United States District Court District of Minnesota

Case 0 :06-cv-00574-MJD-JJG

Document 63

Filed 07/03/2007

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UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

In re NVE CORPORATION SECURITIES LITIGATION

MEMORANDUM OF LAW & ORDER Civil File No. 06-574 (MJD/JJG)

Gregg M. Corwin, Gregg M. Corwin & Associates Law Office, PC, and William B. Federman, Federman & Sherwood, Counsel for Plaintiffs. Peter W. Carter, Thomas M. Jancik, and Seth J. S. Leventhal, Dorsey & Whitney LLP, Counsel for Defendants NVE Corporation, Daniel A. Baker, James M. Daughton, and Jeffrey K. Kaszubinski.

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INTRODUCTION

This matter is before the Court on Defendants' Amended Motion to Dismiss. [Docket No. 45] The Court heard oral argument on March 9, 2007.

II. BACKGROUND A. Factual Background

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Parties

NVE Corporation ("NVE") is a Minnesota-based corporation that specializes

in spintronics, nanotechnology used to store information using electron spin. (Am. Compl. 99 12, 28.) At all relevant times, NVE was listed and actively traded

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on the NASDAQ. (Id. 1 174(a).) NVE licenses intellectual property, such as Magnetic Random Access Memories ("MRAM") technology, and sells spintronic products. (Id. 11 12, 28.) NVE licensed its MRAM patents to other companies including Cypress Semiconductor Corporation ("Cypress") and Motorola, Inc. ("Motorola"). (Id. 13.) Cypress's wholly-owned subsidiary, Silicon Magnetic Systems (" SMS"), was formed to pursue MRAM development . (Id. 142.) NVE

disclosed in its SEC filings that, when it formed its relationship with Cypress and

SMS in 2002, it was dependent on its licensees, particularly Cypress and Motorola,

to convert NVE's intellectual property into commercially viable MRAM. (Id. 143.)

Currently before the Court is a purported securities fraud class action lawsuit brought on behalf of all persons who purchased or acquired NVE securities

during the period of May 16, 2003 through April 19, 2005. Generally, Plaintiffs...