Crucial 2013 Annual Report Download - page 27

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Because the plans of reorganization of the Elpida Companies provide for ongoing payments to creditors following the
closing of the Elpida acquisition, the Japan Proceedings are continuing, and the Elpida Companies remain subject to the
oversight of the Japan Court and of the trustees (including a trustee designated by us, who we refer to as the business trustee,
and a trustee designated by the Japan Court, who we refer to as the legal trustee), pending completion of the reorganization
proceedings. The business trustee will make decisions in relation to the operation of the businesses of the Elpida Companies,
other than decisions in relation to acts that need to be carried out in connection with the Japan Proceedings, which will be the
responsibility of the legal trustee. The Japan Proceedings and oversight of the Japan Court will continue until the final creditor
payment is made under the Elpida Companies' plans of reorganization, which is scheduled to occur in December 2019, but may
occur on a later date to the extent any claims of creditors remain unfixed on the final scheduled installment payment date. The
Elpida Companies may petition the Japan Court for an early termination of the Japan Proceedings once two-thirds of all
payments under the plans of reorganization are made. Although such early terminations are customarily granted, there can be
no assurance that the Japan Court will grant any such petition in these particular cases.
During the pendency of the Japan Proceedings, the Elpida Companies are obligated to provide periodic financial reports to
the Japan Court and may be required to obtain the consent of the Japan Court prior to taking a number of significant actions
relating to their businesses, including transferring or disposing of, or acquiring, certain material assets, incurring or
guaranteeing material indebtedness, settling material disputes, or entering into certain material agreements. The consent of the
legal trustee may also be required for matters that would likely have a material impact on the operations or assets of the Elpida
Companies and their subsidiaries or for transfers of material assets, to the extent the matters or transfers would reasonably be
expected to materially and adversely affect execution of the plans of reorganization of the Elpida Companies. Accordingly,
during the pendency of the Japan Proceedings, our ability to effectively integrate the Elpida Companies as part of our global
operations or to cause the Elpida Companies to take certain actions that we deem advisable for their businesses could be
adversely affected if the Japan Court or the legal trustee is unwilling to consent to various actions that we may wish to take
with respect to the Elpida Companies.
Patent Matters
On August 28, 2000, we filed a complaint against Rambus, Inc. ("Rambus") in the U.S. District Court for the District of
Delaware seeking declaratory and injunctive relief. Among other things, our complaint (as amended) alleges violation of
federal antitrust laws, breach of contract, fraud, deceptive trade practices, and negligent misrepresentation. The complaint also
seeks a declaratory judgment (1) that we did not infringe on certain of Rambus' patents or that such patents are invalid and/or
are unenforceable, (2) that we have an implied license to those patents, and (3) that Rambus is estopped from enforcing those
patents against us. On February 15, 2001, Rambus filed an answer and counterclaim in Delaware denying that we are entitled
to relief, alleging infringement of the eight Rambus patents (later amended to add four additional patents) named in our
declaratory judgment claim, and seeking monetary damages and injunctive relief. In the Delaware action, we subsequently
added claims and defenses based on Rambus' alleged spoliation of evidence and litigation misconduct. The spoliation and
litigation misconduct claims and defenses were heard in a bench trial before Judge Robinson in October 2007. On January 9,
2009, Judge Robinson entered an opinion in our favor holding that Rambus had engaged in spoliation and that the twelve
Rambus patents in the suit were unenforceable against us. Rambus subsequently appealed the 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 further analysis of the appropriate
remedy. On January 2, 2013, Judge Robinson entered a new opinion in our favor holding that Rambus had engaged in
spoliation, that Rambus' spoliation was done in bad faith, that the spoliation prejudiced us, and that the appropriate sanction
was to declare the twelve Rambus patents in the suit unenforceable against us. Separately, on March 27, 2013, Rambus filed a
notice of appeal to the U.S. Court of Appeals for the Federal Circuit. 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. The Northern District of California
Court stayed the trial of the patent phase of the Northern District of California case upon appeal of the Delaware spoliation
issue to the Federal Circuit.