3. STATEMENT OF CLAIMS AND DEFENSES
a. Plaintiff: This is a patent infringement case. The patents-in-suit are United States
Patent Nos. 5,491,774 issued on February 13, 1996 and entitled “Handheld Record and Playback
Device with Flash Memory” (“the ‘774 Patent”), and 5,742,737 issued on April 21, 1998 and
entitled “Method for Recording Voice Messages on Flash Memory in a Hand Held Recorder”
(“the ‘737 Patent”) collectively, “the Patents-in-Suit.” The Patents-in-Suit concern, among other
things, devices and methods for using flash memory to digitally record, playback and/or store
audio signals. Plaintiff claims that Defendants directly infringe, contributorily infringe, and/or
induce infringement of the Patents-in-Suit by making, using, offering to sell, and/or selling the
accused products such as digital cameras, digital video cameras, digital recorders, PDAs and
digital camera phones, among other products, that practice the inventions disclosed in the
Patents-in-Suit.

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e.Digital contends that mediation following an initial round of discovery may be
productive.
Defendants contend that mediation following the Markman Order may be productive.
Defendants assert that a Markman Order from the Court will not only clarify and narrow the
issues in dispute, it will significantly improve the likelihood that the parties can settle or
otherwise resolve the case. Defendants therefore believe that the earlier a Markman Order is
issued, the quicker this case will be settled or resolved.