHX HRH, was filed in the United States District Court, District of Arizona. On
November 13, 2001, the Lemelson Foundation filed an amended complaint, which made the same substantive
allegations against us but named more than twenty five additional defendants. The amended complaint alleges that
we, and the other defendants, have infringed patents held by the Lemelson Foundation pertaining to bar code
scanning technology. By its complaint, the Lemelson Foundation requests that we be enjoined from our allegedly
infringing activities and seeks unspecified damages. The case as to us was stayed pending the outcome of litigation
in the District Court of Nevada related to the same Lemelson bar code scanning patents asserted against us. In early
2004, the Nevada Court ruled that the Lemelson bar code patents (as well as other Lemelson patents) were invalid,
not infringed and unenforceable. The Nevada Court’s findings were thereafter affirmed by the Federal Circuit.
Based on the Federal Circuit’s affirmance, the Lemelson Foundation moved to dismiss with prejudice all claims
against us, and that request for dismissal has been granted.
On October 31, 2001, we filed a complaint for patent infringement in the United States District Court for the
Northern District of California against Memorex Products, Inc., Pretec Electronics Corporation, Ritek Corporation,
and Power Quotient International Co., Ltd. In the suit, captioned SanDisk Corp. v. Memorex Products, Inc., et al.,
Civil Case No. CV 01 4063 VRW, we seek damages and injunctions against these companies from making, selling,
importing or using flash memory cards that infringe our U.S. Patent No. 5,602,987. The court granted summary
judgment of non-infringement in favor of defendants Ritek, Pretec and Memorex and entered judgment on May 17,
2004. On June 2, 2004, we filed a notice of appeal of the summary judgment rulings to the United States Court of
Appeals for the Federal Circuit. On July 8, 2005, the Federal Circuit held in favor of SanDisk, vacating the judgment
of non-infringement and remanding the case back to district court.
On or about June 9, 2003, we received written notice from Infineon Technologies AG, or Infineon, that it
believes we have infringed its U.S. Patent No. 5,726,601 (the ‘601 patent). On June 24, 2003, we filed a complaint
against Infineon for a declaratory judgment of patent non-infringement and invalidity regarding the ‘601 patent in
the United States District Court for the Northern District of California, captioned SanDisk Corporation v. Infineon
Technologies AG, a German corporation, et al., Civil Case No. C 03 02931 BZ. On October 6, 2003, Infineon filed
an answer and counterclaim: (a) denying that we are entitled to the declaration sought by the our complaint;
(b) requesting that we be adjudged to have infringed, actively induced and/or contributed to the infringement of the
‘601 patent and an additional patent, U.S. Patent No. 4,841,222 (the ‘222 patent). On August 12, 2004, Infineon
filed an amended counterclaim for patent infringement alleging that we infringe U.S. Patent Nos. 6,026,002 (the
‘002 patent); 5,041,894 (the ‘894 patent); and 6,226,219 (the ‘219 patent), and omitting the ‘601 and ‘222 patents.
On August 18, 2004, we filed an amended complaint against Infineon for a declaratory judgment of patent non-
infringement and invalidity regarding the ‘002, ‘894, and ‘219 patents. On February 9, 2006, we filed a second
amended complaint to include claims for declaratory judgment that the ‘002, ‘894 and ‘219 patents are
unenforceable.
On October 2, 2003, a purported shareholder class action lawsuit was filed on behalf of United States holders
of ordinary shares of Tower as of the close of business on April 1, 2002 in the United States District Court for the
Southern District of New York. The suit, captioned Philippe de Vries, Julia Frances Dunbar De Vries Trust, et al., v.
Tower Semiconductor Ltd., et al., Civil Case No. 03 CV 4999, was filed against Tower and a number of its
shareholders and directors, including us and Dr. Harari, who is a Tower board member, and asserts claims arising
under Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 14a 9 promulgated
there under. The lawsuit alleges that Tower and certain of its directors made false and misleading statements in a
proxy solicitation to Tower shareholders regarding a proposed amendment to a contract between Tower and certain
of its shareholders, including us. The plaintiffs are seeking unspecified damages and attorneys’ and experts’ fees
and expenses. On August 19, 2004, the court granted our and the other defendants’ motion to dismiss the complaint
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