A Letter from Spansion to Customers

SUNNYVALE, Calif., Aug. 21, 2014 /PRNewswire/ -- First and foremost, let me apologize for you being drawn into the dispute between Macronix and Spansion.  It was never our intention to disrupt our relationship as we assert our intellectual property rights.

Macronix has been quite active in issuing their own press releases, creating quite a distorted picture of this case and Spansion's intentions. I thought that it would be useful to outline the salient facts of the case and our efforts to resolve it.

1. Spansion filed its original case with the ITC and in District Court on August 1, 2013.  Prior to that we had been talking with Macronix for almost one year to resolve our business dispute but were forced to file the case as Macronix broke off talks.  We have remained diligent in repeating our request to settle and re-initiate talks to license Spansion's broad product portfolio.
2. Spansion is asserting the same set of patents it successfully asserted against Samsung, resulting in a settlement that included significant monetary payments to Spansion. So… you can be confident that the patents have been successfully battle-tested in court.   These patents are also part of the portfolio that companies like Hynix and ISSI have licensed from Spansion.  We are highly confident we will win our case, scheduled to begin trial on October 2nd, since we are simply asserting the same proven patents.
3. The situation for Macronix is quite different.  They also filed in the ITC.  Their case is quite weak and we believe this is why they are being so aggressive in the press.  In the ITC, they face three substantial hurdles. We believe we will prevail on each of these issues, while we only need to succeed on one to prevail.

• Domestic Industry. As you know, Macronix is a Taiwanese-based company, yet they have filed in a court (ITC) specifically established to protect US-industry. We believe this is a very weak part of their case against us, for if they fail to prove they are a US-domestic company, with investments in the US, they cannot obtain any judgment from the ITC and their case will be dismissed. They are headquartered in Taiwan, listed on the Taiwan stock exchange and have only a few employees in California. We believe the judge will not accept they are a US-based company and will dismiss the case for this reason alone.
• Asserted Patents. Macronix is asserting three patents against Spansion. Typical of many fast-follower companies, they have filed patents for circuits that are either irrelevant to our products or that are invalid and have been used by the rest of the industry for years. In fact, we had parts in the market with their "inventions" long before they filed these patents. Their patents are also "obvious to anyone skilled in the art" of Flash. We have filed for inter partes review of these patents with the US Patent Office to have all three of their patents cancelled. Moreover, even if valid, neither Spansion nor its customers infringe those patents. We believe that we will be successful with all three of these patents.
• Public Interest. As part of this particular ITC case, the ITC has asked the judge to listen to evidence from the public and public officials regarding the impact of a possible ruling against Spansion. If their case is decided against us, the judge and the Commission will hear from industry leaders, GM, Delphi, members of Congress, mayors and labor leaders regarding the fact that a decision against Spansion will not be in the best interest of the United States. Since the mission of the ITC is to protect US-Industry, we believe the Commission will rule in our favor.
• Because of the weakness of their first filing in the ITC, Macronix filed additional lawsuits in the ITC and district court, each asserting weak patents and weak domestic-industry arguments, while still trying to correct some of the legal mistakes of their original filing. Fortunately for us, their filings have done nothing to improve the strength of their case. We see nothing in their new cases that are notably different. This includes their latest press releases claiming our MCU as subject to their patents. And you should note that the judge has not made any ruling regarding whether it would be proper to include MCUs within the scope of any final order, the judge has simply stated it will consider this issue.
• Throughout their rhetoric, Spansion has attempted to settle with Macronix. We've sent our CEO, CFO and SVP of Strategy to meet with them and to try and negotiate a settlement. Each attempt has been rebuffed. We've also attempted many meetings through our legal representatives, some court mandated, to no avail.

Please let me know if I can answer or address any specific concerns.  We would be more than happy to sit with you or your attorneys and discuss any of this in more detail.  Legal cases can get complicated quickly, but we're more than willing to spend the time to explain any of it completely.

I hope this helps explain where we are and what Spansion is doing to resolve this issue.  We again apologize for the trouble this is causing you.  Our priority is and always will be your satisfaction.

Spansion Resources:

• Spansion newsroom: http://news.spansion.com
• Spansion blog: http://core.spansion.com/blog
• Spansion on Twitter: http://www.twitter.com/Spansion
• Spansion on Facebook: http://www.facebook.com/Spansion

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SOURCE Spansion Inc.