Western Digital 2014 Annual Report Download - page 77

WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
allege infringement of only the ‘473 patent. The ‘473 patent allegedly relates to interface technology to select between
certain modes of a disk drive’s operations relating to speed and noise. A trial in the matter began on July 18, 2011 and
concluded on July 26, 2011 with a verdict against WD and HGST in an amount that is not material to the Company’s
financial position, results of operations or cash flows, for which the Company previously recorded an accrual. WD and
HGST have filed post-trial motions challenging the verdict. On January 17, 2014, the Court denied the Company’s
motion for judgment as a matter of law on invalidity. On May 20, 2014, the Court ordered supplemental briefing related
to post-trial motions related to infringement. Convolve and the Company filed their supplemental briefs on May 30, 2014
and June 6, 2014, respectively. Additional post-trial motions are pending, and the Company will evaluate its options for
appeal after the Court rules on the remaining post-trial motions. The Company intends to continue to defend itself vigo-
rously in this matter.
On December 7, 2009, plaintiff Nazomi Communications (“Nazomi”) filed a complaint in the Eastern District
of Texas against WD and seven other companies alleging infringement of U.S. Patent Nos. 7,080,362 and 7,225,436.
Nazomi dismissed the Eastern District of Texas suit after filing a similar complaint in the Central District of Cal-
ifornia on February 8, 2010. The case was subsequently transferred to the Northern District of California on
October 14, 2010. The complaint seeks injunctive relief and unspecified monetary damages, fees and costs. The
asserted patents allegedly relate to processor cores capable of Java hardware acceleration. In August 2012, the Court
dismissed WD on summary judgment for non-infringement. Nazomi filed a notice of appeal on January 16, 2013.
The Federal Circuit heard oral argument on the appeal on November 4, 2013 and affirmed the Court’s grant of
summary judgment of non-infringement on January 10, 2014. Because Nazomi did not file a petition for a writ of
certiorari with the Supreme Court during the requisite time period, this matter is now closed.
On August 1, 2011, plaintiff Guzik Technical Enterprises (“Guzik”) filed a complaint in the Northern District
of California against WD and various of its subsidiaries alleging infringement of U.S. Patent Nos. 6,023,145 and
6,785,085, breach of contract and misappropriation of trade secrets. The complaint seeks injunctive relief and
unspecified monetary damages, fees and costs. The patents asserted by Guzik allegedly relate to devices used to test
hard disk drive heads and media. On November 30, 2013, WD entered into a settlement agreement for an amount
that is not material to the Company’s financial position, results of operations or cash flows, for which the Company
recorded an accrual in the three months ended December 27, 2013. Guzik is disputing the enforceability of the
agreement and on December 27, 2013, WD filed a motion to enforce the agreement. The Court heard oral argument
on WD’s motion on January 31, 2014. The Court granted WD’s motion to enforce the settlement agreement on
March 21, 2014. On April 14, 2014, Guzik filed a Notice of Appeal to the Federal Circuit. On June 17, 2014, Guzik
filed its opening appellate brief. The Company filed its appellate brief on August 14, 2014. WD intends to continue
to defend itself vigorously in this matter.
On July 9, 2012, Siemens Aktiengesellschaft (“Siemens”) filed a complaint in German court against WD, West-
ern Digital GmbH, and Digital River International, S.a.r.l. alleging patent infringement of European patent no. EP
674769, which claims an artificial antiferromagnetic (AAF) (aka, synthetic antiferromagnetic) structure for magneto-
resistive sensors. On March 14-15, 2013, Western Digital GmbH filed a response of non-infringement and also filed a
separate nullity action. Siemens separately served WD on July 15, 2013. The patent expired on December 16, 2013
and, on March 10, 2014, Siemens withdrew its motion for injunctive relief. On February 5, 2014, the Company filed a
submission in support of its nullity action. On March 25, 2014, Siemens served an extension of the complaint includ-
ing WDT as a defendant. On March 28, 2014, Siemens filed its response to WD’s noninfringement submission. On
June 27, 2014, WDT filed its response to the extension of the complaint. On or around July 14, 2014, Siemens filed a
response to the Company’s nullity action. On July 18, 2014, the Company filed two expert opinions in support of its
nullity action. Siemens has until September 5, 2014 to respond to WDT’s response to the extension of the complaint.
WD’s deadline to make its last noninfringement submission is September 26, 2014. The oral hearing on infringement
is scheduled for October 2, 2014. The oral hearing on the nullity action to challenge the validity of the patent is
scheduled for February 3, 2015. WD intends to defend itself vigorously in this matter.
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