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WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
amount accrued is reasonably possible, the Company discloses an estimate of the amount of the loss or range of possi-
ble losses for the claim if a reasonable estimate can be made, unless the amount of such reasonably possible losses is
not material to the Company’s financial position, results of operations or cash flows.
Unless otherwise stated below, for each of the matters described below, the Company has either recorded an
accrual for losses that are probable and reasonably estimable or has determined that, while a loss is reasonably possible
(including potential losses in excess of the amounts accrued by the Company), a reasonable estimate of the amount of
loss or range of possible losses with respect to the claim or in excess of amounts already accrued by the Company can-
not be made.
Solely for purposes of this note, “WD” refers to Western Digital Corporation or one or more of its subsidiaries
excluding HGST prior to the closing of the Company’s acquisition of HGST on March 8, 2012 (the “HGST Closing
Date”). HGST refers to Hitachi Global Storage Technologies Holdings Pte. Ltd. or one or more of its subsidiaries as of
the HGST Closing Date, and “the Company” refers to Western Digital Corporation and all of its subsidiaries on a
consolidated basis including HGST.
Intellectual Property Litigation
On June 18, 2008, plaintiff Convolve, Inc. (“Convolve”) filed a complaint in the Eastern District of Texas against
WD, HGST, and two other companies alleging infringement of U.S. Patent Nos. 6,314,473 and 4,916,635. The
complaint sought unspecified monetary damages and injunctive relief. On October 10, 2008, Convolve amended its
complaint to 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 filed post-trial motions challenging the verdict. On January 17, 2014 and
February 11, 2015, the Court denied WD’s and HGST’s post-trial motions. On March 13, 2015, WD and HGST
filed Notices of Appeal with the United States District Court for the Federal Circuit (“Federal Circuit”). On April 16,
2015, Convolve filed a motion for reconsideration of the final judgment. On May 5, 2015, the Federal Circuit deacti-
vated the appeal pending the Court’s decision on reconsideration. WD and HGST intend to continue to defend them-
selves vigorously in this matter.
On March 24, 2014, plaintiff Steven F. Reiber (“Reiber”) filed a complaint in the Eastern District of California
against the Company, alleging infringement of U.S. Patent Nos. 7,124,927 and 7,389,905. On September 16, 2014,
Reiber filed an amended complaint in the Eastern District of California against the Company alleging infringement of
three additional patents-U.S. Patent Nos. 6,935,548, 6,651,864, and 6,354,479. Reiber alleged that WD products
(including HDD heads, head gimbal assemblies, head stack assemblies and SSDs) infringed these patents based on the
allegation that the manufacturing of these products involves the use of certain bonding tools (e.g., wire-bonding tips,
capillary tips, and flip-chip handling tools) that have electrically “dissipative” properties, and which are used when
bonding components, such as leads, wires and flip chips. On June 4, 2015, the parties reached a settlement agreement
for an amount that is not material to the Company’s financial position, results of operations or cash flows. On July 17,
2015, the Court dismissed the action against the Company with prejudice. The matter is now resolved.
Seagate Matter
In October 2006, Seagate Technology LLC (“Seagate”) brought an action against the Company and a now former
employee, alleging misappropriation of confidential information and trade secrets. In January 2012, an arbitrator
issued a final award against the Company, including pre-award interest, of $630.4 million. The matter was appealed
and, on October 8, 2014, the Minnesota Supreme Court upheld the arbitrator’s award. On October 14, 2014, the
Company paid Seagate $773.4 million to satisfy the full amount of the final arbitration award plus interest accrued
through October 2014. This amount was paid by one of the Company’s foreign subsidiaries using cash held outside of
the United States.
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