SanDisk 2007 Annual Report Download - page 78

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defendant Lucent’s counterclaim for infringement of the ’080 patent as a matter of law. All motions are presently
pending before the Court.
On August 10, 2007, Lonestar Invention, L.P. (“Lonestar”) filed suit against the Company in the Eastern
District of Texas, Civil Action No. 6:07-CV-00374-LED. The complaint alleges that a memory controller used in
the Company’s flash memory devices infringes U.S. Patent No. 5,208,725. Lonestar is seeking a permanent
injunction, actual damages, treble damages for willful infringement, and costs and attorney fees. The Company has
answered Lonestar’s complaint, denying Lonestar’s allegations.
On September 11, 2007 the Company and the Company’s CEO, Dr. Eli Harari, received grand jury subpoenas
issued from the United States District Court for the Northern District of California indicating a Department of
Justice investigation into possible antitrust violations in the NAND flash memory industry. The Company also
received a notice from the Canadian Competition Bureau (“Bureau”) that the Bureau has commenced an industry-
wide investigation with respect to alleged anti-competitive activity regarding the conduct of companies engaged in
the supply of NAND flash memory chips to Canada and requesting that the Company preserve any records relevant
to such investigation. The Company is cooperating in these investigations.
On September 11, 2007, Premier International Associates LLC (“Premier”) filed suit against the Company and
19 other named defendants, including Microsoft Corporation, Verizon Communications Inc. and AT&T Inc., in the
United States District Court for the Eastern District of Texas (Marshall Division). The suit, Case No. 2-07-CV-396,
alleges infringement of Premier’s U.S. Patents 6,243,725 (the “’725”) and 6,763,345 (the “’345”) by certain of the
Company’s portable digital music players, and seeks an injunction and damages in an unspecified amount. On
December 10, 2007, an amended complaint was filed. On February 5, 2008, the Company filed an answer to the
amended complaint and counterclaims: (a) denying infringement; (b) seeking a declaratory judgment that the ’725
and ’345 patents are invalid, unenforceable and not infringed by the Company. On February 5, 2008, the Company
(along with the other defendants in the action) filed a motion to stay the litigation pending completion of
reexaminations of the ’725 and ’345 patents by the U.S. Patent and Trademark Office. This motion is pending. A
trial date has not been set.
On October 24, 2007, the Company filed a complaint under Section 337 of the Tariff Act of 1930 (as amended)
(Inv. No. 337-TA-619) titled, “In the matter of flash memory controllers, drives, memory cards, and media players
and products containing same” in the ITC (hereinafter, “the 619 Investigation”), naming the following companies as
respondents: Phison Electronics Corp. (“Phison”); Silicon Motion Technology Corporation, Silicon Motion, Inc.
(located in Taiwan), Silicon Motion, Inc. (located in California), and Silicon Motion International, Inc. (collec-
tively, “Silicon Motion”); USBest Technology, Inc. (“USBest”); Skymedi Corporation (“Skymedi”); Chipsbrand
Microelectronics (HK) Co., Ltd., Chipsbank Technology (Shenzhen) Co., Ltd., and Chipsbank Microelectronics
Co., Ltd., (collectively, “Chipsbank”); Zotek Electronic Co., Ltd., dba Zodata Technology Ltd. (collectively,
“Zotek”); Infotech Logistic LLC (“Infotech”), Power Quotient International Co., Ltd., and PQI Corp. (collectively,
“PQI”); Power Quotient International (HK) Co., Ltd.; Syscom Development Co. Ltd.; PNY Technologies, Inc.
(“PNY”); Kingston Technology Co., Inc., Kingston Technology Corp., Payton Technology Corp., and MemoSun,
Inc. (collectively, “Kingston”); Buffalo, Inc., Melco Holdings, Inc., and Buffalo Technology (USA), Inc. (collec-
tively, “Buffalo”); Verbatim Corp. (“Verbatim”); Transcend Information Inc. (located in Taiwan), Transcend
Information Inc. (located in California), and Transcend Information Maryland, Inc., (collectively, “Transcend”);
Imation; Add-On Computer Peripherals, Inc., Add-On Computer Peripherals, LLC, and Add-On Technology Co.
(collectively, “Add-On”); A-Data Technology Co., Ltd., and A-Data Technology (USA) Co., Ltd., (collectively, “A-
DATA”); Apacer Technology Inc. and Apacer Memory America, Inc. (collectively, “Apacer”); Acer, Inc. (“Acer”);
Behavior Tech Computer Corp. and Behavior Tech Computer (USA) Corp. (collectively, “Behavior”); Emprex
Technologies Corp.; Corsair Memory, Inc. (“Corsair”); Dane-Elec Memory S.A., and Dane-Elec Corp. USA,
(collectively, “Dane-Elec”); Deantusaiocht Dane-Elec TEO; EDGE Tech Corp. (“EDGE”); Interactive Media Corp,
(“Interactive”); Kaser Corporation (“Kaser”); LG Electronics, Inc., and LG Electronics U.S.A., Inc., (collectively,
“LG”); TSR Silicon Resources Inc. (“TSR”); and Welldone Co. (“Welldone”). In the complaint, the Company
alleges that respondents’ flash memory products, such as USB flash drives, Compact Flash cards, and flash media
players, infringe the following: U.S. Patent No. 5,719,808 (the “’808 patent”); U.S. Patent No. 6,763,424 (the “’424
patent”); U.S. Patent No. 6,426,893 (the “’893 patent”); U.S. Patent No. 6,947,332 (the “’332 patent”); and
U.S. Patent No. 7,137,011 (the “’011 patent”). The Company seeks an order excluding the respondents’ flash
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