SanDisk 2013 Annual Report Download - page 129

of which could harm our business. We currently believe that we have sufficient cash resources to fund our
operations as well as our anticipated investments in Flash Ventures for at least the next twelve months;
however, we may decide to raise additional funds to maintain the strength of our balance sheet or fund our
operations through equity, public or private debt, or lease financings. However, we cannot be certain that
we will be able to obtain additional financing on favorable terms, or at all. If we issue additional equity
securities, our stockholders will experience dilution and the new equity securities may have rights,
preferences or privileges senior to those of existing holders of common stock. If we raise funds through
debt or lease financing, we will have to pay interest and may be subject to restrictive covenants, which
could harm our business. If we cannot raise funds on acceptable terms, if and when needed, our credit
rating may be downgraded, and we may not be able to develop or enhance our technology or products,
fulfill our obligations to Flash Ventures, increase our wafer supply, take advantage of future opportunities,
engage in acquisitions of or investments in companies, grow our business or respond to competitive
pressures or unanticipated industry changes, any of which could harm our business.
We may be unable to protect our IP rights, which would harm our business, financial condition and
operating results. We rely on a combination of patent, trademark, copyright and trade secret laws,
confidentiality procedures and licensing arrangements to protect our IP rights. In the past, we have been
involved in significant and expensive disputes regarding our IP rights and those of others, including claims
that we may be infringing patents, trademarks and other IP rights of third-parties. We expect that we will
be involved in similar disputes in the future.
There can be no assurance that:
• any of our existing patents will continue to be held valid, if challenged;
• patents will be issued for any of our pending applications;
• any claims allowed from existing or pending patents will have sufficient scope or strength to protect
us;
• our patents will be issued in the primary countries where our products are sold in order to protect
our rights and potential commercial advantage; or
• any of our products or technologies do not infringe on the patents of other companies.
In addition, our competitors may be able to design their products around our patents and other
proprietary rights. We also have patent cross-license agreements with several of our leading competitors.
Under these agreements, we have enabled competitors to manufacture and sell products that incorporate
technology covered by our patents. While we obtain license and royalty revenue or other consideration for
these licenses, if we continue to license our patents to our competitors, competition may increase and may
harm our business, financial condition and operating results.
There are flash memory producers, flash memory card manufacturers and other companies that utilize
flash memory who we believe may infringe our IP. Enforcement of our rights often requires litigation. If we
bring a patent infringement action and are not successful, our competitors would be able to use similar
technology to compete with us. Moreover, the defendant in such an action may successfully countersue us
for infringement of their patents or assert a counterclaim that our patents are invalid or unenforceable. If
we do not prevail in the defense of patent infringement claims, we could be required to pay substantial
damages, cease the manufacture, use and sale of infringing products in one or more geographic locations,
expend significant resources to develop non-infringing technology, discontinue the use of specific processes
or obtain licenses to the technology infringed. If we are enjoined from selling our 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 and results of operations would be harmed.
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Annual Report