SAN DIEGO, CA, – March 16, 2009 – e.Digital Corporation (OTC: EDIG), a leading technology innovator of dedicated portable entertainment systems and patented flash memory-related technology, today summarized recent court action related to business litigation between the Company and digEcor, Inc.

On March 13, 2009 the U.S. District Court for the District of Utah issued a partial ruling on the parties’ Cross-Motions for Summary Judgment. As part of the ruling, the Court granted summary judgment in favor of e.Digital on digEcor’s claim that e.Digital was in breach of non-competition obligations in an agreement between the parties. Concerning the alleged non-compete provisions, the Court held “that California law applies to the 2002 NDA. Further, the court holds that Paragraphs 1, 4, 5 and 6 of 2002 NDA are invalid under California law because they refrain e.Digital from lawfully competing with digEcor.” This holding vindicates e.Digital’s longstanding position that it is free to conduct its lawful business without non-compete restraint or obligation to digEcor.

The Court also concluded that e.Digital failed to deliver certain batteries to digEcor, a claim that the Company has never denied. e.Digital has maintained an accrual of $80,000 for such estimated obligation as more fully discussed in the notes to its annual and interim financial statements. The Court further ruled that e.Digital did not breach a certain performance provision of the 2002 contract between the parties and that digEcor was not obligated to negotiate a revenue sharing arrangement under the same agreement. The Court did not grant summary judgment to either side on the issue of the timeliness of the 2006 delivery of video players. This and other matters related to the parties’ motions, as more fully described in the Company’s regulatory filings, remain to be resolved by future court rulings or at trial.

While decisions of the Court may be subject to appeal, e.Digital is pleased with the Court’s ruling finding the non-compete provisions of the 2002 NDA unenforceable as a matter of law. e.Digital will continue to offer its proprietary portable eVU™ entertainment system to the IFE and other industries.

The bottom line is… we will keep this issue short because the story is still developing. This past week, Utah courts delivered a ruling on the Digecor vs. eDigital lawsuit which is far more complicated than it appears on the surface and deserves more space than we can devote to it here, therefore, we will provide links to dig deeper – you can Google the rest.

The eDigital V.S. Digecor court battle has an initial ruling and the summary resulting Court Ruling. While we have not had time to dig deep on this subject we wanted our readers to get the story first. Among the findings were issues that pertained to judicial jurisdiction and a NDA decision that purportedly prevented eDigital from selling in the IFE arena. The eDigital news release came in from Robert Putnam, Sr. VP who told us, “Attached, please find today’s press release regarding recent court action in the e.Digital/digEcor business litigation that vindicates e.Digital’s longstanding position that it is free to conduct its lawful business without non-compete restraint or obligation to digEcor.” 

Obviously, there were sales in the balance here and based on eDigital’s past views and the court outcome; they will take a more aggressive posture on sales and promotion in the future. Further, we believe eDigital has a few new products that are itching to see the light of day. 

We asked Digecor for a statement and they said; “Digecor will be issuing a position statement in response to the recent court decision between Digecor and eDigital in the forthcoming week. We note that this case is not decided on some claims and it would be improper to comment until the rulings are completed. ” Look forward to their side of this developing story – coming soon.

There you have it, and as an old newspaper feature writer once told us, “There must be a story in they’re somewhere… but if there isn’t, there should be one!”

• See the court ruling