Crucial 2011 Annual Report Download - page 18

Our joint ventures and strategic partnerships involve numerous risks.
We have entered into partnering arrangements to manufacture products and develop new manufacturing process technologies and products.
These arrangements include our IM Flash NAND Flash joint ventures with Intel, our Inotera DRAM joint venture with Nanya, our MP Mask joint
venture with Photronics, our Transform joint venture with Origin Energy and our CMOS image sensor wafer supply agreement with Aptina .
These joint ventures and strategic partnerships are subject to various risks that could adversely affect the value of our investments and our results
of operations. These risks include the following:
If our joint ventures and strategic partnerships are unsuccessful, our business, results of operations or financial condition may be adversely
affected.
An adverse determination that our products or manufacturing processes infringe the intellectual property rights of others could
materially adversely affect our business, results of operations or financial condition.
On January 13, 2006, Rambus filed a lawsuit against us in the U.S. District Court for the Northern District of California. Rambus alleges that
certain of our DDR2, DDR3, RLDRAM, and RLDRAM II products infringe as many as fourteen Rambus patents and seeks monetary damages,
treble damages, and injunctive relief. The accused products account for a significant portion of our net sales. On June 2, 2006, we filed an answer
and counterclaim against Rambus alleging, among other things, antitrust and fraud claims. On January 9, 2009, in another lawsuit involving us
and Rambus and involving allegations by Rambus of patent infringement against us in the U.S. District Court for the District of Delaware, Judge
Robinson entered an opinion in favor of us holding that Rambus had engaged in spoliation and that the twelve Rambus patents in the suit were
unenforceable against us. Rambus subsequently appealed the Delaware Court's decision to the U.S. Court of Appeals for the Federal Circuit. On
May 13, 2011, the Federal Circuit affirmed Judge Robinson's finding of spoliation, but vacated the dismissal sanction and remanded the case to
the Delaware District Court for analysis of the remedy based on the Federal Circuit's decision. The Northern District of California Court stayed a
trial of the patent phase of the Northern District of California case upon appeal of the spoliation issue to the Federal Circuit. (See "Item 1. Legal
Proceedings" for additional details on this lawsuit and other Rambus matters pending in the U.S. and Europe.)
We are unable to predict the outcome of assertions of infringement made against us. A court determination that our products or manufacturing
processes infringe the 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.
We have a number of patent and intellectual property license agreements. Some of these license agreements require us to make one time or
periodic payments. We may need to obtain additional patent licenses or renew existing license agreements in the future. We are unable to predict
whether these license agreements can be obtained or renewed on acceptable terms.
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• our interests could diverge from our partners or we may not be able to agree with partners on ongoing manufacturing and operational
activities, or on the amount, timing or nature of further investments in our joint venture;
• we may experience difficulties in transferring technology to joint ventures;
• we may experience difficulties and delays in ramping production at joint ventures;
• our control over the operations of our joint ventures is limited;
• we may need to recognize our share of losses from Inotera, Aptina or Transform in our future results of operations;
• due to financial constraints, our joint venture partners may be unable to meet their commitments to us or our joint ventures and may pose
credit risks for our transactions with them;
• due to differing business models or long-term business goals, our partners may decide not to join us in capital contributions to our joint
ventures, which may result in us increasing our capital contributions to such ventures, resulting in additional cash expenditures by us; for
example, our contributions to IM Flash Singapore in 2011 and 2010 totaled $ 1,580 million and $128 million, respectively, while Intel's
contributions totaled $ 0 and $38 million, respectively;
• the terms of our partnering arrangements may turn out to be unfavorable;
• cash flows may be inadequate to fund increased capital requirements; and
• changes in tax, legal or regulatory requirements may necessitate changes in the agreements with our partners.