SanDisk 2008 Annual Report Download - page 118

Notes To Consolidated Financial Statements
(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. (collectively, “Buffalo”); Verbatim Corp. (“Verbatim”); Transcend Information Inc. (Taiwan),
Transcend Information Inc. (California), and Transcend Information Maryland, Inc., (collectively, “Transcend”);
Imation Corp., Imation Enterprises Corp., and Memorex Products, Inc. (collectively, “Imation”); Add-On Computer
Peripherals, Inc. and Add-On Computer Peripherals, LLC (collectively, “Add-On Computer Peripherals”); Add-On
Technology Co.; 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. (“Emprex”); 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 Corp. (“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 asserts that respondents’ accused flash memory controllers, drives, memory cards, and 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 accused products from entry
into the United States as well as a permanent cease and desist order against the respondents. Since filing its
complaint, the Company has terminated the investigation as to the ’808 patent, the ’893 patent, and the ’332 patent.
After filing its complaint, the Company reached settlement agreements with Add-On Computer Peripherals, EDGE,
Infotech, Interactive, Kaser, PNY, TSR, Verbatim, Chipsbank, USBest and Welldone. The investigation has been
terminated as to these respondents in light of these settlement agreements. Three of the remaining respondents –
Buffalo, Corsair, and A-Data – were terminated from the investigation after entering consent orders. The
investigation has also been terminated as to Add-On Tech. Co., Behavior, Emprex, and Zotek after these
respondents were found in default. The investigation has also been terminated as to Acer, Payton, Silicon Motion
Tech. Corp., and Silicon Motion, Int’l Inc. The Company also terminated PQI from the investigation as to the ’011
patent. On July 15, 2008, the ALJ issued a Markman ruling regarding the ’011 patent, the ’893 patent, the ’332
patent, and the ’424 patent. Beginning October 27, 2008, the ALJ held an evidentiary hearing. At the hearing, the
respondents denied infringement and raised several affirmative defenses including, among others, lack of domestic
industry, invalidity, unenforceability, patent misuse, license, patent exhaustion, intervening rights, and laches. After
the hearing, the parties filed a series of post-hearing briefs. On February 9, 2009, the ALJ extended the target date
for conclusion of the investigation to August 10, 2009. The ALJ is expected to issue an initial determination on the
merits by April 10, 2009.
On October 24, 2007, the Company filed a complaint for patent infringement in the United States District
Court for the Western District of Wisconsin against the following defendants: Phison, Silicon Motion,
Synergistic Sales, Inc. (“Synergistic”), USBest, Skymedi, Chipsbank, Infotech, Zotek, PQI, PNY, Kingston,
Buffalo, Verbatim, Transcend, Imation, Add-On Computer Peripherals, A-DATA, Apacer, Behavior, Corsair,
Dane-Elec, EDGE, Interactive, LG, TSR and Welldone. In this action, Case No. 07-C-0607-C, the Company
asserts that the defendants infringe the ’808 patent, the ’424 patent, the ’893 patent, the ’332 patent and the ’011
patent. The Company seeks damages and injunctive relief. In light of the above mentioned settlement
agreements, the Company dismissed its claims against Add-On Computer Peripherals, EDGE, Infotech,
Interactive, PNY, TSR and Welldone. The Company also voluntarily dismissed its claims against Acer and
Synergistic without prejudice. The Company also voluntarily dismissed its claims against Corsair in light of its
agreement to sell flash memory products only under license or consent from the Company. On November 21,
2007, defendant Kingston filed a motion to stay this action. Several defendants joined in Kingston’s motion. On
December 19, 2007, the Court issued an order staying the case in its entirety until the 619 Investigation becomes
final. On January 14, 2008, the Court issued an order clarifying that the entire case is stayed for all parties.
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