WDC/Sandisk Corporation Message Board

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Technology Stocks : WDC/Sandisk Corporation

WDC 162.42

+3.0%

3:59 PM EST

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To: Jerome Wittamer who wrote (3540)	7/25/1998 10:44:00 AM
From: Ausdauer	Read Replies (2) of 60323

Dear Thread, Please accept the following as factual as it originates from reliable sources. The lawsuit with Lexar Media is a vital issue to the company. The patents regarding CompactFlash are really at many levels. Some companies manufacturing CF cards pay royalties to the flash memory manufacturers. These royalties may be hidden in the price of memory paid by these manufacturers. However, there are also patents at the card level. That is to say, the actual compilation of the controller, flash memory and other components into the CompactFlash card is a patented process. SanDisk is the originator of CF and should receive the royalties for the manufacture and sale of CF cards which use their patents. Lexar is only one of a multitude of manufacturers which may be infringing on this intellectual property. IMHO, SanDisk has chosen Lexar Media over other manufacturers (which we have listed here previously) for strategic purposes. First, it may be the most visible competitor in the market. Thus, if SNDK prevails, subsequent enforcement of patents against other manufacturers may be simplified. Second, they may have a very weak patent portfolio. Essentially, they have to prove that the card assembly does not utilize any of the ground breaking technology SNDK has developed with regard to CompactFlash. The track record of SNDK's legal defense is a factor in my decision to stick by this investment. I think they have enough cash on hand to sustain a legal battle with Lexar. Can Lexar say the same? Successful patent protection is at the core of any high technology company competing in an emerging market. The costs of litigation are a necessary evil to prevent obsolescence of the company's key products. Perhaps some of the EE geniuses on the thread have an opinion about the defensibility of the patents at issue with Lexar Media. EEPROM and alot of the other terminology is Greek to me.

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