SanDisk 2014 Annual Report Download - page 198

SANDISK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Direct Acquisition-related Costs. Direct acquisition-related costs of $3.1 million during the fiscal year
ended December 29, 2013 were related to legal, regulatory and accounting fees, and were expensed to
General and administrative expense in the Consolidated Statement of Operations.
Note 18. Litigation
From time to time, the Company is involved in various litigation matters, including those described
below, among others. The litigation proceedings in which the Company is involved from time to time may
include matters such as IP, antitrust, commercial, labor, class action and insurance disputes. The
semiconductor industry is characterized by significant litigation seeking to enforce patent and other IP
rights. The Company has enforced, and likely will continue to enforce, its own IP rights through litigation
and related proceedings.
In each case listed below where the Company is the defendant, the Company intends to vigorously
defend the action. At this time, the Company does not believe it is reasonably possible that losses related
to the litigation described below have occurred beyond the amounts, if any, which have been accrued.
However, legal discovery and litigation is highly unpredictable and future legal developments may cause
current estimates to change in future periods.
Patent Infringement and Antitrust Litigation With Round Rock Research LLC. On October 27, 2011, in
response to infringement allegations by Round Rock Research LLC (‘‘Round Rock’’), the Company filed a
lawsuit against Round Rock in the U.S. District Court for the Northern District of California. The lawsuit
seeks a declaratory judgment that 12 Round Rock patents are invalid and/or not infringed by flash memory
products sold by the Company. Round Rock has since withdrawn its infringement allegations as to eight of
the patents. The parties filed several motions for summary judgment directed to various claims and
defenses. On June 13, 2014, the Company won multiple summary judgment motions, which included a
ruling that it did not infringe two of the remaining four patents based on patent exhaustion because its
memories were purchased from an authorized licensee and other rulings limiting the potential damages
from the other two patents. On July 3, 2014, Round Rock dismissed the two remaining patents in the case
in order to appeal the court’s summary judgment rulings. The court entered final judgment on July 3, 2014.
On July 23, 2014, Round Rock filed a notice of appeal.
On May 3, 2012, Round Rock filed an action in the U.S. District Court for the District of Delaware
alleging that the Company infringed eleven patents, and subsequently filed an amended complaint alleging
that the Company’s infringement was willful. The parties agreed to dismiss one patent from this Delaware
lawsuit that was also being litigated in the California case described above. On January 16, 2015, the court
commenced a jury trial on liability issues as to two of the asserted patents. On January 28, 2015, the jury
found that although the Company infringed four of ten claims asserted in the two patents, all of the
asserted claims in those two patents are invalid. On February 4, 2015, the court issued an order granting
summary judgment that five of the six asserted claims of another asserted patent are invalid.
On March 19, 2014, the Company filed an action against Round Rock in the U.S. District Court for
the District of Delaware for antitrust violations arising from Round Rock’s acquisition of patents from
Micron Technology, Inc. (‘‘Micron’’) and demand for royalties that are not reasonable and
non-discriminatory for alleged infringement of patents that Round Rock claims are standards-essential.
The Company alleges that Round Rock violated the antitrust laws by conspiring with Micron and violating
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