Seagate 2004 Annual Report Download - page 95

Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Read-Rite Corporation —In order to clarify our rights under a Patent Cross-License Agreement between Seagate Technology, Inc. and
Read-Rite Corporation, we filed a declaratory judgment action on May 7, 2003 in the Superior Court of California, County of Santa Clara,
seeking a declaration that we are entitled to a cross-license, effective as of November 22, 2000, under terms substantially identical to those
contained in the Patent Cross License Agreement. On June 11, 2003, Read-Rite Corporation answered the complaint putting forward a general
denial and asserting various affirmative defenses. On June 17, 2003, Read-Rite Corporation filed a voluntary petition for bankruptcy under
Chapter 7 of the U.S. Bankruptcy Code. Upon notice, our declaratory judgment action has been stayed. On July 23, 2003, the U.S. Bankruptcy
Court approved Western Digital Corporation’s bid to acquire the assets of Read-Rite Corporation, including intellectual property that was the
subject of Read-Rite’s dispute with us, in a transaction that closed on July 31, 2003.
In the Bankruptcy Court, we objected to the Chapter 7 Trustee’s assumption and assignment to Western Digital of the Patent Cross-
License Agreement, and the Trustee ultimately rejected the Agreement. On November 14, 2003, the Bankruptcy Trustee made a motion,
continued from time to time, to assume or reject certain Read-Rite executory contracts, rejecting the Patent Cross-License Agreement. On
November 12, 2004, we filed our election to retain the benefits of the Patent Cross
-License Agreement to the extent permitted by Section 365
(n) of the U.S. Bankruptcy Code. The Chapter 7 Trustee and Western Digital opposed our election to retain the benefits of the license. We have
since reached agreement with the Bankruptcy Trustee, subject to Bankruptcy Court approval, to allow us to retain the benefits of the Patent
Cross-License in exchange for us withdrawing our proof of claim against the bankruptcy estate. Western Digital objected to the settlement. On
July 7, 2005, the Bankruptcy Trustee filed a motion to approve settlement of all bankruptcy disputes with Western Digital and indicated that he
no longer supports the agreement we reached with him. Pursuant to this motion, the Bankruptcy Trustee seeks approval to appoint Western
Digital as the estate’s attorney in fact involving our election to retain the benefits of the Patent Cross-License Agreement. The Bankruptcy
trustee withdrew his motion to approve the Seagate settlement. At a hearing on July 27, 2005, the Bankruptcy Court approved the Western
Digital settlement and set a hearing for September 28, 2005 on our 365(n) election to retain the benefits of the Patent Cross-License
Agreement.
Securities and Exchange Commission’s Request for Information
In October 2003, we received from the Securities and Exchange Commission a request for all third-party research analyst reports
regarding Seagate Technology published during the period commencing January 1, 2000 through August 30, 2003. By early December 2003
we had provided all information requested by the SEC. We believe their request was made as a result of allegations of a former employee who
claimed that we terminated him in violation of the Minnesota Whistleblower Act for challenging certain financial disclosures. We, and the
former employee entered into a court-mediated settlement of the employee claims. The financial terms of the settlement are confidential but
were not material to us. Nothing has come to our attention during this process that leads us to believe that our financial disclosures were not
complete and appropriate.
Environmental Matters
The Company’s operations inside and outside the United States are subject to laws and regulations relating to protection of the
environment, including those governing the discharge of pollutants into the air, soil and water, the management and disposal of hazardous
substances and wastes and clean-up of contaminated sites. Contaminants have been detected at some of the Company’
s former sites, principally
in connection with historical operations. In addition, the Company has been named as a potentially responsible party at several superfund sites.
Investigative activities have taken place at all sites of known contamination. One former site is under a Consent Order by the U.S.
Environmental Protection Agency. The extent of the contamination at this site has been investigated and defined and remediation is underway.
The Company is indemnified by a third party for
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