OAKLAND, Calif., Jan. 13, 2015 /PRNewswire/ -- A federal
district court judge took the rare step of ordering a preliminary
injunction against a Canadian company from manufacturing, using,
distributing or selling high-speed memory controller chips used by
SanDisk and other major computer manufacturers.
Netlist, Inc. (NASDAQ: NLST) announced that Judge Yvonne Gonzalez Rogers of the United States
District Court for the Northern District of California granted Netlist's Motion for
Preliminary Injunction against Diablo Technologies, Inc., for
controller chips used by SanDisk in its high-speed ULLtraDIMM SSD
product line. Under the Court's order, Diablo and SanDisk are prohibited from
manufacturing and selling the controller chipset used by SanDisk in
the ULLtraDIMM and as a result, from further sale or distribution
of the ULLtraDIMM itself.
Judge Gonzalez Rogers found that
"the evidence indicates that Netlist is likely to prevail by
showing that the Netlist Technology … was used by Diablo to develop" its controller chips. "By
misusing the technology that Diablo had been given in confidence under the
Supply Agreement [with Netlist], Diablo gained an advantage it would not have
otherwise had." In the Court's Order, Judge Gonzalez Rogers rejected Diablo's arguments that it somehow had rights
to use Netlist's chipset and technology under the
agreements.
The judge also rejected SanDisk's motion for reconsideration,
asking that it be allowed to sell existing inventory of the
enjoined products. The Court found that the injunction properly
barred SanDisk from selling these products after a careful review
of the long contractual partnership between Diablo and SanDisk with respect to the
ULLtraDIMM module, finding that SanDisk and Smart Storage "are
'persons who are in active concert with' Diablo."
The Court advanced the trial date by four months, to
March 9, 2015, for Netlist's claims
upon which the motion was decided, including claims against
Diablo for trade secret
misappropriation, breach of contract, and other causes of action
related to the components supplied by Diablo for the ULLtraDIMM. The Court's
order specifically identifies the ULLtraDIMM as well as the eXFlash
modules from IBM, although the injunction affects all modules
containing Diablo components.
Other OEMs, including Huawei, Lenovo and Supermicro, have announced
plans to offer ULLtraDIMMs in certain of their server
platforms.
Netlist created and patented ground-breaking memory interface
technology which significantly increases the speed of servers. It
contracted with Diablo to
implement a proprietary memory-controller chipset based on this
technology, only to find that Diablo stole its trade secrets and
incorporated them into Diablo's
own products.
"We are very pleased with the court's decision", said
C.K. Hong, Netlist's Chief Executive
Officer. "We believe this extraordinary legal ruling is a
validation of what we've said from the beginning about Diablo's flagrant actions. The ruling serves
as a major step towards establishing the rightful ownership of the
intellectual property contained in the ULLtraDIMM, and clears the
path for Netlist products based on our proprietary memory interface
technology. We look forward to the opportunity to present all of
the evidence to a jury, particularly given the court's assessment
of our likelihood of prevailing."
A preliminary injunction requires proof of likelihood of success
on the merits of the claims, and that irreparable injury will
result if the motion is not granted. The Court found that the trade
secret and breach of contract claims substantially overlap, and
that Netlist's "conclusive showing on the contract claim means that
the court need not reach the question of likelihood of success on
the trade secret claims" in order to grant the preliminary
injunction. The Court observed that "the showing of a head-start
advantage to Diablo, based upon an
improper use of Netlist's technology, is sufficient to establish"
irreparable harm. The Court also considered how Diablo's unlawful conduct has harmed Netlist's
efforts to develop and sell its own NVvault and HyperVaultproducts.
A permanent injunction may be issued after trial for the entire
wrongful head-start period.
The decision follows another important legal victory by Netlist
in the dispute. Last month, the United States Patent and
Trademark Office (USPTO) denied petitions filed by SanDisk
requesting Inter Partes Review (IPR) of Netlist patents asserted
against the ULLtraDIMM in a separate patent infringement suit
brought by Netlist against SanDisk and Diablo, before the same court. SanDisk and
Diablo are now barred from filing
additional IPRs on the four Netlist patents with claims that the
PTAB refused to review.
About Netlist:
Netlist, Inc. designs and manufactures
high-performance, logic-based memory subsystems for server and
storage applications for cloud computing. Netlist's flagship
products include NVvault™ and EXPRESSvault™ family of hybrid memory
products that significantly accelerate system performance and
provide mission critical fault tolerance, HyperCloud®, a patented
memory technology that breaks traditional performance barriers, and
a broad portfolio of industrial Flash and specialty memory
subsystems including VLP (very low profile) DIMMs and Planar-X
RDIMMs. Netlist has steadily invested in and grown its worldwide IP
portfolio, which now includes 81 issued and pending patents in the
areas of high performance memory and hybrid memory
technologies.
Netlist develops technology solutions for customer applications
in which high-speed, high-capacity, small form factor and efficient
heat dissipation are key requirements for system memory. These
customers include OEMs and hyperscale datacenter operators that
design and build servers, storage systems and high-performance
computing clusters, engineering workstations and telecommunications
equipment. Founded in 2000, Netlist is headquartered in
Irvine, CA with manufacturing
facilities in Suzhou, People's Republic
of China. Learn more at www.netlist.com.
Safe Harbor Statement:
This news release contains forward-looking statements
regarding future events and the future performance of Netlist.
These forward-looking statements involve risks and uncertainties
that could cause actual results to differ materially from those
expected or projected. These risks and uncertainties include, but
are not limited to, risks associated with the launch and commercial
success of our products, programs and technologies; the success of
product partnerships; continuing development, qualification and
volume production of EXPRESSvault™,
NVvault™, HyperCloud® and VLP Planar-X
RDIMM; the timing and magnitude of the anticipated decrease in
sales to our key customer; our ability to leverage our
NVvault™ technology in a more diverse customer base;
the rapidly-changing nature of technology; risks associated with
intellectual property, including patent infringement litigation
against us as well as the costs and unpredictability of litigation
over infringement of our intellectual property and the possibility
of our patents being reexamined by the United States Patent and
Trademark office; volatility in the pricing of DRAM ICs and NAND;
changes in and uncertainty of customer acceptance of, and demand
for, our existing products and products under development,
including uncertainty of and/or delays in product orders and
product qualifications; delays in the Company's and its customers'
product releases and development; introductions of new products by
competitors; changes in end-user demand for technology solutions;
the Company's ability to attract and retain skilled personnel; the
Company's reliance on suppliers of critical components and vendors
in the supply chain; fluctuations in the market price of critical
components; evolving industry standards; and the political and
regulatory environment in the People's
Republic of China. Other risks and uncertainties are
described in the Company's annual report on Form 10-K filed on
March 18, 2014, and subsequent
filings with the U.S. Securities and Exchange Commission made by
the Company from time to time. Except as required by law, Netlist
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
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SOURCE Netlist, Inc.