SanDisk 2010 Annual Report Download - page 235

This is a TAB type table. Insert
conts here. Annual Report
Notes To Consolidated Financial Statements
Samsung Federal Antitrust Action Against Panasonic and SD-3C. On July 15, 2010, Samsung Electronics
Co., Ltd. (“Samsung”) filed this action in the United States District Court for the Northern District of California,
Case No. CV 10 3098 (ND Cal.), alleging various claims against Panasonic Corporation and Panasonic
Corporation of North America (collectively “Panasonic”) and SD-3C, LLC (“SD-3C”) under federal antitrust law
pursuant to Sections 1 and 2 of the Sherman Act, and under California antitrust and unfair competition laws.
Such claims are based on, inter alia, alleged conduct related to the licensing practices and operations of SD-3C.
The complaint further seeks a declaration that Panasonic and SD-3C engaged in patent misuse and that the
patents subject to such alleged misuse should be held unenforceable. The Company is not named as a defendant
in this case, but it established SD-3C along with Panasonic and Toshiba, and the complaint includes various
factual allegations concerning the Company. Defendants filed a motion to dismiss on September 24, 2010, and
thereafter plaintiff filed an amended complaint on October 14, 2010. The First Amended Complaint is also based
on alleged conduct related to the licensing practices and operations of the SD-3C, and contains the same claims
as the original complaint. On December 1, 2010, the Panasonic defendants and SD-3C filed a motion to
dismiss the First Amended Complaint. Samsung filed its opposition to that motion on February 15, 2011, and the
defendants’ reply is due on March 8, 2011. The hearing on the motion to dismiss is scheduled for April 8, 2011.
Patent Infringement Litigation Initiated by SanDisk. On August 17, 2010, in response to infringement
allegations by Shea Integration Solutions Corp. (“Shea”), the Company filed a lawsuit against Shea in the United
States District Court for the Northern California. The complaint seeks a declaration that the Company does not
infringe United States Patent No. 7,069,447 (the “’447 patent”) allegedly owned by Shea, declarations of
invalidity and unenforceability of the ’447 patent, and it includes state law counterclaims seeking damages for
unfair competition and business interference based on the infringement allegations made by Shea to certain of the
Company’s customers. Shea filed an answer to the complaint on October 7, 2010, denying the Company’s
material allegations and asserting a counterclaim for patent infringement. The Company filed an answer to
Shea’s counterclaims on November 1, 2010, denying Shea’s material allegations. The Company filed a motion
for summary judgment of noninfringement on February 8, 2011, which is scheduled to be heard on May 10,
2011. The case management conference was also rescheduled for May, 10, 2011.
IP Litigation Against SanDisk: On November 12, 2010, Main Hastings, LLC (“Main Hastings”) filed a
patent false marking case in the Eastern District of Texas, alleging that the Company sold and advertised the
Company’s G3 and G4 Solid State Drive lines of products with expired patent numbers, in violation of 35 U.S.C.
§ 292. The complaint alleges that the Company intended to deceive the public by advertising or stating in related
product literature that these products were patented, and seeks damages for each alleged violation. Counsel for
Main Hastings has agreed to an extension of time (until March 11, 2011) for the Company to answer or otherwise
respond to the complaint.
Bankruptcy Court Proceedings of Circuit City Stores, Inc. On November 10, 2008, Circuit City Stores,
Inc. and its affiliated entities (the “Debtors”) filed petitions under Chapter 11 of the Bankruptcy Code in the
United States Bankruptcy Court for the Eastern District of Virginia (the “Bankruptcy Court”). The Company has
filed claims against the Debtors to recover amounts owed to the Company for products that the Company sold to
the Debtors prior to the commencement of the Debtors’ bankruptcy case as well as for products sold to the
Debtors after the commencement of the Debtors’ bankruptcy case. On November 4, 2010, Alfred H. Siegel, as
trustee of Circuit City Stores, Inc. Liquidating Trust (the “Trustee”), filed a lawsuit against the Company in the
Bankruptcy Court. The Trustee seeks to recover based on alleged claims for alleged preferential transfers that
occurred during the 90 day period prior the commencement of the Debtors’ bankruptcy case, breach of contract
and turnover of amounts allegedly owing to the Debtors by the Company. The Company filed an answer to the
Trustee’s complaint on January 31, 2011.
F-49