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Additional legal troubles for SanDisk’s MP3 players

Turin (Italy), January 10, 2007

Sisvel S.p.A. reports that, pursuant to an order of the Criminal Court of Vicenza in northern Italy, yesterday the Italian Fiscal Police seized SanDisk MP3 players at an Italian outlet of the French retailer Auchan. Additional seizures are expected in the coming days. Meanwhile SanDisk is launching yet more MP3 player models.

SanDisk’s recent legal troubles with its MP3 players follow the seizure at the International Funkaustellung in Berlin in early September last year when the German Police seized all of the MP3 players marketed as part of SanDisk’s “Sansa” product lines and the related advertising material exhibited at the SanDisk booth at IFA 2006.

The seizure in Berlin was recently confirmed by the Criminal Chamber of the Landgericht (regional court) Berlin in Germany. In its decision, the Berlin court also stated that it was “of the opinion that there are sufficient grounds for suspicion of deliberate patent infringement”.

These are but the latest steps in the “patent war” involving Sisvel and SanDisk. Sisvel has filed claims of patent infringement against SanDisk in The Netherlands, Germany, and the United Kingdom claiming that SanDisk’s MP3 players infringe patents that Sisvel licenses and is seeking an injunction and damages. An additional lawsuit against SanDisk, also claiming that SanDisk’s MP3 players are infringing, has been filed by Audio MPEG, Sisvel’s subsidiary, in the United States (Eastern District of Virginia). All decisions to date have been favourable to Sisvel and Audio MPEG, including two instances where the UK Courts have ordered SanDisk to reimburse legal fees to Sisvel.

The patents at issue are essential for practicing the standard of MPEG 1 and 2, Layer I, II, and III, and are licensed to over 800 companies, including leaders in the industry and competitors of SanDisk. The list of companies licensed under these patents includes Apple, Creative, Sony, Toshiba, Nokia, Motorola, Sony-Ericsson, Panasonic, Packard-Bell, and Archos. Most recently, Microsoft acquired a patent license from SISVEL and its U.S. subsidiary Audio MPEG for its new Zune music player and the Xbox 360.

The MP3 and MPEG Layer II audio compression patents licensed by Sisvel were developed and are owned by Orange (formerly France Telecom), U.S. Philips Corporation, Koninklijke Philips Electronics N.V., Institut fur Rundfunktechnik GmbH, and Bayerische Rundfunkwerbung GmbH.

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