Netlist Said Appeals Court Denies Emergency Motion From Diablo

Netlist, Inc. announced that the U.S. Court of Appeals for the Federal Circuit denied an emergency motion from Diablo Technologies, Inc., asking the Federal Circuit to stay the preliminary injunction entered against controller chips used by SanDisk Corp. in its high-speed ULLtraDIMM SSD product line. 

The injunction blocks Diablo from supplying SanDisk the chipset upon which the ULLtraDIMM is built.

The preliminary injunction was ordered January 12, 2015 by judge Yvonne Gonzalez Rogers of the U.S. District Court for the Northern District of California after a lengthy briefing and a full hearing. Diablo asked the Federal Circuit to stay the injunction pending resolution of their appeal and further asked for an expedited briefing schedule, all of which Netlist opposed. The Federal Circuit denied Diablo’s requests, leaving the injunction intact, and further denied their request to expedite the appeal.

SanDisk filed a narrower appeal, asking the Federal Circuit to allow SanDisk to sell its existing inventory of controller chips purchased from Diablo prior to the injunction, and also asked for an expedited appeal. Netlist opposed these motions as well. The Federal Circuit denied the motion to expedite the appeal, but granted the motion to stay the injunction as to SanDisk’s existing inventory of the now enjoined controller chips. SanDisk will not, however, be able to acquire additional parts from Diablo once SanDisk’s existing inventory is exhausted. 

Further, the Federal Circuit specifically noted that “[t]his order should not be construed to preclude Netlist from moving at the district court to hold any entity in contempt for aiding and abetting in the violation of the injunction.”

“We are very pleased that the appeals court sided with the district court in rejecting this latest attempt by Diablo to lift the injunction“, said C.K. Hong, Netlist’s CEO. “Our opponents have used every legal maneuver to delay and avoid justice in this case. They are now out of options – the injunction will stand until we get our day in court.  We are confident of prevailing at trial and securing a permanent injunction that will prevent future unauthorized use of Netlist’s IP.”

The jury trial is set to begin March 9, 2015 in Oakland, CA and pertains to trade secret misappropriation and breach of contract. Many of the underlying issues were already considered by the Court and decided in Netlist’s favor in the course of its issuance of the preliminary injunction.

The injunction order specifically identified ULLtraDIMM as well as IBM’s eXFlash modules, 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.