Seagate 2007 Annual Report Download - page 109

Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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The suit alleges that Seagate drives incorporating Giant Magnetic Resistance (GMR) sensors infringe the ‘838 patent. The complaint seeks
damages in an unstated amount, an accounting, preliminary and permanent injunctions, prejudgment interest, enhanced damages for alleged
willful infringement, and attorney fees and costs. The lawsuit was served on Seagate on September 6, 2006. We served an answer to the
complaint on November 27, 2006, denying all material allegations and asserting affirmative defenses. Siemens amended its complaint to add
Tunnel Magnetic Resistance (TMR) sensors to the case. On May 9, 2008, the court entered summary judgment that TMR sensors are not covered
by the ‘838 patent, thus eliminating TMR products from the case. Trial is scheduled to begin November 11, 2008. We believe the claims are
without merit, and the Company intends to defend against them vigorously.
StorMedia Texas LLC v. Comp USA, et al. On January 22, 2007, a lawsuit was filed against 11 defendants, alleging infringement of
U.S. Patent No. 6,805,891 (the ‘891 patent), a media patent that is allegedly owned by StorMedia Texas LLC. The suit was filed in U.S. District
Court for the Eastern District of Texas, Marshall Division. All major hard disc drive companies are named, including Seagate Technology,
Seagate Technology LLC, Hitachi, Fujitsu, Samsung, Toshiba, and Western Digital, as well as retailers Comp USA, J&R Electronics, and Tiger
Direct. We served an answer to the complaint on April 13, 2007, denying all material allegations and asserting affirmative defenses. A request
for reexamination of the ‘891 patent was granted and all claims were rejected as unpatentable over the prior art in an initial office action dated
March 17, 2008. The court denied a motion to stay the case pending patent reexamination. On June 1, 2008, the Company also filed a request for
reexamination of the ‘891 patent on different grounds. Trial is scheduled to begin on March 4, 2009. We believe the claims are without merit,
and the Company intends to defend against them vigorously.
Environmental Matters
Our 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 current and 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. We are indemnified by a
third party for a portion of the costs that may be incurred in the clean up of contamination at most sites. In the opinion of management, the
probability is remote that the losses arising from these environmental matters would be material to the Company’s financial position, cash flows
or results of operations.
We may be subject to various state, federal and international laws and regulations governing the environment, including those restricting
the presence of certain substances in electronic products. For example, the European Union (“EU”) has enacted the Restriction of the Use of
Certain Hazardous Substances in Electrical and Electronic Equipment (“RoHS”),
which prohibits the use of certain substances, including lead, in
certain products, including hard drives, put on the market after July 1, 2006 as well as the Waste Electrical and Electronic Equipment (“WEEE”)
directive, which makes producers of electrical goods, including disc drives, financially responsible for specified collection, recycling, treatment
and disposal of past and future covered products. Similar legislation has been or may be enacted in other jurisdictions, including in the United
States, Canada, Mexico, China and Japan. We will need to ensure that the Company complies with such laws and regulations as they are enacted,
and that its component suppliers also timely comply with such laws and regulations. If the Company fails to timely comply with the legislation,
its customers may refuse to purchase its products, which would have a materially adverse effect on its business, financial condition and results of
operations.
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