SanDisk/Lexar patent disputes settled

Fremont, California–Nov. 16, 2000–SanDisk Corp. filed suit against Lexar Media, Inc. in 1998, alleging that Lexar’s CompactFlash and PC Cards infringe a SanDisk patent–U.S. Patent No. 5,602,987. In September 2000, Lexar filed suit against SanDisk, alleging that SanDisk’s SmartMedia products infringe one of Lexar’s patents–U.S. Patent No. 5,479,638. The companies now have reached a settlement agreement concerning the patent infringement actions and all other claims and counterclaims currently before the U.S. District Courts of the Northern District of California and the District of Delaware.

To resolve the SanDisk suit, Lexar has stipulated that SanDisk’s ‘987 patent is valid and infringed by Lexar’s current CompactFlash and PC Cards. Subject to Lexar’s representations and warranties relating to its newly designed CompactFlash and PC Cards, SanDisk has stipulated that these designs do not infringe its ‘987 patent. Lexar will make a lump sum payment of $8 million for royalties due on the patent, through March 31, 2001. Lexar will then enter into a 4% royalty-bearing license for certain products that use the ‘9987 patent beyond March 31, 2001.

To settle the Lexar suit, SanDisk will pay Lexar a lump sum payment of $2 million for a fully-paid-up license for use of the ‘638 patent in its SmartMedia products. Lexar, in turn, has provided SanDisk with an option for a royalty-bearing license to its patents for use in future SanDisk products.

The two companies have further agreed to resolve any future disputes relating to the use by Lexar of the ‘987 patent through binding arbitration, and that neither company will seek injunctive relief against the other in any patent lawsuit for the next 7 years.


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