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SanDisk Hit by Court Injunction on Diablo Chipset

13 January 2015

Memory module supplier Netlist Inc. (Irvine, Calif.) has announced it has won a preliminary injuction against the manufacture and sale of certain memory controller ICs developed by Diablo Technologies Inc. (Ottawa, Ontario) and which are used in products solid-state drives (SSDs) sold by SanDisk, IBM, Lenovo, Huawei and Supermicro.

Netlist has accused Diablo of stealing trade secrets and said that Diablo had harmed its ability to sell its own NVvault and HyperVault products.

Netlist said that it had created and patented memory interface technology, which it had contracted Diablo to implement in a memory controller chipset only to find the same technology used in Diablo's own products. Netlist added that Diablo's defense to date is that it was entitled to use the information that Netlist had supplied.

In addition Diablo had collaborated with Smart Storage Systems, a company that SanDisk acquired in 2013 for about $300 million. Observers said that the issuing of the preliminary injunction was likely to bring SanDisk to the table for negotiations on an out-of-court settlement.

The preliminary injunction was ordered by Judge Yvonne Gonzalez Rogers of the United States District Court for the Northern District of California as she advanced the trial date by four months to March 9, Netlist said.

SanDisk motion rejected

The judge also rejected a motion from SanDisk that is should be allowed to sell existing inventory, Netlist said. The court found that because SanDisk had a long-term contractual relationship with Diablo it was proper that it should be included under the injunction.

The granting of preliminary injunction is a relatively rare occurrence in US legal cases. Usually companies, on the presumption of innocence, are allowed to continue making and selling products that are the subject of disputes. A preliminary injunction is only granted if there is a strong chance the case will win at trial and that there would be irreparable injury if the injunction were not granted.

Netlist said that as a result of the preliminary injuction Diablo and SanDisk are prohibited manufacturing and selling the controller chipset used by SanDisk in the ULLtraDIMM SSD and as a result, from further sale or distribution of the ULLtraDIMM itself. The court order also identifies the eXFlash memory modules from IBM. Other OEMs including Huawei, Lenovo and Supermicro have announced plans to offer ULLtraDIMMs in server platforms and must now stay those plans.

"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," said C. K. Hong, CEO of Netlist in a statement.

Questions or comments on this story? Contact dylan.mcgrath@ihs.com

Related links and articles:

www.netlist.com

www.diablo-technologies.com

IHS Compute, Servers & Storage

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SanDisk Grabs Fusion-io in Billion-Dollar Storage Deal



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