SanDisk 2008 Annual Report Download - page 115

Notes To Consolidated Financial Statements
and likely will, continue to enforce such rights as appropriate through litigation and related proceedings. The
Company expects that its competitors and others who hold intellectual property rights related to its industry will
pursue similar strategies against it in litigation and related 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 the Company. In each case listed below where the Company is the defendant, the Company intends
to vigorously defend the action. At this time, the Company does not believe it is reasonably possible that losses
related to the litigation described below have occurred beyond the amounts, if any, that have been accrued.
On October 15, 2004, the Company filed a complaint for patent infringement and declaratory judgment of
non-infringement and patent invalidity against STMicroelectronics N.V. and STMicroelectronics, Inc.
(collectively, “ST”) in the United States District Court for the Northern District of California, captioned SanDisk
Corporation v. STMicroelectronics, Inc., et al., Civil Case No. C 04 04379 JF. The complaint alleges that ST’s
products infringe one of the Company’s U.S. patents, U.S. Patent No. 5,172,338 (the “’338 patent”), and also
alleges that several of ST’s patents are invalid and not infringed. On June 18, 2007, the Company filed an
amended complaint, removing several of the Company’s declaratory judgment claims. At a case management
conference conducted on June 29, 2007, the parties agreed that the remaining declaratory judgment claims would
be dismissed pursuant to a settlement agreement in two matters being litigated in the Eastern District of Texas
(Civil Case No. 4:05CV44 and Civil Case No. 4:05CV45, discussed below). The parties also agreed that the ’338
patent and a second Company patent, presently at issue in Civil Case No. C0505021 JF (discussed below), will
be litigated together in this case. ST filed an answer and counterclaims on September 6, 2007. ST’s
counterclaims included assertions of antitrust violations. On October 19, 2007, the Company filed a motion to
dismiss ST’s antitrust counterclaims. On December 20, 2007, the Court entered a stipulated order staying all
procedural deadlines until the Court resolves the Company’s motion to dismiss. At a hearing held on January 25,
2008, the Court converted the Company’s motion to dismiss into a motion for summary judgment. On June 17,
2008, the Court issued a stipulated order rescheduling the hearing on the Company’s motion for summary
judgment for September 12, 2008. On October 17, 2008, the Court issued an order granting in part and denying
in part the Company’s motion for summary judgment on ST’s antitrust counterclaims. The Court has not yet
established new procedural deadlines in this matter.
On October 14, 2005, STMicroelectronics, Inc. (“STMicro”) filed a complaint against the Company and the
Company’s CEO, Dr. 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 “Harari Matter”). The complaint
alleges that STMicro, as the successor to Wafer Scale Integration, Inc.’s (“WSI”) legal rights, has an ownership
interest in several Company patents that were issued from applications filed by Dr. Harari, a former WSI
employee. The complaint seeks the assignment or co-ownership of certain inventions and patents conceived of by
Dr. Harari, including some of the patents asserted by the Company in its litigations against STMicro, as well as
damages in an unspecified amount. On November 15, 2005, Dr. 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
December 13, 2005, STMicro filed a motion to remand the case back to the Superior Court of Alameda County.
The case was remanded to the Superior Court of Alameda County on July 18, 2006, after briefing and oral
argument on a motion by STMicro for reconsideration of an earlier order denying STMicro’s request for remand.
Due to the remand, the District Court did not rule upon a summary judgment motion previously filed by the
Company. In the Superior Court of Alameda County, the Company filed a Motion to Transfer Venue to Santa
Clara County on August 10, 2006, which was denied on September 12, 2006. On October 6, 2006, the Company
filed a Petition for Writ of Mandate with the First District Court of Appeal, which asked that the Superior Court’s
September 12, 2006 Order be vacated, and the case transferred to Santa Clara County. On October 20, 2006, the
Court of Appeal requested briefing on the Company’s petition for a writ of mandate and stayed the action during
the pendency of the writ proceedings. On January 17, 2007, the Court of Appeal issued an alternative writ
directing the Superior Court to issue a new order granting the Company’s venue transfer motion or to show cause
why a writ of mandate should not issue compelling such an order. On January 23, 2007, the Superior Court of
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