by Lyle Smith

Diablo Technologies Appeals Court Ruling

We reported earlier today about Diablo Technologies’ counter suit being struck down, and now it has been announced that the company has appealed the ruling by the United States District judge in California granting a preliminary injunction to halt Diablo's shipments of Memory Channel Storage (MCS) based chipsets. Diablo's believes that the most recent ruling was based on an erroneous interpretation of the contract as well as a misunderstanding on the technology differences between the products involved. In addition, the court did not find that Diablo MCS uses Netlist trade secrets.

Diablo claims that the court order “effectively rewrites” the language in the contract signed by the parties in 2008, stating that additional words were included in said court order, which changed the terms and meaning of the contract significantly. As a result, Diablo indicates that it imposed a new obligation that was not agreed between the parties by in 2008 and thus no violation by Diablo of the original contract has occurred. The details from Diablo are as follows:

  • The court was misled about important technology distinctions: The court relied on Netlist's representation that their HyperCloud and Diablo MCS "are used to perform the same function" which is not the case because the HyperCloud is DRAM (memory) and Diablo MCS is a block storage device (disk). 
  • The court also relied on Netlist's representation that the products are competitive because they both "attach to the same memory channel." Netlist equates the two devices simply because they use the same location and i/o channel; extending that logic would equate all devices that reside in PCI-e slots, which would be a similarly erroneous claim.

There's no telling where this back-and-forth suit will go from here and whether the counter suit by Diablo will become valid once again.

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