SanDisk 2005 Annual Report Download - page 144

Company 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 the Company is entitled to the
declaration sought by the the Company’s complaint; (b) requesting that the Company 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 the Company infringed 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, the
Company 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, the Company 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 the Company 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 the Company. The plaintiffs are seeking unspecified damages and
attorneys’ and experts’ fees and expenses. On August 19, 2004, the court granted the Company and the other
defendants’ motion to dismiss the complaint in its entirety with prejudice. On September 29, 2004, plaintiffs
appealed the dismissal to the United States Court of Appeals for the Second Circuit.
On February 20, 2004, the Company and a number of other manufacturers of flash memory products were sued
in the Superior Court of the State of California for the City and County of San Francisco in a purported consumer
class action captioned Willem Vroegh et al. v. Dane Electric Corp. USA, et al., Civil Case No. GCG 04 428953,
alleging false advertising, unfair business practices, breach of contract, fraud, deceit, misrepresentation and
violation of the California Consumers Legal Remedy Act. The lawsuit purports to be on behalf of a class of
purchasers of flash memory products and claims that the defendants overstated the size of the memory storage
capabilities of such products. The lawsuit seeks restitution, injunction and damages in an unspecified amount. The
parties have reached a settlement of the case, which is pending court approval.
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. 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 04379JF. The complaint alleges that STMicro’s products infringe one of the
Company’s U.S. patents and seeks damages and an injunction. The complaint further seeks a declaratory judgment
that the Company does not infringe several of STMicro’s U.S. patents. By order dated January 4, 2005, the court
stayed the Company’s claim that STMicro infringes its patent pending an outcome in the ITC investigation initiated
on November 15, 2004 (discussed below). On January 20, 2005, the court issued an order granting STMicro’s
motion to dismiss the declaratory judgment causes of action. The Company has appealed this decision to the
U.S. Court of Appeals for the Federal Circuit. The remainder of the case, including the Company’s infringement
claim against STMicro, is stayed pending the outcome of the appeal.
On February 4, 2005, STMicro filed two complaints for patent infringement against the Company in the United
States District Court for the Eastern District of Texas, captioned STMicroelectronics, Inc. v. SanDisk Corporation,
Civil Case No. 4 05CV44, and STMicroelectronics, Inc. v. SanDisk Corporation, Civil Case No. 4 05CV45,
respectively. The complaints seek damages and injunctions against unspecified SanDisk products. On April 22,
2005, the Company filed counterclaims on two patents against STMicroelectronics N.V. and STMicroelectronics,
F-25
Notes to Consolidated Financial Statements — (Continued)
Annual Report