Adaptec 2001 Annual Report Download - page 45

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In addition, while all of our sales are denominated in US dollars, our customers’ products are
sold worldw ide. Any further decline in the world netw orking markets could seriously depress
our customers’ order levels for our products. This effect could be exacerbated if fluctuations in
currency exchange rates decrease the demand for our customers’ products.
From time to time, we become def endants in legal proceedings about which we are unable to
assess our exposure and which coul d become signi ficant liabi l iti es upon judgment.
We become defendants in legal proceedings from time to time. Companies in our industry
have been subject to claims related to patent infringement and product liability, as well as
contract and personal claims. We may not be able to accurately assess the risk related to these
suits, and we may be unable to accurately assess our level of exposure. These proceedings may
result in material charges to our operating results in the future if our exposure is material and if
our ability to assess our exposure becomes clearer.
If we cannot protect our proprietary technology, w e may not be abl e to prevent competi tors
from copyi ng our technology and sel l ing si mil ar products, which would harm our revenues.
To compete effectively, we must protect our proprietary information. We rely on a
combination of patents, trademarks, copyrights, trade secret laws, confidentiality procedures
and licensing arrangements to protect our intellectual property rights. We hold several patents
and have a number of pending patent applications.
We might not succeed in attaining patents from any of our pending applications. Even if we
are awarded patents, they may not provide any meaningful protection or commercial
advantage to us, as they may not be of sufficient scope or strength, or may not be issued in all
countries where our products can be sold. In addition, our competitors may be able to design
around our patents.
We develop, manufacture and sell our products in A sian and other countries that may not
protect our products or intellectual property rights to the same extent as the law s of the United
States. This makes piracy of our technology and products more likely. Steps we take to protect
our proprietary information may not be adequate to prevent theft of our technology. We may
not be able to prevent our competitors from independently developing technologies that are
similar to or better than ours.
Our products employ technol ogy that may inf ringe on the proprietary ri ghts of third parti es,
which may expose us to litigati on and prevent us from sel l ing our products.
Vigorous protection and pursuit of intellectual property rights or positions characterize the
semiconductor industry. This often results in expensive and lengthy litigation. We, as well as
our customers or suppliers, may be accused of infringing on patents or other intellectual
property rights owned by third parties. This has happened in the past. An adverse result in
any litigation could force us to pay substantial damages, stop manufacturing, using and selling
the infringing products, spend significant resources to develop non-infringing technology,