Crucial 2014 Annual Report Download - page 76

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Patent Matters
As is typical in the semiconductor and other high technology industries, from time to time others have asserted, and may in
the future assert, that our products or manufacturing processes infringe their intellectual property rights.
On September 1, 2011, HSM Portfolio LLC and Technology Properties Limited LLC filed a patent infringement action in
the U.S. District Court for the District of Delaware against us and seventeen other defendants, including MMJ and Elpida
Memory (USA) Inc. On August 22, 2013, the plaintiffs filed a third amended complaint. The third amended complaint alleges
that certain of our DRAM and image sensor products infringe four U.S. patents and that certain MMJ and Elpida Memory
(USA) Inc. DRAM products infringe two U.S. patents and seeks damages, attorneys' fees, and costs. Trial currently is
scheduled for February 22, 2016. On March 23, 2012, MMJ and Elpida Memory (USA) Inc. filed a Notice of Filing and
Hearing on Petition Under Chapter 15 of the U.S. Bankruptcy Code and Issuance of Provisional Relief that included an order of
the U.S. Bankruptcy Court for the District of Delaware staying judicial proceedings against MMJ and Elpida Memory (USA)
Inc. Accordingly, the plaintiffs' case against MMJ and Elpida Memory (USA) was stayed. On June 25, 2013, the U.S.
Bankruptcy Court for the District of Delaware entered its Order (1) Granting Recognition of the Japanese Reorganization Plan
of MMJ and the Tokyo District Court's Confirmation Orders, (2) Entrusting MMJ's U.S. Assets to Foreign Representatives and
Approving Certain Plan Transactions, (3) Granting Permanent Injunction, and (4) Granting Related Relief (the "Recognition
Order"). Pursuant to the Recognition Order, the plaintiffs are permanently enjoined from continuing their case against MMJ
and Elpida Memory (USA) Inc. in respect of any claim or claims arising prior to the commencement of the Japan Proceeding
(as defined in the Recognition Order).
On December 5, 2011, the Board of Trustees for the University of Illinois (the "University") filed a patent infringement
action against us in the U.S. District Court for the Central District of Illinois. The complaint alleges that unspecified
semiconductor products of ours infringe three U.S. patents and seeks injunctive relief, damages, attorneys' fees, and costs. We
have filed three petitions for inter-partes review by the Patent and Trademark Office, challenging the validity of each of the
patents in suit. The Patent Trial and Appeal Board ("PTAB") held a hearing in connection with the three petitions on December
9, 2013. On March 10, 2014, the PTAB issued written decisions finding that each and every claim in the three patents in suit is
invalid, and cancelled all claims. The University has appealed the PTAB rulings to the U.S. Court of Appeals for the Federal
Circuit.
On April 27, 2012, Semcon Tech, LLC filed a patent infringement action against us in the U.S. District Court for the
District of Delaware. The complaint alleges that our use of various chemical mechanical planarization systems purchased from
Applied Materials infringes a single U.S. patent and seeks injunctive relief, damages, attorneys' fees, and costs. Trial is
currently scheduled for August 21, 2015.
On December 7, 2007, Tessera, Inc. filed a patent infringement action against MMJ, Elpida Memory (USA) Inc., and
numerous other defendants, in the United States District Court for the Eastern District of Texas. The complaint alleges that
certain MMJ and Elpida Memory (USA) Inc. products infringe four U.S. patents and seeks injunctive relief, damages,
attorneys' fees, and costs. Prior to answering the complaint, MMJ and Elpida Memory (USA) Inc. and other defendants filed
motions to stay the case pending final resolution of a case before the International Trade Commission ("ITC") against MMJ and
Elpida Memory (USA) Inc. and other respondents, alleging infringement of the same patents asserted in the Eastern District of
Texas case (In The Matter of Certain Semiconductor Chips with Minimized Chip Package Size and Products Containing Same
(III), ITC No. 337-TA-630 (the "ITC Action")). On February 25, 2008, the Eastern District of Texas Court granted the
defendants' motion to stay the action. On December 29, 2009, the ITC issued a Notice of Final Determination in the ITC
Action finding no violation by MMJ and Elpida Memory (USA) Inc. Tessera, Inc. subsequently appealed the matter to the U.S.
Court of Appeals for the Federal Circuit. On May 23, 2011, the Federal Circuit affirmed the ITC's Final Determination.
Additionally, by operation of the Recognition Order, plaintiff in that action is permanently enjoined from continuing its case
against MMJ and Elpida Memory (USA) in respect of any claim or claims arising prior to the commencement of the Japan
Proceeding (as defined in the Recognition Order). On July 30, 2014, we entered into a five-year term patent cross-license
agreement with Tessera, which also settled the pending litigation against MMJ and Elpida Memory (USA). The agreement,
which requires us to make quarterly payments over its term, gives us “life-of-product” protection for specifically identified
DRAM products and a term license for certain other products. We capitalized an intangible asset for the term of the agreement
and also recorded a $66 million charge to cost of goods sold in the fourth quarter of 2014.
Among other things, the above lawsuits pertain to certain of our DDR, DDR2, DDR3, SDR SDRAM, PSRAM, RLDRAM,
LPDRAM, NAND Flash, image sensor products and certain other memory products we manufacture, which account for a
significant portion of our net sales.