… Diablo Appeals District Judge Ruling In Federal Court …

Diablo Technologies, Inc. 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 appeal explains that the ruling is based on an erroneous interpretation of the contract and a failure to recognize the technology differences among the products involved. Most importantly, however, the court did not find that Diablo MCS uses Netlist, Inc.‘s trade secrets.

To support the judgment, the order effectively rewrites the language in the contract signed by the parties in 2008: the additional words included in the order changed the terms of the contract and imposed a new obligation that was not agreed between the parties. In other words, there was no violation by Diablo of the original contract.

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.

“It is important that the facts of the case are well understood; it should also be stressed that the court did not determine that Diablo uses Netlist trade secrets,” stated Riccardo Badalone, CEO and co-founder, Diablo. “We offer an innovative storage device that gives customers great performance advantages, but with this injunction, the court is putting our company and our customers at risk. With this appeal, we expect to reverse this decision and get back to work.“