SanDisk 2006 Annual Report Download - page 144

No. 5,991,517 (the “517 patent). 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)
(Case No. 337-TA-560) titled, “In the matter of certain NOR and NAND flash memory devices and products
containing same” in the ITC, naming ST as respondents. In the complaint, the Company alleges that: (i) ST’s NOR
flash memory infringes the “338 patent; (ii) ST’s NAND flash memory infringes U.S. Patent No. 6,542,956 (the
“956 patent”); and (iii) ST’s NOR flash memory and NAND flash memory infringe the ‘517 patent. The complaint
seeks an order excluding ST’s NOR and NAND flash memory products from importation into the United States. The
ITC instituted an investigation, based on the Company’s complaint, on February 8, 2006. On March 31, 2006, ST
filed a motion for partial summary determination or termination of the investigation with respect to the ‘338 patent.
On May 1, 2006, the Administrative Law Judge (“ALJ”) denied ST’s motion in an initial determination that is
subject to review by the ITC. On May 17, 2006, SanDisk filed a motion to voluntarily terminate the investigation
with respect to the ‘956 patent. On June 1, 2006, the ALJ issued an Initial Determination granting the Company’s
motion. On August 15, 2006, the ALJ set December 4, 2006 as the date for the hearing, April 4, 2007 for the Initial
Determination, and August 13, 2007 as the target date for completion of the investigation. On September 12, 2006,
the Company filed a motion to voluntarily terminate the investigation with respect to claims 1, 2, and 4 of the ‘517
patent. On October 10, 2006, the ALJ issued an Initial Determination granting the Company’s motion with respect
to claims 2 and 4 of the ‘517 patent. On September 25, 2006, ST filed motions for summary determination of non-
infringement of the ‘338 patent with respect to its current products and non-infringement of the ‘338 and ‘517
patents with respect to prospective products and of lack of domestic industry with regard to the ‘338 patent. On the
same date, SanDisk filed a motion for summary determination of the economic prong of the domestic industry
requirement with regard to the ‘517 patent. On November 17, 2006, the ALJ granted SanDisk’s motion for summary
determination of the economic prong of domestic industry, and denied ST’s motion for summary determination of
lack of domestic industry with regard to the ‘338 patent. The ALJ denied one of ST’s motions for summary
determination of noninfringement of the ‘338 patent. The ALJ granted ST’s motion for summary determination
with respect to ST’s binary NOR products, which SanDisk was no longer accusing, and terminated the investigation
with respect to certain prospective products. On November 28, 2006, the ALJ denied ST’s second motion for
summary determination of non-infringement of the ‘338 patent. The ALJ then held an evidentiary hearing from
December 1, 2006 through December 15, 2006. On January 16, 2007, the ALJ extended the due date of the initial
determination due to June 1, 2007.
On or about July 15, 2005, Societa’ Italiana Per Lo Sviluppo Dell’electtronica, S.I.Sv.El., S.p.A., (“Sisvel”)
filed suit against the Company and others in the district court of the Netherlands in The Hague in a case captioned
Societa’ Italiana Per Lo Sviluppo Dell’electtronica, S.I.Sv.El., S.p.A. adverse to SanDisk International Sales,
Moduslink B.V. and UPS SCS (Nederland) B.V., Case No. 999.131.1804 (Cause List numbers 2006/167 and
2006/168). Sisvel alleges that certain of the Company’s MP3 products infringe three European patents of which
Sisvel claims to be a licensee with the right to bring suit. Sisvel seeks an injunction and unspecified damages. Sisvel
has previously publicly indicated that it will license these and other patents under reasonable and nondiscriminatory
terms, and it has specifically offered the Company a license under the patents. The Company has submitted its
answer on the substance of Sisvel’s claim. Further pre-trial proceedings must be undertaken and a trial is unlikely in
this matter until the end of 2007, at the earliest.
In a related action, on March 9, 2006, the Company filed an action in the English High Court, Chancery
Division, Patents Court, in London, against Sisvel and the owners of the patents Sisvel has asserted against the
Company in the Netherlands. The case is SanDisk Corporation v. Koninklijke Philips Electronics N.V. (a Dutch
corporation), France Télécom (a French corporation), Télédiffusion de France S.A. (a French corporation), Institut
fu
¨r Rundfunktechnik GmbH (a German corporation) and Societa’ Italiana Per Lo Sviluppo Dell’electtronica,
S.I.Sv.El., S.p.A., Case No. HC 06 C 00835. In this action, the Company seeks a declaration of non-infringement of
the patents asserted by Sisvel in connection with the Company’s MP3 products. The Company also seeks a
declaration that the patents are not “essential” to the technology of MP3 players, as Sisvel presently contends in the
case filed in the Netherlands. The defendants have submitted their formal defense and counterclaimed for
Annual Report
F-45
Notes to Consolidated Financial Statements — (Continued)