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|WIN © 2009 The World Airline Entertainment Association (WAEA)

PARTIAL RULING IN

E.DIGITAL/DIGECOR DISPUTE

e

on 13 March received a partial ruling

from the Utah US District Court on litigation

each company filed against the other.

In June 2006 digEcor filed suit against

e.Digital alleging it did not receive 1,250

digEplayers that were to have been delivered

to digEcor by a third-party manufacturing

company working on behalf of

e.Digital. e.Digital counter-sued for intellectual

property infringement claiming

that digEcor’s XT portable devices use

e.Digital’s technology.

Last month’s ruling addressed the

companies’ cross-motions for summary

judgment. The Court ruled:

•

obligations in an agreement

between the parties. e.Digital is free to

conduct its lawful business without

non-compete restraint or obligation to

digEcor. digEcor said “it will have to

wait to appeal the court’s decision that

‘Paragraphs 1, 4, 5, and 6 of the 2002

NDA [non-disclosure agreement] are

invalid under California law.’ ”

•

claim for substantial damages (due to

non-delivery of digEplayers by a thirdparty

manufacturing company) is declined.

•

to digEcor (a claim that e.Digital

has never denied). e.Digital said it has

maintained an accrual of US$80,000 for

this estimated obligation.

•

provision of its 2002 contract

with digEcor.

•

revenue-sharing arrangement with

e.Digital under the same agreement.

Issues Still Pending

The Court did not grant summary judgment

to either side on the issue of the

timeliness of the 2006 delivery of video

players. This and other remaining issues,

which the companies declined to delineate,

remain to be resolved by future court

rulings or at trial.

In a written statement, digEcor said:

“Subject to the outcome of the next

hearing, digEcor is looking forward to a

trial on its claims that:

(1) e.Digital breached its contract by

failing to timely deliver 1,250 players

in 2006;

(2) e.Digital breached warranty obligations

owed to digEcor;

(3) e.Digital breached the covenant of

good faith and fair dealing owed to

digEcor by offering a competing product

to digEcor's customers in 2006;

(4) e.Digital breached its promise to give

digEcor exclusive rights to DRM

technology in the IFE industry by

incorporating that technology into a

competing product; and,

(5) e.Digital and its officers, Fred Falk and

William Blakeley, committed violations

of federal and state unfair competition

laws in connection with their marketing

of e.Digital’s competing product.”

e.Digital Sues Eight Companies

for Patent Infringement

In September 2007 and March 2008,

e.Digital filed its first round of Flash-R

portfolio patent infringement litigation

against eight undisclosed companies.

e.Digital has licensed and settled five of

the cases and expects further legal and

licensing activity soon and throughout the

year.

e.Digital believes its Flash-R patent

portfolio is essential to many consumer

electronics products that use flash memory,

including cell phones, digital cameras,

camcorders, and PDAs.