SanDisk ULLtraDIMM SSD sales ban upheld, but drives in stock can be sold

SanDisk and Diablo Technologies, a Canadian company that manufactures controller chips for SanDisk's ULLtraDIMM SSDs, had requested that the U.S. Court of Appeals for the Federal Circuit lift the ban, issued last month by a California federal district court.

The preliminary injunction barred both Diablo and SanDisk from manufacturing, using, distributing, and selling SSDs using the controller.

The ban was issued on a request from Netlist, which invented and developed a memory interface technology designed to increase the speed of servers. It worked together with Diablo to implement a memory-controller chipset based on this technology. However, after that, Netlist alleges, Diablo stole Netlist's trade secrets and incorporated them into Diablo's own products, which were later used in SanDisk's ULLtraDIMM SSDs.

The U.S. District Court for the Northern District of California found on Jan. 6 that evidence brought by Netlist is likely to show that Diablo breached a contract with Netlist and caused Netlist irreparable harm. That was the reason it decided to ban the sale of products using the controller pending the lawsuit.

SanDisk and Diablo protested the ban, arguing that the district court made several errors. The appeals court noted that SanDisk, in particular, argued that since it is not a party in the suit, the district court erred in issuing an injunction against its products. This was reason enough to lift the ban on SanDisk's current stock of ULLtraDIMM SSDs, the court said in a Tuesday order.

SanDisk will not, however, be able to acquire additional controller chips from Diablo once SanDisk's existing inventory is exhausted, said Netlist in a news release.

The injunction against Diablo will remain in place during the lawsuit and Netlist said it is confident that it will secure a permanent injunction that will prevent future unauthorized use of its intellectual property.

A jury trial is set to begin on March 9 in Oakland, California.

While the injunction order specifically identified ULLtraDIMM as well as IBM's eXFlash modules, the sales ban affects all modules containing Diablo components, Netlist said.

SanDisk did not immediately respond to a request for comment.

Loek is Amsterdam Correspondent and covers online privacy, intellectual property, online payment issues as well as EU technology policy and regulation for the IDG News Service. Follow him on Twitter at @loekessers or email tips and comments to loek_essers@idg.com