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Good morning, everyone, and welcome to the Netlist First Quarter 2024 Earnings Conference Call and Webcast. [Operator Instructions] Please also note, today's event is being recorded. At this time, I'd like to turn the floor over to Mike Smargiassi, Investor Relations. Sir, please go ahead.
Thank you, Jamie, and good day, everyone. Welcome to Netlist's First Quarter 2024 Conference Call. Leading today's call will be Chuck Hong, Chief Executive Officer of Netlist; and Gail Sasaki, Chief Financial Officer. As a reminder, you can access the earnings release and a replay of today's call on the Investors section of the Netlist website at netlist.com.
Before we start the call, I would note that today's presentation of Netlist's results and the answers to questions may include forward-looking statements, which are based on current expectations. The actual results could differ materially from those projected in the forward-looking statements because of a number of risks and uncertainties that are expressed in the call, annual and current SEC filings and the cautionary statements contained in today's press release. Netlist assumes no obligation to update forward-looking statements.
I will now turn the call over to Chuck.
Thanks, Mike, and hello, everyone. In the first quarter, our product revenue came in at $36 million, a threefold increase from a year ago period. This performance reflects further improvement in both the price and demand environment. The 2 recent earthquakes in Taiwan have resulted in minimal market disruption, but we continue to expect additional price increases for both DRAM and NAND products as we move through the rest of the year. As the memory market continues to rebound, Netlist remains well positioned to capitalize on the positive market conditions.
Now turning to the legal update. Thus far this year, we have received disappointing results in the IPRs at the Patent Trial and Appeal Board. For the 5 asserted patents and Netlist's $303 million jury award against Samsung, in that case, we've now received final written decisions of unpatentability for those 5 patents. We are reviewing each of these decisions carefully and considering next steps. Parties have 30 days to file a request to challenge the result at the PTO itself. This appeal process can take several months. And if denied, the PTAB will enter a final decision and denial. This then opens the window to file an appeal with the U.S. Federal Circuit Court of Appeals. For the '339 patent covering LRDIMM, Netlist has already filed a notice of appeal with the Federal Circuit.
We expect the Federal Circuit appeal process to take 18 to 24 months to reach its conclusion. For the '918 and '054 patents covering on-module power management technologies for DDR5 memory modules, we plan to file an appeal to the Federal Circuit. Finally, in regard to the '060 and '160 patents covering HBM memory, we will decide shortly whether to file a request for the rehearing by the PTAB panel or a request for the PTO Director review. As these proceedings move forward, I would note the jury verdict and judgment against Samsung in the Eastern District of Texas remains in place, and we await a final order from the court.
Last week, Netlist's Claim 16 of the seminal '912 patent was also found unpatentable. The '912 patent has been subject to 5 distinct reviews at the USPTO and Federal Circuit between 2010 and today, or 14 years of its total available life. In that time alone, the Patent Office has seen 5 different directors. And now the '912 patent was found for the first time to be unpatentable by this recent PTAB panel. The '912 has been the subject of serial reexaminations and [ abusive ] attacks and was validated 5 times over, including by the Federal Circuit Court of Appeals.
Only now in year 14 of its near continuous scrutiny has this Board decided that Claim 16 of the '912 patent may be obvious, and this was an IPR filed by Samsung admittedly acting at Google's behest. In so doing, this Board has unwound over a decade of decisions made by its predecessors at the PTAB itself and the Federal Circuit Court of Appeals and made clear that the purpose of the PTAB is not about killing bad patents but killing good patents if it serves their interest in some way. The '912 history is the poster child of how to abuse post-grant review processes and prevent innovators like Netlist from stopping large infringers in court.
It is disturbing to see the USPTO reconsider the validity of this patent for the sixth time and only now reversed more than a decade of decisions. We're considering all post-decision options standard and otherwise to redress this unprecedented in justice. In the Eastern District of Texas, the court has separated Netlist's consolidated cases against Micron and Samsung. The jury trial against Micron was set to begin April 29. However, earlier this week, it was rescheduled to May 20 due to a last-minute emergency. The court has not set a trial date for the parallel Samsung case, but we hope to have a day set after our trial against Samsung in the Central District concludes.
In the breach of contract case against Samsung and the U.S. District Court for the Central District of California, Judge Mark Scarsi has set the final trial conference for May 6, and the jury trial start date of May 16. We are looking forward to this proceeding because this trial represents Netlist's first opportunity to bring all of Samsung's past actions to light before a jury. We expect the trial to last approximately 1 week. Our case against Micron in the Western District of Texas is still currently stayed, but we filed a motion to move this case to the Eastern District of Texas.
We're making this motion as the case has been sitting in a nonassigned judicial docket and is still not assigned to a judge. This case involves Netlist's patents covering Micron's use of DDR4 LRDM technology and 2 of the 4 asserted patents in this case have already been found valid and patentable by the PTAB.
In summary, the memory market continues to improve. And we are preparing now for a very busy month in May with 2 federal jury trials to conduct: The breach of contract case against Samsung in Los Angeles and the patent infringement case against Micron in Marshall, Texas.
Now I'll turn the call over to Gail for the financial review.
Thanks, Chuck. For the 3 months ended March 30, 2024, total revenues were $35.8 million compared to $9 million in the year ago period. This was a 297% increase from the first quarter of 2023 and a 7% increase on a sequential quarter basis. The revenue increase highlights the strong turnaround in the memory market from the year ago period. And while we do not formally guide given our booking and shipping for the second quarter of 2024 to date plus the industry outlook for continued growth in both memory demand and pricing, we currently expect a moderate increase in revenue for the second quarter of 2024 when compared to the first quarter of 2024.
The increase in operating expense for the first quarter was mainly due to increased legal expense related to the number of active campaigns and upcoming jury trial preparation. We do expect legal costs to remain elevated through the second quarter of 2024, after which we anticipate reductions through the end of the year. We ended the first quarter with cash and cash equivalents and restricted cash of $41.1 million compared to approximately $53 million at the end of 2023.
With a $10 million working capital line of credit and approximately $34 million available on the equity line of credit, we continue to maintain significant financial flexibility and liquidity going forward. And as always, we manage the operational cash cycle very carefully with days in sales improved by 48 days over last year as well as days in inventory improved by 57 days over last year's Q1.
Operator, we are now ready for questions.
Our question comes from Suji Desilva from ROTH Capital.
I was just trying to understand the relationship of the Samsung finding in East Texas, the relationship with that to the breach of contract case in California, Chuck, can you just tell me if those 2 are linked or if they're kind of separate in path?
They're obviously related because it's those patents that have been found invalid in the PTAB proceedings. Now the PTAB proceedings are obviously not final within the PTAB. The LRDIMM decision in the PTAB is final, and that has been appealed to the Federal Circuit. The 2 other families, 1 involving the PMIC at DDR5 and the HBM, the 2 patents each there, the 4 patents altogether, they will still be going through further processes within the PTAB, either a director review or a rehearing.
And once we go through that, we can then appeal those to the Federal Circuit. The Federal Circuit appeal decision is -- for all practical purposes is the final decision on those patents. But the system is set up so that the district court through its jury trial reaches its own decision on both infringement and validity. So you have, actually, 2 competing decisions that will get to the appellate court for a final final. So I don't know if that is helpful, but that's how the process works.
No, it definitely helps. And maybe a follow-up question there, Chuck. Just to understand, I mean, as an example, the '912 patent having gone through 14 years of sort of reviews, is a decision in either direction final? Or is this kind of a situation where it can go back and forth indefinitely?
Yes, just to clarify, what we just spoke of is the $300 million jury verdict. First of all, that remains in place. These decisions at the PTAB, PTAB is a government agency under the USPTO, which is under the Department of Commerce, it's in the executive branch. So it's a decision that the courts look at, but the courts render their own decision under the judicial branch.
And they -- their decision on the $303 million infringement verdict that remains in place. So then we've got a court decision of infringement and validity and damages award for $300 million. That remains intact while a government agency has found the patents to be unpatentable. So you've got 2 conflicting decisions that needs -- that need to get resolved at the Federal Circuit Court of Appeals. That's where all of this kind of gets reconciled.
The '912 patent is separate from -- it's in a separate case, along with a couple of other LRDIMM patents and that is what we call the Eastern District of Texas Case 2 against both Micron and Samsung. And one of those cases, the one against Micron is set to go to trial on the 20th of May. And your question about whether the '912, what we will do with that? Yes. There is no other patent I don't think in history that have gone through what this has gone through.
It has been found valid by the USPTO and the PTAB 4 separate times. And what this recent panel has done, first of all, in instituting this patent is kind of extraordinary that they instituted something that their predecessors has said that it's been valid. They should have not instituted it particularly because it was brought -- it was challenged by Samsung and they clearly blatantly said that they're doing this on behalf of Google. So it should not have been instituted. So there's something wrong that's going on there clearly at the PTAB.
And yes, we need to enlist some higher powers within the government. And in the past, we have had people like Paul Michel who used to be the Chief Judge at the Federal Circuit write and op-ed criticizing the decision to even institute this patent again at the time of institution. So we are looking at different options because this is what's happening here is not double jeopardy, it's quadruple, quintuple. I mean once you've been given a clear title to an asset in this country that should be your title.
They're now questioning your title 4 different times or the fifth different time. And on the fifth time, they're saying, no, okay, the 4 prior examinations and the Federal Circuit finding is wrong, were finding some different angle to see that this should have never been patentable. So it's -- yes, it is quite the -- yes, it's hard to even put in to a single word what's happened here.
I appreciate the insight on the challenges you have there, and I think you've made it relatively clear what's going on. Switching over to the product side, the memory market improving, I guess, pricing firming. Can you just talk about the puts and takes in that, I guess, the demand would drive the pricing up, but maybe supply hasn't been expanded and how that affects your opportunity for resale and new product opportunity in the next few quarters?
Yes, Suji. The market has certainly become better. I mean it's not any kind of a significant shortage as of yet. But just in general, compared to last year, things are improving, and you see that from the results from big suppliers like hynix recently and Micron. So I think both DRAM and NAND will continue to -- the price will appreciate. And the demand is remaining relatively strong, and that will continue out through the rest of this year.
And we're seeing good demand from our customers as well. So we believe that things will improve our results. Certainly, the top line will continue to incrementally improve for the second half of this year. The bottom line, obviously, are going to depend on -- we're still spending quite a bit on the legal front with the 2 trials coming up in May. And then we continue to invest significantly in the CXL development, which is really is going to be the market for the second half of this decade. We manage the investments as closely as possible and tightly as possible. But these are investments that we need to make as a business given that we must monetize the assets that we have here.
And ladies and gentlemen, with that, we'll be ending today's question-and-answer session as well as today's conference call and presentation. We do thank everyone for joining. You may now disconnect your lines.