Elpida Memory gets stay of U.S. litigation; ITC case remains active

By Jim Witters

Wilmington, Del., March 20 - Elpida Memory, Inc. was granted a stay on Tuesday of U.S. litigation that the company deemed essential to protecting its interests and assets.

Judge Christopher S. Sontchi issued an injunction that stays all cases except the one before the International Trade Commission. His ruling came during a hearing in the U.S. Bankruptcy Court for the District of Delaware.

The stay covers litigation involving Elpida and non-debtor parties. Debtors attorney James I. McClammy said the lawsuits stem from allegations of patent infringement.

Elpida has been paying attorneys fees for all its downstream clients, including those who used the company's dynamic random access memory (DRAM) in their products and those who sold the finished products, such as Best Buy and Wal-Mart, McClammy said.

He said allowing the cases to move forward would further strain a company that already is struggling with a cash shortage.

Judge's concerns

Sontchi said the proposed stay order is too broad and fails to delineate the restrictive scope of the injunction that McClammy described in his other court filings and his statements during the hearing.

Specifically, Sontchi instructed McClammy to:

• List the U.S. litigations affected by the stay;

• Incorporate into the stay order the language from other court documents that spells out the scope of the restrictions; and

• File a notice of the order and an attached copy of the order with all the affected courts, so the judges presiding over those cases are aware of the injunction.

Sontchi verbally approved the stay, subject to those changes.

McClammy is to make the changes, then file the order under certification of counsel.

Single objection

The sole objection to the stay came from attorney Maurice Horwitz, who is representing Intellectual Ventures II LLC. His client is one of the litigants in three cases, including the ITC case and a case in the U.S. District Court for the District of Delaware.

Horwitz said he has scheduled 11 depositions of Elpida employees in Japan during the coming two weeks, and he sought permission from the court to complete all of those.

Of the 11, seven are involved in both the ITC and Delaware cases, Horwitz said.

Because of the cost of reserving space at the U.S. embassy in Tokyo, hiring a camera crew and sound technicians and preparing attorneys for the questioning, the cost to conduct all 11 depositions as scheduled would be less than rescheduling the four that are not part of the ITC case, Horwitz argued.

Sontchi said his injunction covers all non-ITC cases.

However, he granted the parties permission to participate in a conference scheduled for April 3 in the Delaware case. He said he would let that judge, Mary Pat Thynge, decide how she would like to proceed.

Horwitz said his client may file a motion to modify the injunction.

McClammy said he would speak with Horwitz to see if they could come to terms before McClammy submits the revised stay order for the judge's signature.

Cases affected

The cases stayed by the March 20 ruling include:

• Intellectual Ventures I, LLC et al. v. Hynix Semiconductor, Case # 1:10-cv-01066, filed Dec. 8, 2010 in the U.S. District Court for the District of Delaware;

• Intellectual Ventures I, LLC et al v. Hynix Semiconductor, Case # 2:11-cv-01145, filed July 11, 2011 in the U.S. District Court for the Western District of Washington;

• Mosaid Technologies, Inc. v. Elpida Memory, Inc., Case # 6:11-cv-00230, filed May 10, 2011 in the U.S. District Court for the Eastern District of Texas;

• Certain Dynamic Random Access Memory Devices and Products Containing Same, Investigation # No. 337-TA-821, filed with the International Trade Commission by Nanya Technology Corp.;

• Certain Dynamic Random Access Memory and Nand Flash Memory Devices and Products Containing Same, Investigation # 337- TA-803, filed with the International Trade Commission.

The case also names Elpida's downstream customers as defendants, including Acer, Inc., Dell, Inc., Hewlett-Packard Co., Logitech, Inc., Best Buy Co., Inc., Wal-Mart Stores, Inc. and others. That case was brought by Intellectual Ventures Management, LLC;

• Pirinate Consulting Group, LLC v. Elpida Memory, Inc., Case # 11-ap-51075 filed Feb. 25, 2011 in the U.S. Bankruptcy Court for the District of Delaware by Pirinate Consulting Group, LLC, the claims agent for the Chapter 11 Estates of Spansion, Inc.;

• Tessera, Inc. v. A-Data Technology Co., Ltd., et al, Case # 2:07-cv-00534 filed Dec. 7, 2007 in the U.S. District Court for the Eastern District of Texas;

• Certain Semiconductor Chip with Minimized Chip Package Size and Products Containing Same (III), Investigation # 337-TA-630 filed with the International Trade Commission by Tessera, Inc.;

• Elpida Memory, Inc. v. Nanya Technology Corp. et al, Case # 4:11-cv-04411 filed Sept. 6, 2011 in the U.S. District Court for the Northern District of California by Elpida; and

• HSM Portfolio LLC et al. v. Fujitsu Ltd. et al., Case # 1:11-cv-007700-RGA filed Sept. 1, 2011 in the U.S. District Court for the District of Delaware by HSM Portfolio LLC and Technology Properties Limited LLC.

Case background

Elpida filed its Japanese reorganization proceeding in February as a result of the historic appreciation of yen, the sharp decline in DRAM prices because of an intensification of competition in the industry and the sluggish demand for DRAM stemming from a severe flood in Thailand.

A hearing is scheduled for 11 a.m. ET on April 18 for judge Sontchi to consider Elpida's request for recognition of its foreign proceedings.

Elpida, a Tokyo-based manufacturer of DRAM integrated circuits, filed for bankruptcy in the United States on March 19. The Chapter 15 case number is 12-10947.

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