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On December 7, 2007, Tessera, Inc. filed a patent infringement against Elpida Memory, Inc., Elpida Memory (USA) Inc.
(collectively "Elpida"), and numerous other defendants, in the United States District Court for the Eastern District of Texas.
The complaint alleges that certain Elpida products infringe four U.S. patents and seeks injunctive relief, damages, attorneys'
fees, and costs. Prior to answering the complaint, Elpida and other defendants filed motions to stay the case pending final
resolution of a case before the International Trade Commission ("ITC") against Elpida and other respondents, alleging
infringement of the same patents asserted in the Eastern District of Texas case (In The Matter of Certain Semiconductor Chips
with Minimized Chip Package Size and Products Containing Same (III), ITC No. 337-TA-630 (the "ITC Action")). On
February 25, 2008, the Eastern District of Texas Court granted the defendants' motion to stay the action. On December 29,
2009, the ITC issued a Notice of Final Determination in the ITC Action finding no violation by Elpida. Tessera subsequently
appealed the matter to the U.S. Court of Appeals for the Federal Circuit. On May 23, 2011, the Federal Circuit affirmed the
ITC's Final Determination. The Eastern District of Texas case currently remains stayed.
We are unable to predict the outcome of these suits. A court determination that our products or manufacturing processes
infringe the product or process intellectual property rights of others could result in significant liability and/or require us to make
material changes to our products and/or manufacturing processes. Any of the foregoing results could have a material adverse
effect on our business, results of operations or financial condition.
Antitrust Matters
On May 5, 2004, Rambus filed a complaint in the Superior Court of the State of California (San Francisco County) against
us and other DRAM suppliers which alleged that the defendants harmed Rambus by engaging in concerted and unlawful efforts
affecting Rambus DRAM by eliminating competition and stifling innovation in the market for computer memory technology
and computer memory chips. Rambus' complaint alleged various causes of action under California state law including, among
other things, a conspiracy to restrict output and fix prices, a conspiracy to monopolize, intentional interference with prospective
economic advantage, and unfair competition. Rambus sought a judgment for damages of approximately $3.9 billion, joint and
several liability, trebling of damages awarded, punitive damages, a permanent injunction enjoining the defendants from the
conduct alleged in the complaint, interest, and attorneys' fees and costs. Trial began on June 20, 2011, and the case went to the
jury on September 21, 2011. On November 16, 2011, the jury found for us on all claims. On April 2, 2012, Rambus filed a
notice of appeal to the California 1st District Court of Appeal.
A number of purported class action price-fixing lawsuits have been filed against us and other DRAM suppliers. Four cases
have been filed in the U.S. District Court for the Northern District of California asserting claims on behalf of a purported class
of individuals and entities that indirectly purchased DRAM and/or products containing DRAM from various DRAM suppliers
during the time period from April 1, 1999 through at least June 30, 2002. The complaints allege a conspiracy to increase
DRAM prices in violation of federal and state antitrust laws and state unfair competition law, and/or unjust enrichment relating
to the sale and pricing of DRAM products. The complaints seek joint and several damages, trebled, monetary damages,
restitution, costs, interest and attorneys' fees. In addition, at least sixty-four cases have been filed in various state courts
asserting claims on behalf of a purported class of indirect purchasers of DRAM. In July 2006, the Attorneys General for
approximately forty U.S. states and territories filed suit in the U.S. District Court for the Northern District of California. The
complaints allege, among other things, violations of the Sherman Act, Cartwright Act, and certain other states' consumer
protection and antitrust laws and seek joint and several damages, trebled, as well as injunctive and other relief. On October 3,
2008, the California Attorney General filed a similar lawsuit in California Superior Court, purportedly on behalf of local
California government entities, alleging, among other things, violations of the Cartwright Act and state unfair competition law.
On June 23, 2010, we executed a settlement agreement resolving these purported class-action indirect purchaser cases and the
pending cases of the Attorneys General relating to alleged DRAM price-fixing in the United States. Subject to certain
conditions, including final court approval of the class settlements, we agreed to pay approximately $67 million in aggregate in
three equal installments over a two-year period. We had paid the full amount into an escrow account by the end of the first
quarter of 2013 in accordance with the settlement agreement.