Sisvel-SanDisk: Additional Legal Troubles for SanDisk's MP3 Players

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 France Telecom, TDF S.A.
(Telediffusion de France), U.S. Philips Corporation, Koninklijke
Philips Electronics N.V., Institut fur Rundfunktechnik GmbH, and
Bayerische Rundfunkwerbung GmbH.