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Netlist sues Diablo and SMART Storage after whistleblower reveals alleged IP theft

Anon scribe says company slurped proprietary info

Security for virtualized datacentres

Hi-performance memory biz Netlist says it has a whistleblower's letter from inside Diablo Technologies claiming that Diablo stole Netlist's most valuable proprietary technology, HyperCloud, developed over six years at a cost of $65m.

NetList is a maker of memory virtualisation firmware and ASIC tech that lets servers handle more memory than they are theoretically supposed to be able to.

Diablo Technologies' TeraDIMM memory channel technology enables flash memory to be placed alongside a server's DRAM, giving it access to flash-stored data faster than PCIe flash cards. SMART Storage is partnering with Diablo, with SMART'S ULLtraDIMM product using Diablo's memory channel technology to link a bunch of flash chips to a server's memory bus. It seems that IBM is planning to introduce ULLtraDIMM to the market in one of its X-Series servers in January 2014.

Yet Netlist now claims that the ULLtraDIMM is based on stolen technology. It began chucking sueballs around in August this year, suing Diablo Technologies, SMART Modular, SMART Storage and Smart Worldwide Holdings, alleging infringement of five Netlist patents, based in part on the recently-announced ULLtraDIMM memory module. Netlist also claims that SMART Modular and Smart Worldwide committed antitrust violations.

According to court filings, Netlist's grounds for legal action are that:

  • SMART Modular procured a patent (U.S. Patent No. 8,250,295) with blatant inequitable conduct at the US Patent and Trademark Office (USPTO)
  • Withheld the patent application leading to the patent from relevant JEDEC committees for more than eight years
  • Sought to improperly enforce that patent against Netlist's JEDEC-compliant HyperCloud product by seeking a preliminary injunction, which was denied by the Court
  • Made deceptive statements to the public about its lawsuit against Netlist
  • Trade secret misappropriation and trademark infringement against Diablo

In particular, Netlist claims Diablo (and SMART) misused Netlist trade secrets and the HyperCloud technology to create the ULLtraDIMM product and other competing products.

SanDisk bought SMART Storage in August for $307m, but it is not named in Netlist's lawsuits. Netlist lists its HyperCloud tech as enabling servers to use more memory than they are normally entitled to in standard Intel and AMD systems.

There is virtualisation ASIC hardware, which enables cheap memory chips to be used to build large memory DIMMs that bypass memory address limits and makes memory-bound servers go faster. NetList announced 32GB HyperCloud DDR3 memory in November 2011.

Ironically, Netlist had selected Diablo Technologies as a qualified chipset supplier for its HyperCloud memory modules back in October 2010.

Blow that whistle

Much to the apparent pleasure of Netlist's lawyers, a whistleblower's letter was received on 13 November this year. It is included in Netlist's 8-K filing with the SEC, and says:

I notice that Netlist is suing Diablo Technologies and SMART storage systems for Patent Infringements.

In my opinion, Diablo did not just infringe the patents but also stole Netlist's detailed architecture and design. ...

If you want more information then you should contact (--) who was the VP of engineering and (--) (Firmware architect). Both these gentlemen are no longer with Diablo.

Netlist's 8-K also includes other correspondence naming John Vincent as the former Diablo VP Engineering and and Sujoy Ray as the firmware architect.

The letter writer attached slides and diagrams to back the assertions up, saying:

  • The Megadimm (slide 2) shows that they used the Netlist ASICS VT Berlinetta ID and RD ASICS to do all their prototype tests. All the software, firmware tests and customer demos were done with this configuration. This can be verified by contacting the customers like IBM, HP, etc.
  • Slide 3 shows their final product and the configurations are very similar to slide 2.
  • One of their chips was running late so Diablo were planning to replace Bolt chip with ID chip for all prototype testing. This is shown in slide 4.
  • All staff were advised not to mention RD and ID to any customers. The Rush and Bolt are very similar to RD and ID except Diablo made some superficial interface changes so that they could not be sued.
  • The Diablo Bolt ASIC is similar to the Netlist ID chip. The front end and clocking is identical although the Serdes and Phy IP was contracted out. Diablo was also careful about keeping the Bolt in the same technology (13u) to reduce the risks.

The SEC filing by Netlist includes extracts from the letter.

Comment

What next? Until this is resolved, potential ULLtraDIMM customers will need a lot of reassurance. SanDisk, anxious to establish itself as an enterprise-class flash supplier, may decide to clear the decks by doing a deal with Netlist. ®

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