Case4:13-cv-05962-YGR Case: 15-1260 Document: Document331 57 Page: Filed02/10/15 1 Filed: 02/10/2015 Page1 of 3 NOTE: This order is nonprecedential. United States Court of Appeals for the Federal Circuit ______________________ NETLIST, INC., Plaintiff-Appellee v. DIABLO TECHNOLOGIES INC., Defendant-Appellant, AND SANDISK CORPORATION, SMART STORAGE SYSTEMS INC., Non-party-Appellants ______________________ 2015-1260, -1274 ______________________ Appeals from the United States District Court for the Northern District of California in No. 4:13-cv-05962-YGR, Judge Yvonne Gonzalez Rogers. ______________________ ON MOTION ______________________ Before PROST, Chief Judge, MOORE and TARANTO, Circuit Judges. MOORE, Circuit Judge. Case4:13-cv-05962-YGR Case: 15-1260 Document: Document331 57 Page: Filed02/10/15 2 Filed: 02/10/2015 Page2 of 3 2 NETLIST, INC. v. DIABLO TECHNOLOGIES INC. ORDER Diablo Technologies, Inc. (“Diablo”) moves for this court to stay the preliminary injunction entered by the District Court for the Northern District of California. SanDisk Corporation and Smart Storage Systems, Inc. (collectively, “SanDisk”) separately move to stay the same injunction. Netlist, Inc. (“Netlist”) opposes. Netlist and Diablo partnered to develop a computer memory device. After that partnership ended, Diablo partnered with SanDisk to develop another memory device. Netlist subsequently sued Diablo for, among other things, correction of inventorship and patent ownership, breach of contract, and misappropriation of trade secrets. SanDisk is not a party to this lawsuit between Netlist and Diablo. Netlist sought and was granted a preliminary injunction. The injunction barred both Diablo and SanDisk from manufacturing, using, distributing, and/or selling the memory device that resulted from their collaboration. In granting the preliminary injunction, the district court found that Netlist had made a strong showing that Diablo’s development of that device was in breach of a contract between Netlist and Diablo and that the breach caused Netlist irreparable harm. It also found that SanDisk was in active concert with Diablo’s breach. In determining whether to grant a stay, the court considers four factors: (1) whether the movant has made a strong showing of likelihood of success on the merits; (2) whether the movant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies. See Nken v. Holder, 556 U.S. 418, 434 (2009). The first two factors are “the most critical.” Id. Case4:13-cv-05962-YGR Case: 15-1260 Document: Document331 57 Page: Filed02/10/15 3 Filed: 02/10/2015 Page3 of 3 NETLIST, INC. v. DIABLO TECHNOLOGIES INC. 3 In their papers, Diablo and SanDisk raise several contentions of error in the district court’s issuance of an injunction. SanDisk, in particular, argues that the district court erred by entering an injunction against a nonparty, citing Additive Controls & Measurement Systems, Inc. v. Flowdata, Inc., 96 F.3d 1390, 1395 (Fed. Cir. 1996) and Zepeda v. United States Immigration & Naturalization Service, 753 F.2d 719, 727 (9th Cir. 1983). Without prejudicing the ultimate disposition of this case by a merits panel, we conclude based upon the papers submitted that Diablo has not established that it is entitled to a stay of the injunction pending appeal but that SanDisk has established that it is entitled to such a stay. Upon consideration thereof, IT IS ORDERED THAT: (1) Diablo’s motion to stay is denied. (2) SanDisk’s motion to stay is granted, insofar as the preliminary injunction is stayed only as to SanDisk pending the resolution of the appeal. This order should not be construed to preclude Netlist from moving at the district court to hold any entity in contempt for aiding and abetting in the violation of the injunction. See Additive Controls, 96 F.3d at 1395 (“Courts have carefully distinguished between entering an injunction against a nonparty, which is forbidden, and holding a non-party in contempt for aiding and abetting in the violation of an injunction that has been entered against a party, which is permitted.”). FOR THE COURT /s/ Daniel E. O’Toole Daniel E. O’Toole Clerk of Court s31