Diablo Moves to Stay Injunction That Bars It From Selling Controller Chipsets to SanDisk

Chipmaker Diablo Technologies immediately moved for a stay Monday in a federal judge’s preliminary injunction that bars the company from distributing or selling high-speed memory controller chipsets to SanDisk for its ULLtraDIMM solid-state drive product line. Supplier Netlist, which sued Diablo in August 2013 alleging breach of contract, trade secret misappropriations and other charges, won the injunction. U.S. District Judge Yvonne Gonzalez Rogers in Oakland granted the preliminary junction, in an order Monday. She denied Netlist’s motion for an order recalling all ULLtraDIMM modules that already have shipped, saying Netlist “has not met the higher burden associated with a mandatory injunction requiring a recall.” Diablo representatives didn’t comment. Diablo attorneys' motion for a stay, also filed Monday, said they plan to “challenge on appeal substantial questions of law which control the outcome of this matter.” For example, Diablo argued, Netlist waited 13 months after suing Diablo to move for a preliminary injunction, and that delay alone is at odds with Netlist claims that harms to the company would be imminent and irreparable without an injunction. “Netlist has not shown that its alleged harms hamper it from conducting its business,” Diablo said. “By contrast, issuance of the preliminary injunction against Diablo will be severe and irreparable.” Netlist trumpeted the granting of the injunction in a news release Tuesday that hailed the judge for her “extraordinary legal ruling,” saying the decision “is a validation of what we've said from the beginning about Diablo's flagrant actions.” Netlist has maintained in its complaint that it created and patented the “ground-breaking memory interface technology” at issue in the case. Netlist signed a supply agreement in which it “contracted with Diablo to implement a proprietary memory-controller chipset based on this technology, only to find that Diablo stole its trade secrets and incorporated them into Diablo's own products,” it said. SanDisk representatives didn’t comment.