To: straight life who wrote (11123 ) 5/17/2000 5:26:00 PM From: Ausdauer Read Replies (3) | Respond to of 60323
Lexar has cost SanDisk $1.7 million in legal costs to date. ***************FROM THE LATEST SNDK QUARTERLY REPORT******************In March 1998 we filed a complaint in federal court against Lexar Media, Inc. for infringement of one of our flash card patents. Lexar disputed this claim and asserted that our patent was invalid or unenforceable, as well as asserting various counterclaims including unfair competition, violation of the Lanham Act, patent misuse, interference with prospective economic advantage, trade defamation and fraud. We have denied all of these counterclaims. In July 1998, the court denied Lexar's request to have the case dismissed. Discovery in this suit began in August 1998. On February 22, 1999, the court considered arguments and papers submitted by the parties regarding the scope and proper interpretation of the asserted claims in our patent at issue in the Lexar suit. On March 4, 1999, the court issued its ruling on the proper construction of the claim terms in our patent. On July 30, 1999, we filed a motion for partial summary judgment that Lexar CompactFlash and PC Cards contributorily infringe our patent . Lexar filed a motion for summary judgement that our patent is invalid in view of prior art. A hearing on both of these motions was held on March 17, 2000 and on March 28, 2000 the court found that the accused Lexar flash cards contributarily infringed SanDisk's patent and granted SanDisk's motion for partial summary judgement . Additionally, the court denied Lexar's summary judgement motion for non-infringement and invalidity. A trial date has been set this matter in October 2000. If you all recall, Lexar has used, IMHO, underhanded tactics to gain favor with investors and to "submarine" SanDisk's secondary offering. After the tragic earthquake in Taiwan last year Lexar sent out a press release on a Sunday night that, again IMHO, tried to mislead investors as to SanDisk's position in the '987 patent case. It even took SI Thread members a considerable amount of time and effort to track down case numbers and presiding court judges' names to confirm or refute their claims...sandisk.com Were I a Lexar Media employee I would seriously consider the implications of proceeding with the "patent nullification" trial as they intend to do. If anyone has read the recent and past quarterly reports from SanDisk they will notice that SNDK's chief flash competitors, Hitachi,Toshiba and Samsung, do not compete in the card assembly business (see also my notes from the annual meeting). I think this leads credence to validity of the '987 patent. I remain suspect of Lexar's intentions unless it is to divert SanDisk's efforts and sap their considerable engineering resources temporarily until Lexar simply runs out of cash. In fact, in public court documents it has been revealed that the Lexar CEO (purportedly) admitted to infringement of the '987 patent. If there is a possibility this could be proven in court the spectre of "willfull infringement" with its attendant punitive damages must loom large over Lexar. The ongoing litigation is not helpful to either company. Lexar has by far the most to lose. And with the current demand for CompactFlash and other related flash memory products it would seem that exhausting valuable cash and other resources through ongoing litigation is wasteful indeed.Will commonsense ever prevail? Ausdauer