SanDisk 2014 Annual Report Download - page 200

SANDISK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
the Company. The defendants filed a motion to dismiss on September 24, 2010, and Samsung filed a first
amended complaint on October 14, 2010. On August 25, 2011, the District Court dismissed the patent
misuse claim with prejudice but gave Samsung leave to amend its other claims. Samsung filed a second
amended complaint on September 16, 2011. On January 3, 2012, the District Court granted the defendants’
motion to dismiss Samsung’s complaint without leave to amend. Samsung appealed. On April 4, 2014, the
U.S. Court of Appeals for the Ninth Circuit (the ‘‘Appeals Court’’) issued a decision reversing the District
Court’s dismissal on statute of limitations grounds and remanding the case to the District Court for further
proceedings. The Appeals Court denied the defendants’ petition for rehearing and issued its mandate to
send the case back to the District Court. On November 12, 2014, the defendants filed a petition for writ of
certiorari with the U.S. Supreme Court, which the U.S. Supreme Court subsequently denied. Samsung
filed a third amended complaint on January 20, 2015.
Federal Antitrust Class Action Against SanDisk, et al. On March 15, 2011, a putative class action captioned
Oliver v. SD-3C LLC, et al was filed in the U.S. District Court for the Northern District of California (the
‘‘District Court’’) on behalf of a nationwide class of indirect purchasers of SD cards alleging various claims
against the Company, SD-3C, LLC (‘‘SD-3C’’), Panasonic Corporation, Panasonic Corporation of North
America, Toshiba and Toshiba America Electronic Components, Inc. under federal antitrust law pursuant
to Section 1 of the Sherman Act, California antitrust and unfair competition laws, and common law. The
complaint seeks an injunction of the challenged conduct, dissolution of ‘‘the cooperation agreements, joint
ventures and/or cross-licenses alleged herein,’’ treble damages, restitution, disgorgement, pre- and
post-judgment interest, costs, and attorneys’ fees. The plaintiffs allege that the Company (along with the
other members of SD-3C) conspired to artificially inflate the royalty costs associated with manufacturing
SD cards in violation of federal and California antitrust and unfair competition laws, which in turn
allegedly caused the plaintiffs to pay higher prices for SD cards. The allegations are similar to, and
incorporate by reference the complaint in the Samsung Electronics Co., Ltd. v. Panasonic Corporation;
Panasonic Corporation of North America; and SD-3C LLC described above. On May 21, 2012, the District
Court granted the defendants’ motion to dismiss the complaint with prejudice. The plaintiffs appealed. On
May 14, 2014, the appeals court issued a decision reversing the District Court’s dismissal on statute of
limitations grounds and remanding the case to the District Court for further proceedings. The appeals
court denied the defendants’ petition for rehearing and issued its mandate to send the case back to the
District Court. On December 1, 2014, the defendants filed a petition for writ of certiorari with the U.S.
Supreme Court. On February 3, 2015, the plaintiffs filed a second amended complaint in the District
Court.
Trade Secret Litigation Against SK hynix Inc., et al. On March 13, 2014, the Company filed a civil action in
Santa Clara Superior Court in California against SK hynix Inc. (‘‘Hynix’’) and certain related entities for
trade secret misappropriation arising from the theft of trade secrets by a former employee of the Company
and the defendants’ wrongful receipt and use of such information. The lawsuit seeks damages, an
injunction and other remedies. Additionally, in March 2014, SanDisk submitted a criminal complaint to the
Tokyo Metropolitan Police Department against the former employee. On April 3, 2014, the former
employee was indicted by the Tokyo District Public Prosecutor’s Office for theft of trade secrets. The
former employee’s criminal trial was held on January 20, 2015 and January 21, 2015, and a decision by the
court is expected in March 2015.
In June 2014, the Company moved for a preliminary injunction requiring Hynix to stop using any of
the Company’s information received from the former employee and to return stolen Company material.
On July 1, 2014, the court issued a preliminary injunction prohibiting Hynix from using or disclosing trade
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