NVIDIA 2009 Annual Report Download - page 33

Our ability to compete will be harmed if we are unable to adequately protect our intellectual property.
We rely primarily on a combination of patents, trademarks, trade secrets, employee and third-party nondisclosure agreements, and
licensing arrangements to protect our intellectual property in the United States and internationally. We have numerous patents issued,
allowed and pending in the United States and in foreign jurisdictions. Our patents and pending patent applications primarily relate to
our products and the technology used in connection with our products. We also rely on international treaties, organizations and foreign
laws to protect our intellectual property. The laws of certain foreign countries in which our products are or may be manufactured or
sold, including various countries in Asia, may not protect our products or intellectual property rights to the same extent as the laws of
the United States. This makes the possibility of piracy of our technology and products more likely. We continuously assess whether
and where to seek formal protection for particular innovations and technologies based on such factors as:
• the commercial significance of our operations and our competitors’ operations in particular countries and regions;
• the location in which our products are manufactured;
• our strategic technology or product directions in different countries; and
• the degree to which intellectual property laws exist and are meaningfully enforced in different jurisdictions.
Our pending patent applications and any future applications may not be approved. In addition, any issued patents may not provide
us with competitive advantages or may be challenged by third parties. The enforcement of patents by others may harm our ability to
conduct our business. Others may independently develop substantially equivalent intellectual property or otherwise gain access to our
trade secrets or intellectual property. Our failure to effectively protect our intellectual property could harm our business.
Government investigations and inquiries from regulatory agencies could lead to enforcement actions, fines or other penalties
and could result in litigation against us.
In the past, we have been subject to government investigations and inquiries from regulatory agencies such as the DOJ and the
SEC. We may be subject to government investigations and receive additional inquiries from regulatory agencies in the future, which
may lead to enforcement actions, fines or other penalties.
In addition, litigation has often been brought against a company in connection with the announcement of a government
investigation or inquiry from a regulatory agency. For example, following the announcement of the DOJ investigation, several
putative civil complaints were filed against us. In addition, following our Audit Committee’s investigation and the SEC’s investigation
concerning our historical stock option granting practices, ten derivative complaints were filed in state and federal court pertaining to
allegations relating to stock option grants. Please refer to Note 12 of the Notes to Consolidated Financial Statements in Part IV, Item
15 of this Form 10-K for further information regarding these lawsuits. Such lawsuits could result in the diversion of management’s
time and attention away from business operations, which could harm our business. In addition, the costs of defense and any damages
resulting from litigation, a ruling against us, or a settlement of the litigation could adversely affect our cash flow and financial results.
We are subject to the risks of owning real property.
In fiscal year 2009, we used approximately $183.8 million of our cash to purchase real property in Santa Clara, California that
includes approximately 25 acres of land and ten commercial buildings. We also own real property in China and India. We have
limited experience in the ownership and management of real property and are subject to the risks of owning real property, including:
• the possibility of environmental contamination and the costs associated with fixing any environmental problems;
• adverse changes in the value of these properties, due to interest rate changes, changes in the neighborhood in which the property
is located, or other factors;
• the risk of loss if we decide to sell and are not able to recover all capitalized costs;
• increased cash commitments for the possible construction of a campus;
• the possible need for structural improvements in order to comply with zoning, seismic and other legal or regulatory
requirements;
• increased operating expenses for the buildings or the property or both;
• possible disputes with third parties, such as neighboring owners or others, related to the buildings or the property or both; and
• the risk of financial loss in excess of amounts covered by insurance, or uninsured risks, such as the loss caused by damage to the
buildings as a result of earthquakes, floods and or other natural disasters.
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Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Research℠