Seagate 2010 Annual Report Download - page 17

Table of Contents
applications will vary at any given time as part of our ongoing patent portfolio management activity. Due to the rapid technological change that
characterizes the electronic data storage industry, we believe that, in addition to patent protection, the improvement of existing products, reliance
upon trade secrets, protection of unpatented proprietary know-how and development of new products are also important to our business in
establishing and maintaining a competitive advantage. Accordingly, we intend to continue our efforts to broadly protect our intellectual property,
including obtaining patents, where available, in connection with our research and development program.
The electronic data storage industry is characterized by significant litigation relating to patent and other intellectual property rights. Because
of rapid technological development in the electronic data storage industry, some of our products have been, and in the future could be, alleged to
infringe existing patents of third parties. From time to time, we receive claims that our products infringe patents of third parties. Although we
have been able to resolve some of those claims or potential claims by obtaining licenses or rights under the patents in question without a material
adverse affect on us, other claims have resulted in adverse decisions or settlements. In addition, other claims are pending, which if resolved
unfavorably to us could have a material adverse effect on our business and results of operations. For more information on these claims, see
"Item 8. Financial Statements and Supplementary Data—Note 13, Legal, Environmental, and Other Contingencies." The costs of engaging in
intellectual property litigation in the past have been, and in the future may be, substantial, irrespective of the merits of the claim or the outcome.
We have patent licenses with a number of companies. Additionally, as part of our normal intellectual property practices, we may be engaged in
negotiations with other major electronic data storage companies and component manufacturers with respect to patent licenses.
Backlog
In view of our customers' rights to cancel or defer orders with little or no penalty, we believe backlog in the disk drive industry is of limited
indicative value in estimating future performance and results.
Environmental Matters
Our operations are subject to U.S. and foreign laws and regulations relating to the protection of the environment, including those governing
discharges of pollutants into the air and water, the management and disposal of hazardous substances and wastes and the cleanup of
contaminated sites. Some of our operations require environmental permits and controls to prevent and reduce air and water pollution, and these
permits are subject to modification, renewal and revocation by issuing authorities.
We have established environmental management systems and continually update our environmental policies and standard operating
procedures for our operations worldwide. We believe that our operations are in material compliance with applicable environmental laws,
regulations and permits. We budget for operating and capital costs on an ongoing basis to comply with environmental laws. If additional or more
stringent requirements are imposed on us in the future, we could incur additional operating costs and capital expenditures.
Some environmental laws, such as the Comprehensive Environmental Response Compensation and Liability Act of 1980 (as amended, the
"Superfund" law) and its state equivalents, can impose liability for the cost of cleanup of contaminated sites upon any of the current or former
site owners or operators or upon parties who sent waste to these sites, regardless of whether the owner or operator owned the site at the time of
the release of hazardous substances or the lawfulness of the original disposal activity. We have been identified as a potentially responsible party
at several sites. At each of these sites, we have an assigned portion of the financial liability based on the type and amount of hazardous
substances disposed of by each party at the site and the number of financially viable parties. We have fulfilled our responsibilities at some of
these sites and remain involved in only a few sites at this time.
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