SanDisk 2005 Annual Report Download - page 145

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Inc. in the Civil Case 4-05CV45 proceeding. The counterclaims seek damages and injunctive relief against
STMicroelectronics N.V. and STMicroelectronics, Inc. flash memory products.
On October 15, 2004, the Company filed a complaint under Section 337 of the Tariff Act of 1930 (as amended)
titled, “In the matter of certain NAND flash memory circuits and products containing same” in the United States
International Trade Commission, naming STMicroelectronics N.V. and STMicroelectronics, Inc. (“STMicro”) as
respondents. In the complaint, the Company alleges that STMicro’s NAND flash memory infringes U.S. Patent
No. 5,172,338 (the ’338 patent), and seek an order excluding their products from importation into the United States.
In the complaint, the Company alleges that STMicro’s NAND flash memory infringes the ’338 patent and seeks an
order excluding their products from importation into the United States. On November 15, 2004, the ITC instituted
an investigation pursuant to 19 U.S.C. Section 1337 against STMicro in response to the Company’s complaint. A
hearing was held from August 1-8, 2005. On October 19, 2005, the Administrative Law Judge issued an initial
determination confirming the validity and enforceability of the Company’s United States Patent 5,172,338 (the ’338
patent) by rejecting STMicro’s claims that the patent was invalidated by prior art. The initial determination,
however, found that STMicro’s NAND flash memory chips did not infringe three claims of the ’338 patent. On
October 31, 2005, the Company filed a petition with the International Trade Commission to review and reverse the
finding of non-infringement. Also, on October 31, 2005, STMicro filed a petition for review with the International
Trade Commission to review and reverse the finding that the patent was valid and enforceable. On December 6,
2005, the ITC issued its decision. The ITC declined to review the finding of non-infringement, and, after reviewing
the finding of validity, declined to take any position on the issue of validity. The Company is appealing the ITC’s
decision to the U.S. Court of Appeals for the Federal Circuit.
On October 14, 2005, STMicroelectronics, Inc. filed a complaint against the Company and the Company’s
CEO Eli Harari, in the Superior Court of the State of California for the County of Alameda, captioned
STMicroelectronics, Inc. v. Harari, Case No. HG 05237216. The complaint alleges that STMicroelectronics,Inc.,
as the successor to Wafer Scale Integration, Inc.’s (“WSI”) legal rights, has an ownership interest in several SanDisk
patents that issued from applications filed by Dr. Harari, a former WSI employee. The complaint seeks the
assignment of certain inventions and patents conceived of by Harari as well as damages in an unspecified amount.
On November 15, 2005, Harari and the Company removed the case to the U.S. District Court for the Northern
District of California, where it was assigned case number C05-04691. On November 23, 2005, Harari and the
Company filed counterclaims, asserting the Company’s (i.e. SanDisk’s) ownership of the patents and applications
raised in the complaint. On December 13, 2005, STMicroelectronics, Inc. filed a motion to remand the case back to
the Superior Court of Alameda County. That motion remains pending.
On December 6, 2005, the Company filed a complaint for patent infringement in the United States District
Court for the Northern District of California against STMicroelectronics, Inc. and STMicroelectronics, NV
(“STMicro”) (Case No. C0505021 JF). In the suit, the Company seeks damages and injunctions against STMicro
from making, selling, importing or using flash memory chips or products that infringe the Company’s U.S. Patent
No. 5,991,517. The case is presently stayed, pending the termination of the ITC investigation instituted February 8,
2006, discussed below.
On January 11, 2006, the Company filed a complaint for patent infringement in the United States District Court
for the Northern District of California against STMicro (Case No.C06-00194 JF). In the suit, the Company seeks
damages and injunctions against STMicro from making, selling, importing or using flash memory chips or products
that infringe the Company’s U.S. Patent No. 6,542,956. The case is presently stayed, pending the termination of the
ITC investigation instituted February 8, 2006, discussed below.
On January 10, 2006, the Company filed a complaint under Section 337 of the Tariff Act of 1930 (as amended)
titled, “In the matter of certain NAND flash memory circuits and products containing same” in the ITC, naming
STMicro as respondents. In the complaint, the Company alleges that: (i) STMicro’s NOR flash memory infringes
the ’338 patent; (ii) STMicro’s NAND flash memory infringes U.S. Patent No. 6,542,956; and (iii) STMicro’s NOR
flash memory and NAND flash memory infringe U.S. Patent No. 5,991,517. The complaint seeks an order
F-26
Notes to Consolidated Financial Statements — (Continued)