LEXAR DROPS ALL CLAIMS AGAINST SANDISK RELATED TO THE COMPACTFLASH ASSOCIATION

SanDisk Corporation (NASDAQ:SNDK) announced today that Lexar Media Inc., in response to a motion to dismiss filed by SanDisk, has dropped all claims against SanDisk related to the CompactFlash Association (CFA). Lexar agreed to remove any allegation that SanDisk used its position in the association to engage in unfair competition, commit trade libel or interfere with Lexar's prospective business advantage.

Nelson Chan, SanDisk vice president of marketing, said, "When Lexar filed its CFA-related claims it also issued a highly inaccurate press release aimed at harming the image and reputation of both SanDisk and the CompactFlash Association. Now, by dropping all of its CFA-related claims, Lexar has conceded that it never had a factual basis for the allegations."

SanDisk also announced that Lexar also dropped other claims against SanDisk in a lawsuit filed against SanDisk. The Federal District Court for the Northern District of California has issued an order giving Lexar permission to amend its lawsuit against SanDisk and to remove the claims.

Lexar agreed to drop its claims against SanDisk for unfair competition and false advertising under California common law and for negligent interference with a prospective business advantage.

The court also denied several of Lexar's specific requests for injunctive relief. Lexar's preliminary injunction motion asked that SanDisk issue an immediate public statement stating that the court had found that Lexar is likely to win its false advertising claim. The court further denied Lexar's request that SanDisk make no further representations stating or implying that SanDisk CompactFlash cards are faster than Lexar CompactFlash cards in the following camera models: Hewlett Packard C20, Epson Photo PC 700, Kodak DC120 and Kodak DC210.

The court did issue a preliminary injunction that requires SanDisk to stop the further distribution of a chart based on SanDisk product testing that compares the relative performance of SanDisk and Lexar flash memory cards in digital cameras. The court found that SanDisk's use or suggestion in the chart of the "click to click" terminology should be changed to "release to click" terminology.