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Diablo Technologies scores another court win over Netlist

Diablo Technologies chalked up another legal victory over Netlist this week, although  Netlist’s separate patent infringement lawsuit remains unresolved.

The U.S. Court of Appeals for the Federal Circuit this week upheld a March 2015 jury verdict that Diablo Technologies did not breach a supply contract with Netlist, its former development partner.  Netlist did not appeal the jury’s findings that Diablo did not violate a non-disclosure agreement and did not misuse trade secrets.

Netlist asked the Federal Circuit to review the contract language and rule that Diablo’s use of Netlist chips in the design of SanDisk ULLtraDIMM technology constituted a breach of contract. The three-judge Federal Circuit panel heard oral arguments on July 7 and affirmed the jury verdict two business days later.

The Irvine, California-based memory module manufacturer has two options to appeal the Federal Circuit panel’s decision. Netlist can request an “en banc” rehearing of the case before all of the Federal Circuit judges or appeal to the U.S. Supreme Court. Through a spokesman, Netlist declined to comment on whether it intends to appeal the decision.

The appellate ruling will become final within two weeks if Netlist does not appeal the three-judge panel’s decision, according to Fabio Marino, a partner at McDermott Will & Emery LLP, the law firm representing Diablo Technologies.

Marino, lead counsel for Diablo, said the appellate decision would conclude Netlist’s main case against Diablo. “The patent case is really against SanDisk, and we are implicated as a supplier,” he said.

Prior to the March 2015 trial, the U.S. District Court for the Northern District of California had granted Netlist’s request for a preliminary injunction to stop Ottawa-based Diablo Technologies from supplying SanDisk with the chipset for the ULLtraDIMM product. The court dissolved the preliminary injunction a month after the jury verdict. SanDisk is now part of Western Digital.

Patent lawsuit stayed
The U.S. District Court suspended Netlist’s seven-patent lawsuit pending the completion of Inter Partes Reviews (IPRs) with the U.S. Patent and Trademark Office (USPTO). According to Netlist, Diablo, SanDisk and Smart Modular Technologies filed a total of 17 IPRs to try to invalidate Netlist’s asserted patents related to memory technology.

Noel Whitley, vice president of intellectual property and licensing at Netlist, claimed that Netlist has prevailed in the reviews of five patents with the Patent Trial and Appeals Board. He said Netlist is appealing the results with two other patents, and the patent lawsuit will likely remain stayed until all IPR-related appeals are complete.

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