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

You are correct, pictured here is IFE’s Geoff Underwood (Inflight Peripherals) at a reception meeting HRH Elizabeth II after receiving the Queen’s Award for achievement in export or innovation. In Geoff’s words, “It doesn’t matter how big or small the company is… I guess it would be the same as a “Presidents Award” in the USA.  It’s the highest award that a company can get in the UK, and only a handful get it each year, so its pretty cool for our little company to receive this coveted award.” Right you are Mr. Underwood and we note that it took almost a year to get the humble UK business owner to tell us more. His words probably describe the scene best: “Ours was for export (international trade) because most of our products ship to the USA, and for the fact that we have gained business with world leading organizations (you know who they are). Once you have the Award, you can use the logo on your headed notepaper, and stuff like that, and you can generally use the status of the Award to “big up” your business.  Obviously, it’s not that well known in the USA, but in the UK and in Europe it’s well respected. I like to think that this has been achieved by producing good products, but also by gaining the trust of our customers through providing what we say we’re going to provide.  Our delivery record is excellent. We turn around new designs quickly, and the quality and reliability of our products is way up there too.”  

Geoff went on, “So, we got told about the award in April.  Then we were invited to meet HM The Queen and HRH Prince Philip at Buckingham Palace. The coolest bit was being able to drive our car through the front gates in front of the Palace – They are the one’s you see in all the movies where tourists stand. Claire and I laughed our socks off when foreign tourists were taking photos of us… just in case we might be royalty!!!!  You’ll have to call her Princess Claire from now on! Inside, there’s a reception where you stand around talking with other Award winners. Then you queue up and get introduced to HM The Queen. Shake hands, bow, and then move on. Later in the year was the presentation of the actual Award. This is a beautiful cut glass bowl, and it was presented at our factory on the Isle of Wight by HM The Queen’s representative The Lord Lieutenant (pronounced Leftenant here in jolly old England). We invited loads of suppliers and customers, and had a great day, which included a tour of the Island on an open top bus!” Jolly good on you, Geoff! 

On another front, check out link on the AirCell/Delta vs. Ambit lawsuit:
http://www.ajc.com/business/content/business/delta/stories/2009/02/18/aircell_delta_lawsuit_wifi.html. It seems a Brit with an international patent claims infringement, but we have never heard of the guy(s). Obviously, no comment from all involved but you might Google the title of the patent for more info… or check out this link: http://www.wipo.int/pctdb/en/wo.jsp?IA=GB2007001278&wo=2007116209&DISPLAY=STATUS

You other IFE vendors who are dabbling in connectivity (you know who you are) might want to pay particular attention to this one:�
Lastly, we have been getting emails about a forthcoming legal battle between Digecor and E-Digital on the bench this week. Stay Tuned, it’s never dull here!