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Lenovo, Huawei could face SanDisk FlashDIMM dam – analysts

Preliminary injunction mandated 'in part'

SanDisk could be stopped from shipping its FlashDIMMs for Lenovo, Huawei and Supermicro servers if analysts' interpretations of a Netlist court-awarded injunction are correct.

SanDisk’s acquired SMART business unit supplies ULLtraDIMMs, flash dies fitted to DIMM sockets - flashDIMMs - which are based on MCS (Memory Channel Storage) products from Canada's Diablo Technologies. Earlier on in the development of this technology, Diablo worked with California company Netlist.

NetList has its own HyperCloud-based NVault non-volatile DIMM (NVDIMM) technology which is used in customised form by Nimble Storage. Diablo is being sued by Netlist*, which alleges that MCS uses Netlist’s patented NVDIMM technology unlawfully.

Diablo denies this and has countersued. Meanwhile, Diablo applied to the US patent and trademark office (USPTO) in an effort to have Netlist’s patents reviewed and struck down.

It has been granted an Inter Partes review of two patents (7,881,150 B2 and 8,081,536 B1) asserted by Netlist against Diablo’s MCS technology.

On 6 January, a California Northern District Court granted a Netlist request “in part” for a preliminary injunction against SanDisk shipping ULLtraDIMMs. What “in part” means has not been publicly revealed by the court.

However, another document filed in the case [Document 260 Filed 01/07/15] refers to "Rush and Bolt chips" and a court assessor exhibit in the document says: "I have been asked to estimate Diablo’s sales of the Rush and Bolt chips between January 13, 2015 and March 20, 2015 (the “Injunction Period”)."

An excerpt from document 260 states: "Based on data provided by Diablo, Netlist estimates that Diablo would have sold approximately [redacted] of the Rush and Bolt chips during the injunction period. [and] ... the net or operating profit that Diablo would have earned from the sale of the Rush and Bolt chipset during the injunction period."

Needham, a financial research company, has a research note saying that, based on its reading of the court documents, SanDisk could be forced to stop shipping ULLtraDIMM products.

It says: “It is our belief that this could bring SNDK to the negotiating table...”

Craig-Hallum, an institutional research company, supports this view with a note (PDF) saying: “While the full public order is not yet available, we believe it affords Netlist relief by preventing Diablo Technologies [and SanDisk] from shipping its chipset related to SanDisk’s UlltraDIMM product.”

Craig-Hallum claims this could get SanDisk negotiating with Netlist: “We would not be surprised if this injunction ... lead[s] to a licensing arrangement in the near term, as the UlltraDIMM product was a key part of SanDisk’s growth strategy for 2015 and beyond.”

Needham adds: “We believe it is very difficult to get patents invalidated, and put a low probability on this succeeding. … it is our belief that this patent review will NOT impact the preliminary injunction that has been put into place as that case was tied to the contract dispute and trade secrets.”

If SanDisk and Netlist negotiate over a licensing deal, then Diablo would likely have to follow suit.

The court brought forward the theft of trade secrets trial date to 9 March, 2015. ®

* Case number: 13-cv-05962-YGR before Judge Yvonne Gonzalez Rogers in the United States District Court for the Northern District of California in Oakland, California.

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