NVIDIA 2010 Annual Report Download - page 36

Our ability to compete will be harmed if we are unable to adequately protect our intellectual property.
We rely primarily on a combination of patents, trademarks, trade secrets, employee and third-party nondisclosure agreements,
and licensing arrangements to protect our intellectual property in the United States and internationally. We have numerous patents
issued, allowed and pending in the United States and in foreign jurisdictions. Our patents and pending patent applications primarily
relate to our products and the technology used in connection with our products. We also rely on international treaties, organizations
and foreign laws to protect our intellectual property. The laws of certain foreign countries in which our products are or may be
manufactured or sold, including various countries in Asia, may not protect our products or intellectual property rights to the same
extent as the laws of the United States. This makes the possibility of piracy of our technology and products more likely. We
continuously assess whether and where to seek formal protection for particular innovations and technologies based on such factors as:
• the commercial significance of our operations and our competitors’ operations in particular countries and regions;
• the location in which our products are manufactured;
• our strategic technology or product directions in different countries; and
• the degree to which intellectual property laws exist and are meaningfully enforced in different jurisdictions.
Our pending patent applications and any future applications may not be approved. In addition, any issued patents may not provide
us with competitive advantages or may be challenged by third parties. The enforcement of patents by others may harm our ability to
conduct our business. Others may independently develop substantially equivalent intellectual property or otherwise gain access to our
trade secrets or intellectual property. Our failure to effectively protect our intellectual property could harm our business.
Government investigations and inquiries from regulatory agencies could lead to enforcement actions, fines or other penalties
and could result in litigation against us.
In the past, we have been subject to government investigations and inquiries from regulatory agencies such as the Department of
Justice and the SEC. We may be subject to government investigations and receive additional inquiries from regulatory agencies in the
future, which may lead to enforcement actions, fines or other penalties.
In addition, litigation has often been brought against a company in connection with the announcement of a government
investigation or inquiry from a regulatory agency. Such lawsuits could result in the diversion of management’s time and attention
away from business operations, which could harm our business. In addition, the costs of defense and any damages resulting from
litigation, a ruling against us, or a settlement of the litigation could adversely affect our cash flow and financial results.
We are subject to the risks of owning real property.
During fiscal year 2009, we purchased real property in Santa Clara, California that includes approximately 25 acres of land and
ten commercial buildings. We also own real property in China and India. We have limited experience in the ownership and
management of real property and are subject to the risks of owning real property, including:
• the possibility of environmental contamination and the costs associated with mitigating any environmental problems;
• adverse changes in the value of these properties, due to interest rate changes, changes in the market in which the property is
located, or other factors;
• the risk of loss if we decide to sell and are not able to recover all capitalized costs;
• increased cash commitments for the possible construction of a campus;
• the possible need for structural improvements in order to comply with zoning, seismic and other legal or regulatory
requirements;
• increased operating expenses for the buildings or the property or both;
• possible disputes with third parties, such as neighboring owners or others, related to the buildings or the property or both;
and
• the risk of financial loss in excess of amounts covered by insurance, or uninsured risks, such as the loss caused by damage
to the buildings as a result of earthquakes, floods and or other natural disasters.
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Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Research℠