SanDisk 2007 Annual Report Download - page 76

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. A case management conference was conducted on June 29,
2007. At that conference, the parties agreed that the remaining declaratory judgment claims will 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. On January 25, 2008, the Court held a hearing on the
Company’s motion. At the hearing, the Court converted the Company’s Motion to Dismiss into a Motion for
Summary Judgment. The Court scheduled a hearing on the Company’s Motion for Summary Judgment for May 30,
2008. The trial is currently scheduled for summer of 2008. This trial date, however, may be moved depending on the
Court’s ruling on the Company’s Motion for Summary Judgment.
On October 14, 2005, 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
asks 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 Alameda transferred the case to Santa Clara County as a result of the writ proceeding at the Court of
Appeal. The Company also filed a special motion to strike STMicro’s unfair competition claim, which the Superior
Court denied on September 11, 2006. The Company has appealed the denial of that motion, and the proceedings at
the Superior Court were stayed during the pendency of the appeal. On August 7, 2007, the First District Court of
Appeal affirmed the Superior Court’s decision. The California Supreme Court subsequently denied the Company’s
petition for review of the Court of Appeal’s decision. The Superior Court scheduled a case management conference
for April 10, 2008.
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 ST (Case No. C0505021 JF). In the suit, the Company seeks
damages and injunctions against ST from making, selling, importing or using flash memory chips or products that
infringe the Company’s U.S. Patent No. 5,991,517 (the “’517 patent”). As discussed above, the ’517 patent will be
litigated together with the ’338 patent in Civil Case No. C 04 04379JF.
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