Antitrust Law Daily Wrap Up, TOP STORY—N.D. Cal.: Monopolization claims deleted in flash memory suit, (May 3, 2016)

By Greg Hammond, J.D.

Allegations that a company fraudulently obtained two patents from the U.S. Patent and Trademark Office (PTO), in order to monopolize the market for NAND flash memory, were not supported by evidence of fraud, the federal district court in Oakland, California, has concluded. The company’s motion for summary judgment was therefore granted (Giuliano v. SanDisk Corp., April 29, 2016, Armstrong, S.).

NAND flash memory is a type of non-volatile Electronically Erasable Programmable Read Only Memory used in a range of final flash products, such as mobile phones, tablets, GPS, portable and home gaming systems, and personal computers. SanDisk Corp., the self-described "global leader in flash storage solutions," moved for summary judgment against Walker Process claims that it fraudulently obtained two patents (the ’338 and ’517 patents) from the PTO in order to monopolize the market for NAND flash memory. SanDisk moved for summary judgment.

Fraud, prior testimony. The plaintiffs claim that SanDisk falsely represented to the PTO during the ’338 reexamination that SanDisk knew that latch 721 was a two-way latch, but nevertheless argued the exact opposite to the PTO. However, the plaintiffs mischaracterized the testimony on which they relied, the court found. Contrary to the plaintiffs’ arguments, SanDisk’s witnesses testified that: (1) in the context of the ’338 patent, latch 721 is intended to represent a one-way latch to perform the permanent inhibit function; (2) that every latch is defined by the function it is intended to perform, and that such function cannot be determined exclusively from the graphical depiction of the latch in the patent; and (3) that it is improper to construe the ’338 patent based on isolated language in the specification and that, upon construing the language of the patent as a whole, a person of ordinary skill in the art would understand that claim 27 teaches a one-way latch. There was consequently no misrepresentation of fact, the court concluded.

Fraud, prior art references. SanDisk also was accused of deliberately withholding prior art references during the reexamination of the ’338 patent and prosecution of the ’517 patent. In particular, the plaintiffs claim that other patents teach a "permanent inhibit" limitation, and that had those prior art references been presented to the PTO, it would have concluded that the permanent inhibit limitation disclosed in the disputed patents was not novel.

The plaintiffs, however, made no effort to construe any claims of the disputed patents, and further did not provide any explanation or analysis of the prior art references from which the court could ascertain whether they would have materially affected the PTO’s conclusions. The mere fact that prior art references apparently included a program-inhibit feature, without more, is plainly insufficient to show that the PTO would have deemed the disputed patents invalid had those references been disclosed, the court found. Because the technology underlying the disputed patents was not easily understandable and was beyond the comprehension of an ordinary layperson, the court alternatively found that the absence of expert testimony to support plaintiffs’ arguments was fatal to their claims. Lastly, the court determined that the plaintiffs failed to offer any evidence that SanDisk intended to deceive the PTO. Summary judgment was therefore granted against the Walker Process claim and remaining theories of antitrust liability.

The case is No. C 10-2787 SBA.

Attorneys: Colleen Duffy-Smith (Morgan Tidalgo Sukhodrev & Azzolino LLP) for Ritz Camera & Image, LLC. Raoul Dion Kennedy (Skadden Arps Slate Meagher & Flom LLP) for SanDisk Corp.

Companies: Ritz Camera & Image, LLC; SanDisk Corp.

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