Case: 3:07-cv-00605-bbc

Document #: 473

Filed: 02/17/2010

Page 1 of 9

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WISCONSIN SanDisk Corporation, Plaintiff, v. Phison Electronics Corp., et al. Defendants. ) ) ) ) ) ) ) ) ) ) )

Civil Action Nos.: 07-C-0605-C and 07-C-0607-C

MOTION FOR LEAVE TO AMEND COMPLAINT PLEASE TAKE NOTICE that plaintiff SanDisk Corporation (“SanDisk”) moves pursuant to Rule 15(a) of the Federal Rules of Civil Procedure, for leave to amend its Complaint in Civil Action No. 07-C-0605 to consolidate the claims in Civil Action Nos. 07-C-0605 and 07-C-0607, to reflect the parties’ efforts to narrow the issues in these actions, and to assert six Continuation Patents1 against the Defendants.2 A copy of the proposed Amended Complaint for Civil Action No. 07-C-0605 is attached as Exhibit 1. The Continuation Patents are all closely related to the Original Patents-In-Suit.3 The Defendants have indicated that they are willing to consent to the addition of the Continuation Patents, but only if the trial is delayed by two months. SanDisk opposes the Defendants’ attempt to delay the trial.

1

For purposes of this motion, the term “Continuation Patents” refers to U.S. Patent Nos. 7,397,713 (“the ’713 patent”), 7,492,660 (“the ’660 patent”), 7,532,511 (“the ’511 patent”), 7,646,666 (“the ’666 patent”), 7,646,667 (“the 667 patent”), and 7,657,702 (“the ’702 patent”). 2 For purposes of this motion, the term “Defendants” collectively refers to the following entities: ITE Technologies Inc., Kingston Technology Co., Inc., Kingston Technology Corp., Buffalo, Inc., Melco Holdings, Inc., Buffalo Technology (USA) Inc., Transcend Information Inc. (Taiwan), Transcend Information Inc. (California, U.S.A.), Transcend Information Maryland, Inc., Imation Corp., Imation Enterprises Corp., Memorex Products, Inc., A-Data Technology Co., Ltd., A-Data Technology (USA) Co., Ltd., Apacer Technology Inc., Apacer Memory America, Inc., and Dane-Elec Corp. USA. 3 “Original Patents-In-Suit” collectively refers to U.S. Patent Nos. 6,149,316 (“the ’316 patent”), 6,757,842 (“the ’842 patent”), 5,719,808 (“the ’808 patent”), 6,763,424 (“the ’424 patent”), 6,426,893 (“the ’893 patent”), the 6,947,332 (“the ’332 patent”), and 7,137,011 (“the ’011 patent”).

Motion for Leave to Amend Complaint

Case: 3:07-cv-00605-bbc

Document #: 473

Filed: 02/17/2010

Page 2 of 9

MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION SanDisk satisfies all of the factors that courts consider in determining whether to grant a request for leave to amend. First, the proposed amendments are non-prejudicial and timely. The Continuation Patents all issued either while this case was stayed or shortly after the stay was lifted in November 2009. SanDisk promptly notified the Defendants of its desire to add the Continuation Patents once the Court lifted the stay. In addition, the Continuation Patents implicate the same issues as the Original Patents-In-Suit. For that reason, SanDisk’s proposed amendments promote judicial economy and are not futile. The only disputed issue between the parties is whether the addition of the Continuation Patents would justify delaying the trial. SanDisk opposes delaying the trial because the Court has already indicated that it will try this case in February 2011 and SanDisk sees no reason why the Court should revisit this decision. II. RELEVANT FACTS SanDisk pioneered the use of Flash memory for mass storage applications and has been awarded many patents in recognition of its contributions. For example, on April 13, 1989 inventors Eli Harari, Sanjay Mehrotra and Bob Norman submitted patent applications to the United States Patent & Trademark Office (“USPTO”) regarding SanDisk’s Flash memory technology. Based on these applications, the USPTO awarded SanDisk with the ‘808, ’316, and ’842 patents in February 1998, November 2000, and June 2004, respectively. In the years following SanDisk’s original patent applications, the company continued to innovate and received additional patents. For example, on September 1, 1993, Dr. Harari, Dan Guterman, and Bob Wallace submitted a patent application for a novel removable Flash memory card with encryption technology. The USPTO awarded SanDisk the ’011 patent in recognition of this invention. In February 2000, inventors Kevin Conley, John Mangan, and Jeffrey Craig filed a patent application disclosing, among other things, techniques to enhance the speed and reliability of Flash memory systems. In recognition of their inventions, the 2

Motion for Leave to Amend Complaint

Case: 3:07-cv-00605-bbc

Document #: 473

Filed: 02/17/2010

Page 3 of 9

USPTO awarded SanDisk the ’893 patent in July 2002. In January 2001, Mr. Conley filed another patent application, which disclosed a novel programming algorithm and technique for a high-speed mass storage Flash memory system. Based on this application, the USPTO awarded SanDisk the ’424 patent in July 2004. The Defendants began selling competing products that infringe SanDisk’s patents. In an effort to put a stop to the Defendants’ widespread infringement, on October 24, 2007, SanDisk filed a complaint asserting that the Defendants infringe the ’316 and ’842 patents. See Dkt. 1 [Civil Action No. 07-C-0605-C]. That same day, SanDisk filed a second complaint asserting that the Defendants infringe the ’808, ’424, ’893, and ’011 patents. See Dkt.1 [Civil Action No. 07-C-0607-C].4 The Court consolidated these actions and imposed a stay during the pendency of an investigation before the International Trade Commission. That investigation involved the patents in Civil Action No. 07-C-0607. See Dkt. 195 [Civil Action No. 07-C-0605-C]; Dkts. 164, 185 [Civil Action No. 07-C-0607-C]. While the case was stayed, the USPTO awarded SanDisk the ’713 and ’660 patents. See Smith Decl.5 ¶ 3. Both patents issued from the same original patent application as the ’842, ’316 and ’808 patents. Id. These continuation patents share the same specification and have the same inventors as the ’842, ’316 and ’808 patents. Id. Also during the stay, the USPTO awarded SanDisk the ’511 patent. See Smith Decl. ¶ 4. The ’511 patent issued from the same original application as the ’893 patent, which is asserted in Civil Action No. 07-C-0607. Id. As such, the ’511 and ’893 patents share the same specification and have the same inventors. Id. This Court lifted its discretionary stay on November 13, 2009. See Dkt. 261 [Civil Action No. 07-C-0605-C]. On November 30, 2009, SanDisk informed the Defendants of its intent to add the ’713, ’660, and ’511 patents to the present action and provided the Defendants
4

SanDisk also asserted the ’332 patent in its original complaint. That patent was dismissed pursuant to an agreement among the parties. 5 “Smith Decl.” refers to the Declaration of Ryan R. Smith in Support of SanDisk’s Motion For Leave to Amend Complaint, which is filed concurrently with this motion.

Motion for Leave to Amend Complaint

3

Case: 3:07-cv-00605-bbc

Document #: 473

Filed: 02/17/2010

Page 4 of 9

with copies of each patent. See Smith Decl. Ex. 1. SanDisk also informed the Defendants of its intent to add the patents issuing from U.S. App. Nos. 402,955 (“the ’955 application”), 403,014 (“the ’014 application”), and 371,460 (“the ’460 application”), patent applications which had been recently allowed by the USPTO and would later issue as the ’666, ’667, and ’702 patents, respectively. SanDisk provided the Defendants with copies of the notices of allowance and the allowed claims. Id. On December 1, 2009, the parties met and conferred regarding a proposed case schedule, which included a discussion of the six patents SanDisk intended to add to this case. See Dkt. 364 [Civil Action No. 07-C-0605-C] at 1. In the Joint 26(f) Statement dated on December 4, 2009, the Defendants stated that they “do not oppose SanDisk’s request for leave to amend to add U.S. Patent Nos. 7,397,713; 7,492,660; and 7,532,511.” Id. at 9 (emphasis added). With respect to the three patent applications, the Defendants stated that “[w]hen and if SanDisk’s new patents are issued, SanDisk can bring a motion to amend. . . . If sufficient time exists, relative to existing deadlines, for all parties to take complete discovery into the new patents -- without prejudicing the rights of any party -- SanDisk's motion may be appropriate.” Id. On January 12, 2010, the ’666 and ’667 patents issued from the ’955 and ’014 applications, respectively. See Smith Decl. ¶ 5. Both issued from the same original patent application as the ’893 patent and therefore share the same specification and have the same inventors. Id. The next day, SanDisk notified the Defendants that the ’666 and ’667 patents had issued and provided them with copies of both patents. See Smith Decl. Ex. 2. SanDisk also asked whether the Defendants would consent to SanDisk amending its complaint to add the ’666 and ’667 patents as well as the patent issuing from the ’460 application. Id. On January 25, 2010, the Defendants responded: “The defendants are willing to grant such consent under the condition that SanDisk supports an extension of the schedule proposed by Magistrate Crocker.” See Smith Decl. Ex. 3.

Motion for Leave to Amend Complaint

4

Case: 3:07-cv-00605-bbc

Document #: 473

Filed: 02/17/2010

Page 5 of 9

On February 2, 2010, the remaining Continuation Patent, the ’702 patent, issued from the ’460 application. See Smith Decl. ¶ 6. The ’702 patent issued from the same original patent application as the ’424 patent and, therefore, shares the same specification and has the same inventor. Id. Shortly thereafter, SanDisk notified the Defendants of the issuance of the ’702 patent. See Smith Decl. Ex. 4. SanDisk also informed the Defendants that it would not support delaying the trial, given the Court’s plan to try this case in February 2011. Id. On February 12, 2010, the Defendants confirmed that they would oppose a motion to amend the complaint to add the newly-issued patents, stating “[w]ith a trial date less than 12 months from now, it simply is not possible for an adequate analysis to be done of the patents.” See Smith Decl. Ex. 5. Subsequently, SanDisk filed this motion. For the Court’s convenience, the chart below summarizes the relationship between the Original Patents-in-Suit and the Continuation Patents that SanDisk wishes to add. As shown, each of these patents falls into one of the four patent families that are already at issue in this case: Family 1 ’316 (originally asserted in 05 Action) ’842 (originally asserted in 05 Action) ’808 (originally asserted in 07 Action) ’713 (issued July 8, 2008) ’660 (issued February 17, 2009) ’424 (originally asserted in 07 Action) ’702 (issued February 2, 2010) ’893 (originally asserted in 07 Action) ’511 (issued May 12, 2009) ’666 (issued January 12, 2010) ’667 (issued January 12, 2010) ’011 (originally asserted in 07 Action)

Family 2 Family 3

Family 4 III. ARGUMENT

Rule 15(a) of the Federal Rules of Civil Procedure provides that a party may amend a pleading by leave of court, and further provides that such leave “shall be freely given when

Motion for Leave to Amend Complaint

5

Case: 3:07-cv-00605-bbc

Document #: 473

Filed: 02/17/2010

Page 6 of 9

justice so requires.” Fed. R. Civ. P. 15(a). This rule reflects an underlying policy that disputes should be determined on their merits, and not on the technicalities of pleading rules. See Foman v. Davis, 371 U.S. 178, 181-82 (1962) (reversing denial of motion to amend). Courts consider the following factors in determining whether to grant a request for leave to amend: (1) prejudice to the nonmoving party, (2) undue delay in bringing the motion, (3) bad faith in seeking the amendments, and (4) futility of the amendments. See Foman, 371 U.S. at 181-82; Barry Aviation Inc. v. Land O’Lakes Municipal Airport Com’n, 377 F.3d 682, 687 (7th Cir. 2004). The central inquiry is whether an amendment would result in undue prejudice to the defendants. Hess v. Gray, 85 F.R.D. 15, 20 (N.D. Ill. 1979) (“A motion to amend should be denied only in those instances where the prejudice outweighs the right to have the case tried on the merits”). A. SanDisk’s Proposed Amendments Will Not Prejudice The Defendants

The additional patents that SanDisk seeks to add will not subject the Defendants to additional discovery burdens. The Continuation Patents have the same specification, inventors, and priority date as the Original Patents-In-Suit and share many of the same claim terms. Additionally, SanDisk anticipates a significant (if not complete) overlap between the products accused of infringing the Original Patents-In-Suit and the products accused of infringing the Continuation Patents. To the extent that the Defendants require additional discovery, they have ample opportunity to obtain it. In fact, the parties’ proposed case schedules take into consideration SanDisk’s proposed amendments. See Dkt. [Civil Action No. 07-C-0605-C] at 1-3. Moreover, fact discovery has not yet begun. B. SanDisk’s Proposed Amendments Are Timely

This Motion is timely. The Continuation Patents were allowed by the USPTO after the Complaints were filed, and the Court only recently lifted the stay. SanDisk immediately

Motion for Leave to Amend Complaint

6

Case: 3:07-cv-00605-bbc

Document #: 473

Filed: 02/17/2010

Page 7 of 9

notified the Defendants of its intention to add all six Continuation Patents to the matter. SanDisk filed this Motion soon after the last Continuation Patent issued. The parties have not engaged in any fact or expert discovery. The Defendants will have full opportunity to conduct any additional investigation necessary for the Continuation Patents. C. SanDisk’s Proposed Amendments Are Made In Good Faith

SanDisk filed this Motion in good faith. The Continuation Patents share the same specification, have the same priority date, the same inventors, and use many of the same claim terms as the Original Patents-In-Suit. As a consequence, the claim construction, infringement, prior art and damages issues for the continuation patents are substantially the same as those for the Original Patents-In-Suit. Based on these common issues, judicial economy is best served by litigating the SanDisk patents together in this action. In contrast, requiring the Continuation Patents to be litigated separately would force the Court and the parties to needlessly duplicate the work done in this case. D. SanDisk’s Proposed Amendments Are Not Futile

SanDisk’s assertion of patent infringement as to the Continuation Patent is by no means futile. See General Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1085 (7th Cir. 1997) (amendments are futile only if “the complaint, as amended, would fail to state a claim upon which relief could be granted”). SanDisk proposed amendments assert infringement claims that more than sufficiently state a claim upon which relief could be granted. SanDisk believes that the Defendants continue to sell the accused products and to induce infringement by encouraging its customers to use its Flash memory devices that practice the inventions of the Original Patents-In-Suit and the related Continuation Patents. E. The Defendants Are Willing To Add The Patents Given A Delay To Trial

The only reason that the Defendants have not stipulated to SanDisk’s proposed amendments is because they wish to condition SanDisk’s amendments on delaying the trial. More specifically, when the parties submitted the Joint 26(f) Statement, the Defendants had

Motion for Leave to Amend Complaint

7

Case: 3:07-cv-00605-bbc

Document #: 473

Filed: 02/17/2010

Page 8 of 9

already expressly agreed that they would not challenge the addition of the ’713, ’660 and ’511 patents to the case. See Dkt. 364 at 9. Subsequently, when SanDisk requested the Defendants consent to add the remaining Continuation Patents, the Defendants indicated their willingness to provide such consent upon SanDisk’s support of an extension to the schedule. Smith Decl. Ex. 3 at 1. The Defendants only opposed the addition of the applications during the case management conference because they had not yet issued. This is no longer a concern. F. SanDisk’s Proposed Amendments To Reflect Dismissal of Certain Parties And The ’332 Patent

Since filing its original Complaints, SanDisk has settled (and dismissed) its claims against several defendants.6 Additionally, the Court has dismissed several defendants in light of SanDisk’s non-opposition to motions to dismiss filed by these defendants.7 SanDisk has therefore streamlined this case by significantly reducing the number of defendants. In an effort to further streamline the case, the parties stipulated to, and the Court ordered the dismissal of all claims and counterclaims concerning the ’332 patent. SanDisk therefore seeks leave to file a single consolidated complaint reflecting these dismissals and the added Continuation Patents. SanDisk also seeks to amend the Complaint to include minor changes reflecting information discovered since the Complaint was originally filed.8

6

The Court has dismissed following parties: Phison (dismissed on February 5, 2010); Silicon Motion (dismissed on February 5, 2010); Chipsbank (dismissed on January 13, 2010); Infotech Logistic LLC (dismissed on January 23, 2008); PNY (January 10, 2008); MemoSun, Inc. (dismissed on January 25, 2010); Payton Technology Corporation (dismissed on January 25, 2010); Verbatim (dismissed on January 12, 2010); Add-On (dismissed on January 28, 2008); Acer, Inc. (dismissed January 7, 2008); Corsair (dismissed on September 5, 2008); EDGE (dismissed on January 28, 2008); Interactive Media (January 8, 2008); TSR (dismissed on January 23, 2008); Welldone (dismissed on January 18, 2008). A notice of dismissal for Skymedi was filed on February 12, 2010. 7 These defendants include PQI; Behavior Tech; Dane-Elec Memory S.A.; and LG. 8 Defendant USBest Technology, Inc. is now known as ITE Technologies Inc. This change is reflected throughout the Amended Complaint. SanDisk now has “over 1000 patents” rather than “over 800 patents.” This change is reflected in paragraph 3 of the Amended Complaint. The lists of controllers designed, developed, manufactured, and/or sold by the controller companies have been updated. These changes are reflected in paragraphs 11, 13, 15, and 18 of the Amended Complaint. Allegations of willful infringement as to Imation have been removed. This change is reflected throughout the Amended Complaint.

Motion for Leave to Amend Complaint

8

Case: 3:07-cv-00605-bbc

Document #: 473

Filed: 02/17/2010

Page 9 of 9

IV.

CONCLUSION For the foregoing reasons, SanDisk respectfully requests that the Court grant this

motion for leave to amend its Complaint to consolidate the original Complaints into one complaint, to reflect dismissals by the Court, and to add the Continuation Patents.

DATE: February 17, 2010 RESPECTFULLY SUBMITTED,

By:

s/ Ryan R. Smith Michael A. Ladra James C. Yoon Ryan R. Smith WILSON SONSINI GOODRICH & ROSATI Professional Corporation 650 Page Mill Road Palo Alto, California 94304-1050 Telephone: (650) 493-9300 Facsimile: (650) 493-6811 Allen A. Arntsen Jeffrey A. Simmons FOLEY & LARDNER LLP 150 E. Gilman Street Madison, WI 53703-1481 P.O. Box 1497 Madison, WI 53701-1497 Telephone: (608) 257-5035 Facsimile: (608) 258-4258 James R. Troupis MICHAEL BEST & FRIEDRICH LLP One South Pinckney Street, Suite 700 P.O. Box 1806 Madison, WI 53701-1806 Telephone: (608) 257-3501 Facsimile: (608) 283-2275 Attorneys for Plaintiff SanDisk Corporation

Motion for Leave to Amend Complaint

9