Salesforce.com 2016 Annual Report Download - page 38

breach of fiduciary duty and unjust enrichment, and sought restitution and disgorgement of a portion of the
directors’ compensation as well as reform of our equity plan. Because the complaint was derivative in nature,
it did not seek monetary damages from us. In February 2016, the parties agreed to dismiss the complaint with
prejudice as to the plaintiff and submitted a stipulation to that effect to the Court. In March 2016, the Court
entered the order of dismissal. Neither we nor the individual defendants paid any consideration to the plaintiff.
During fiscal 2015, we received a communication from a large technology company alleging that we
infringed certain of its patents. We continue to analyze this claim and no litigation has been filed to date. There
can be no assurance that this claim will not lead to litigation in the future. The resolution of this claim is not
expected to have a material adverse effect on our financial condition, but it could be material to operating results
or cash flows or both of a particular quarter.
We evaluate all claims and lawsuits with respect to their potential merits, our potential defenses and
counterclaims, settlement or litigation potential and the expected effect on us. Our technologies may be subject to
injunction if they are found to infringe the rights of a third party. In addition, many of our subscription
agreements require us to indemnify our customers for third-party intellectual property infringement claims,
which could increase the cost to us of an adverse ruling on such a claim.
The outcome of any claims or litigation, regardless of the merits, is inherently uncertain. Any claims and
other lawsuits, and the disposition of such claims and lawsuits, whether through settlement or litigation, could be
time-consuming and expensive to resolve, divert our attention from executing our business plan, result in efforts
to enjoin our activities, lead to attempts by third parties to seek similar claims and, in the case of intellectual
property claims, require us to change our technology, change our business practices, pay monetary damages or
enter into short- or long-term royalty or licensing agreements.
In general, the resolution of a legal matter could prevent us from offering our service to others, could be
material to our financial condition or cash flows, or both, or could otherwise adversely affect our operating
results.
We make a provision for a liability relating to legal matters when it is both probable that a liability has been
incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly
and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel
and other information and events pertaining to a particular matter. In our opinion, resolution of all current matters
is not expected to have a material adverse impact on our consolidated results of operations, cash flows or
financial position. However, depending on the nature and timing of any such dispute, an unfavorable resolution
of a matter could materially affect our future results of operations or cash flows, or both, of a particular quarter.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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