re: SNDK patent litigation (and what can happen when a company tries to get around another company's patents).
The following is taken from SEC filings by Lexar which recently became available:
"We are currently involved in significant and costly litigation with our
primary competitor in which the Federal District Court has found that our
products infringe our competitor's patent. If the court ultimately rules that
this patent is valid, we could be required to pay significant damages and
royalties and could be enjoined from making, selling or using the infringing
products."
"if
the SanDisk patent litigation were to be resolved by a settlement, we might
need to make substantial upfront payments as well as ongoing royalties to
SanDisk and grant a license to SanDisk to utilize portions of our technology"
"We have recently redesigned our products to avoid SanDisk's intellectual
property, but the redesigned products may not be feasible to produce,
commercially competitive or have all the functionality of our current and
future products or may be held to infringe SanDisk's patents"
"We intend to
vigorously contest SanDisk's claims and the validity of SanDisk's patent at
trial, but to succeed, we will have to overcome by clear and convincing
evidence the legal presumption that a patent is valid. This is a difficult
burden of proof and, as a result, patents are found to be valid in a
significant majority of cases.
In its complaint, SanDisk requests both a preliminary and a permanent
injunction. SanDisk could request a hearing on its request for a preliminary
injunction against us at any time prior to trial. In the event a preliminary or
permanent injunction were granted, we would be unable to sell products found to
infringe SanDisk's patent. Such an injunction would result in our not being
able to ship a substantial portion of our products, which would cause a
substantial reduction in our revenues, significant losses and loss of customer
goodwill for an extended period of time. As a result, we would face a
substantial depletion of our financial resources that could severely limit our
future business prospects or render us insolvent. Further, if at trial the
SanDisk patent is held to be valid, we could be required to pay significant
monetary damages to SanDisk, which, in the event of a finding of willful
infringement, would be subject to trebling and could also require us to pay
SanDisk's attorney's fees. "
"In the event of an injunction, we could seek a license from SanDisk to
enable us to continue selling our products, but SanDisk might not agree to
license its patents to us on reasonable terms, or at all. While SanDisk has
expressed a willingness to license its patents, such a license may cause us to
pay royalties on all our products, even those in the future that may not
infringe SanDisk's patent, and we might be required to grant a license to
SanDisk to utilize portions of our technology. Accordingly, the terms of any
license might adversely affect our margins and our ability to compete with
SanDisk and others."
These are just excerpts from a 72 page Registration Statement. The statement can be read at:
freeedgar.com
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