SanDisk 2010 Annual Report Download - page 154

non-infringement of certain accused flash memory products. There can be no assurance that we will be successful
in future patent infringement actions or that the validity of the asserted patents will be preserved or that we will
not face counterclaims of the nature described above.
We and certain of our officers are at times involved in litigation, including litigation regarding our
intellectual property rights or those of third parties, which may be costly, may divert the efforts of our key
personnel and could result in adverse court rulings, which could materially harm our business. We are often
involved in a number of lawsuits, including among others, several cases involving our patents and the patents of
third parties. We are the plaintiff in some of these actions and the defendant in other of these actions. Some of the
actions seek injunctions against the sale of our products and/or substantial monetary damages, which if granted
or awarded, could have a material adverse effect on our business, financial condition and results of operations.
We and numerous other companies have been sued in the United States District Court of the Northern
District of California in purported consumer class actions alleging a conspiracy to fix, raise, maintain or stabilize
the pricing of flash memory, and concealment thereof, in violation of state and federal laws. The lawsuits purport
to be on behalf of classes of purchasers of flash memory. The lawsuits seek restitution, injunction and damages,
including treble damages, in an unspecified amount. We are unable to predict the outcome of these lawsuits and
investigations. The cost of discovery and defense in these actions as well as the final resolution of these alleged
violations of antitrust laws could result in significant liability and expense and may harm our business, financial
condition and results of operations.
Litigation is subject to inherent risks and uncertainties that may cause actual results to differ materially from
our expectations. Factors that could cause litigation results to differ include, but are not limited to, the discovery
of previously unknown facts, changes in the law or in the interpretation of laws, and uncertainties associated with
the judicial decision-making process. If we receive an adverse judgment in any litigation, we could be required to
pay substantial damages and/or cease the manufacture, use and sale of products. Litigation, including intellectual
property litigation, can be complex, can extend for a protracted period of time, can be very expensive, and the
expense can be unpredictable. Litigation initiated by us could also result in counter-claims against us, which
could increase the costs associated with the litigation and result in our payment of damages or other judgments
against us. In addition, litigation may divert the efforts and attention of some of our key personnel.
From time-to-time, we have sued, and may in the future sue, third parties in order to protect our intellectual
property rights. Parties that we have sued and that we may sue for patent infringement may countersue us for
infringing their patents. If we are held to infringe the intellectual property or related rights of others, we may
need to spend significant resources to develop non-infringing technology or obtain licenses from third parties, but
we may not be able to develop such technology or acquire such licenses on terms acceptable to us, or at all. We
may also be required to pay significant damages and/or discontinue the use of certain manufacturing or design
processes. In addition, we or our suppliers could be enjoined from selling some or all of our respective products
in one or more geographic locations. If we or our suppliers are enjoined from selling any of our respective
products, or if we are required to develop new technologies or pay significant monetary damages or are required
to make substantial royalty payments, our business would be harmed.
We may be obligated to indemnify our current or former directors or employees, or former directors or
employees of companies that we have acquired, in connection with litigation or regulatory investigations. These
liabilities could be substantial and may include, among other things, the costs of defending lawsuits against these
individuals; the cost of defending shareholder derivative suits; the cost of governmental, law enforcement or
regulatory investigations; civil or criminal fines and penalties; legal and other expenses; and expenses associated
with the remedial measures, if any, which may be imposed.
We continually evaluate and explore strategic opportunities as they arise, including business combinations,
strategic partnerships, collaborations, capital investments and the purchase, licensing or sale of assets. Potential
continuing uncertainty surrounding these activities may result in legal proceedings and claims against us,
26