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This excerpt taken from the STM 20-F filed May 13, 2009. Legal
Proceedings
As is the case with many companies in the semiconductor
industry, we have from time to time received, and may in the
future receive, communications from other semiconductor
companies or third parties alleging possible infringement of
patents. Furthermore, we may become involved in costly
litigation brought against us regarding patents, copyrights,
trademarks, trade secrets or mask works. In the event that the
outcome of any litigation would be unfavorable to us, we may be
required to take a license to the underlying intellectual
property right upon economically unfavorable terms and
conditions, and possibly pay damages for prior use,
and/or face
an injunction, all of which singly or in the aggregate could
have a material adverse effect on our results of operations and
ability to compete. See “Item 3. Key
Information — Risk Factors — Risks Related
to Our Operations — We depend on patents to protect
our rights to our technology.”
We record a provision when it is probable that a liability has
been incurred and when the amount of the loss can be reasonably
estimated. We regularly evaluate losses and claims to determine
whether they need to be adjusted based on the current
information available to us. Legal costs associated with claims
are expensed as incurred. We are in discussion with several
parties with respect to claims against us relating to possible
infringements of patents and similar intellectual property
rights of others.
We are currently a party to legal proceedings with SanDisk
Corporation.
On October 15, 2004, SanDisk filed a complaint for patent
infringement and a declaratory judgment of non-infringement and
patent invalidity against us with the United States District
Court for the Northern District of California. The complaint
alleged that our products infringed on a single SanDisk
U.S. patent (Civil Case No. C
04-04379JF).
By an order dated January 4, 2005, the court stayed
SanDisk’s patent infringement claim, pending final
determination in an action filed contemporaneously by SanDisk
with the U.S. International Trade Commission
(“ITC”), which covered the same patent claim asserted
in Civil Case No. C
04-04379JF.
The ITC action was subsequently resolved in our favor. On
August 2, 2007, SanDisk filed an amended complaint in the
United States District Court for the Northern District of
California adding allegations of infringement with respect to a
second SanDisk U.S. patent which had been the subject of a
second ITC action and which was also resolved in our favor. On
September 6, 2007, we filed an answer and a counterclaim
alleging various federal and state antitrust and unfair
competition claims. SanDisk filed a motion to dismiss our
antitrust counterclaim, which was denied on January 25,
2008. On October 17, 2008, the Court issued an order
granting in part and denying in part a summary judgment motion
filed by SanDisk with respect to our antitrust counterclaims.
Discovery is ongoing. SanDisk recently moved to add two
additional related patents to the case. Such motion is
currently pending. The trial date has not yet been set.
On October 14, 2005, we filed a complaint against SanDisk
and its current CEO, Dr. Eli Harari, before the Superior
Court of California, County of Alameda. The complaint seeks,
among other relief, the assignment or co-ownership of certain
SanDisk patents that resulted from inventive activity on the
part of Dr. Harari that took place while he was an
employee, officer
and/or
director of Waferscale Integration, Inc. and actual, incidental,
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consequential, exemplary and punitive damages in an amount to be
proven at trial. We are the successor to Waferscale Integration,
Inc. by merger. SanDisk removed the matter to the United States
District Court for the Northern District of California which
remanded the matter to the Superior Court of California, County
of Alameda in July 2006. SanDisk moved to transfer the case to
the Superior Court of California, County of Santa Clara and
to strike our claim for unfair competition, which were both
denied by the trial court. SanDisk appealed these rulings and
also moved to stay the case pending resolution of the appeal. On
January 12, 2007, the California Court of Appeals ordered
that the case be transferred to the Superior Court of
California, County of Santa Clara. On August 7, 2007,
the California Court of Appeals affirmed the Superior
Court’s decision denying SanDisk’s motion to strike
our claim for unfair competition. SanDisk appealed this ruling
to the California Supreme Court, which refused to hear it. On
August 26, 2008, the federal court granted our motion to
remand the case back to Santa Clara County and,
subsequently, on September 9, 2008 SanDisk’s motion
for reconsideration. The case has now been re-certified in the
state court and a trial date of September 8, 2009 has been
set. Discovery is ongoing. In April 2009, the Court denied
Sandisk’s motion for summary judgement on SanDisk’s
affirmative defense of statute of limitations.
With respect to the lawsuits with SanDisk as described above,
and following two prior decisions in our favor taken by the ITC,
we have not identified any risk of probable loss that is likely
to arise out of the outstanding proceedings.
We are also a party to legal proceedings with Tessera, Inc.
On January 31, 2006, Tessera added our Company as a
co-defendant, along with several other semiconductor and
packaging companies, to a lawsuit filed by Tessera on
October 7, 2005 against Advanced Micro Devices Inc. and
Spansion in the United States District Court for the Northern
District of California. Tessera is claiming that certain of our
small format BGA packages infringe certain patents owned by
Tessera, and that we are liable for damages. Tessera is also
claiming that various ST entities breached a 1997 License
Agreement and that we are liable for unpaid royalties as a
result. In April and May 2007, the United States Patent and
Trademark Office (“PTO”) initiated reexaminations in
response to the reexamination requests. A final decision
regarding the reexamination requests is pending.
On April 17, 2007, Tessera filed a complaint against us,
Spansion, ATI Technologies, Inc., Qualcomm, Motorola and
Freescale with the ITC with respect to certain small format ball
grid array packages and products containing the same, alleging
patent infringement claims of two of the Tessera patents
previously asserted in the District Court action described above
and seeking an order excluding importation of such products into
the United States. On May 15, 2007, the ITC instituted an
investigation pursuant to 19 U.S.C. § 1337,
entitled “In the Matter of Certain Semiconductor Chips with
Minimized Chip Package Size and Products Containing Same”,
Inv.
No. 337-TA-605.
The PTO’s Central Reexamination Unit has issued office
actions rejecting all of the asserted patent claims on the
grounds that they are invalid in view of certain prior art.
Tessera is contesting these rejections, and the PTO has not made
a final decision. On February 25, 2008, the administrative
law judge issued an initial determination staying the ITC
proceeding pending completion of these reexamination
proceedings. On March 28, 2008, the ITC reversed the
administrative law judge and ordered him to reinstate the ITC
proceeding. Trial proceedings took place from July 14, 2008
to July 18, 2008. On December 1, 2008, the ITC
Administration Law Judge issued this initial determination
finding the “326” and “419” patents valid
but not infringed. Tessera has appealed this ruling to the ITC
which, on March 26, 2009 decided to extend the deadline for
completing its review and rendering its final determination
until May 20, 2009. Pursuant to its review, the ITC can
affirm, modify or reverse the initial determination, in whole or
in part. The two Tessera patents asserted in the proceedings
will expire in 2010.
In addition, in April 2008, we, along with several other
companies such as Freescale, NXP Semiconductor, Grace
Semiconductor, National Semiconductor, Spansion and Elpida, were
sued by LSI Corp. and its wholly-owned subsidiary Agere Systems,
Inc. (collectively “LSI”) before the ITC in
Washington, D.C.. The lawsuit follows LSI Corp.’s
purchase of Agere Systems Inc. and alleges infringement of a
single Agere U.S. process patent (US 5,227,335). LSI
is seeking an exclusion order preventing the importation into
the United States of semiconductor integrated devices and
products made by the methods alleged to infringe the asserted
patent. The Administrative Law Judge assigned to the case set a
July 2009 trial date with an initial determination on the merits
due September 21, 2009. The ITC’s final determination
is currently scheduled for January 21, 2010. The LSI patent
in suit expires July 13, 2010. A
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claim for patent infringement was also made by LSI in the United
States District Court for the Eastern District of Texas
regarding the same patent. The action in the United States
District Court for the Eastern District of Texas has been stayed
pending completion of the ITC case. Fact discovery is closed in
this case and the plaintiff’s expert report contains no
mention of ST. We have filed a motion for summary determination
with the ITC based upon our affirmative defense of license and
LSI’s failure to offer expert testimony regarding
infringement of the asserted patent by any ST product.
Other
Matters
In February 2008, we instituted arbitration proceedings against
Credit Suisse Securities (“Credit Suisse”) in
connection with the unauthorized purchase by Credit Suisse of
collateralized debt obligations and credit-linked notes (the
“Unauthorized Securities”) instead of the federally
guaranteed student loan securities that we had instructed Credit
Suisse to purchase. On February 12, 2009 an arbitration
panel of the Financial Industry Regulatory Authority
(“FINRA”) awarded us approximately $401.5 million
in compensatory and consequential damages, in addition to
approximately $27 million in interest and $3 million
in attorney’s fees, in exchange for the transfer of all of
the Unauthorized Securities back to Credit Suisse. On
February 17, 2009, we filed a petition in the United States
District Court for the Southern District of New York (the
“Court”) seeking confirmation and enforcement of the
FINRA award. Credit Suisse has responded by seeking to vacate
the FINRA award. All required written submissions have to date
been filed with the Court by us and Credit Suisse, and the Court
may rule at any time.
In October 2008, we learned that the European Commission had
commenced an investigation involving the Smartcard business for
alleged violations of antitrust laws. This investigation is in
the very early stages. We are monitoring the investigation
carefully and have expressed our willingness to the European
Commission to cooperate to the full extent possible in the
management of the case and our availability to provide any
additional information or documentation as may be requested.
This excerpt taken from the STM 20-F filed Mar 3, 2008. Legal
Proceedings
As is the case with many companies in the semiconductor
industry, we have from time to time received, and may in the
future receive, communications from other semiconductor
companies or third parties alleging possible infringement of
patents. Furthermore, we may become involved in costly
litigation brought against us regarding patents, copyrights,
trademarks, trade secrets or mask works. In the event that the
outcome of any litigation would be unfavorable to us, we may be
required to take a license to the underlying intellectual
property right upon economically unfavorable terms and
conditions, and possibly pay damages for prior use,
and/or face
an injunction, all of which singly or in the aggregate could
have a material adverse effect on our results of operations and
ability to
Table of Contents
compete. See “Item 3. Key Information — Risk
Factors — Risks Related to Our Operations —
We depend on patents to protect our rights to our
technology.”
We record a provision when it is probable that a liability has
been incurred and when the amount of the loss can be reasonably
estimated. We regularly evaluate losses and claims to determine
whether they need to be adjusted based on the current
information available to us. Legal costs associated with claims
are expensed as incurred. We are in discussion with several
parties with respect to claims against us relating to possible
infringements of patents and similar intellectual property
rights of others.
We are currently a party to legal proceedings with SanDisk
Corporation.
On October 15, 2004, SanDisk filed a complaint for patent
infringement and a declaratory judgment of non-infringement and
patent invalidity against us with the United States District
Court for the Northern District of California. The complaint
alleges that our products infringed a single SanDisk
U.S. patent and seeks a declaratory judgment that SanDisk
did not infringe several of our U.S. patents (Civil Case
No. C
04-04379JF).
By an order dated January 4, 2005, the court stayed
SanDisk’s patent infringement claim, pending final
determination in an action filed contemporaneously by SanDisk
with the United States International Trade Commission
(“ITC”), which covers the same patent claim asserted
in Civil Case No. C
04-04379JF.
The ITC action was subsequently resolved in our favor. On
August 2, 2007, SanDisk filed an amended complaint adding
allegations of infringement with respect to a second SanDisk
U.S. patent which had been the subject of a second ITC
action and which was also resolved in our favor. On
September 6, 2007, we filed an answer and a counterclaim
alleging various federal and state antitrust and unfair
competition claims. SanDisk filed a motion to dismiss our
antitrust counterclaim, which was denied on January 25,
2008. Discovery is now proceeding.
On October 14, 2005, we filed a complaint against SanDisk
and its current CEO, Dr. Eli Harari, before the Superior
Court of California, County of Alameda. The complaint seeks,
among other relief, the assignment or co-ownership of certain
SanDisk patents that resulted from inventive activity on the
part of Dr. Harari that took place while he was an
employee, officer
and/or
director of Waferscale Integration, Inc. and actual, incidental,
consequential, exemplary and punitive damages in an amount to be
proven at trial. We are the successor to Waferscale Integration,
Inc. by merger. SanDisk removed the matter to the United States
District Court for the Northern District of California which
remanded the matter to the Superior Court of California, County
of Alameda in July 2006. SanDisk moved to transfer the case to
the Superior Court of California, County of Santa Clara and
to strike our claim for unfair competition, which were both
denied by the trial court. SanDisk appealed these rulings and
also moved to stay the case pending resolution of the appeal. On
January 12, 2007, the California Court of Appeals ordered
that the case be transferred to the Superior Court of California
County of Santa Clara. On August 7, 2007, the
California Court of Appeals affirmed the Superior Court’s
decision denying SanDisk’s motion to strike our claim for
unfair competition. SanDisk appealed this ruling to the
California Supreme Court, which refused to hear it. Discovery is
now proceeding. A hearing on Dr. Hariri’s motion for
summary judgment on the statute of limitations defense is
scheduled for the third quarter of 2008.
With respect to the lawsuits with SanDisk as described above,
and following two prior decisions in our favor taken by the ITC,
we have not identified any risk of probable loss that is likely
to arise out of the outstanding proceedings.
We are also a party to legal proceedings with Tessera, Inc.
On January 31, 2006, Tessera added our Company as a
co-defendant, along with several other semiconductor and
packaging companies, to a lawsuit filed by Tessera on
October 7, 2005 against Advanced Micro Devices Inc. and
Spansion in the United States District Court for the Northern
District of California. Tessera is claiming that certain of our
small format BGA packages infringe certain patents owned by
Tessera, and that ST is liable for damages. Tessera is also
claiming that various ST entities breached a 1997 License
Agreement and that ST is liable for unpaid royalties as a
result. In February and March 2007, our codefendants Siliconware
Precision Industries Co., Ltd. and Siliconware USA, Inc., filed
reexamination requests with the U.S. Patent and Trademark
Office covering all of the patents and claims asserted by
Tessera in the lawsuit. In April and May 2007, the
U.S. Patent and Trademark Office initiated reexaminations
in response to all of the reexamination requests and final
decisions regarding the reexamination requests are pending. On
May 24, 2007, this action was stayed pending the outcome of
the ITC proceeding described below.
On April 17, 2007, Tessera filed a complaint against us,
Spansion, ATI Technologies, Inc., Qualcomm, Motorola and
Freescale with the ITC with respect to certain small format ball
grid array packages and products containing the same, alleging
patent infringement claims of two of the Tessera patents
previously asserted in the District Court action described above
and seeking an order excluding importation of such products into
the United States. On May 15, 2007, the ITC instituted an
investigation pursuant to 19 U.S.C. § 1337,
entitled In the Matter of
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Certain Semiconductor Chips with Minimized Chip Package Size and
Products Containing Same, Inv.
No. 337-TA-605.
On February 25, 2008, the administrative law judge at the
ITC issued a decision to stay all Tessera’s ITC proceedings
pending completion of re-examination proceedings before the
U.S. Patent and Trademark Office (“PTO”)
concerning the two asserted Tessera patents. This decision from
the administrative law judge was the result of a motion by the
defendants seeking to stop ITC action following recent PTO
actions rejecting numerous claims on the Tessera patents being
asserted in the litigation. Tessera has indicated its intent to
appeal the aforementioned ITC and PTO actions.
In September 2006, after we uncovered by our internal audit
fraudulent foreign exchange transactions not known to us
performed by our former Treasurer and resulting in payments by a
financial institution of over 28 million Swiss Francs in
commissions for the personal benefit of our former Treasurer, we
filed a criminal complaint before the Public Prosecutor in
Lugano, Switzerland. Following such complaint, our former
Treasurer was arrested in November 2006 and on February 12,
2008 sentenced to three and half years imprisonment. To date, we
have recovered over half of the illegally paid commissions and
we are actively pursuing outstanding dues pursuant to the fraud
and will continue to do so from all responsible parties.
In February 2008, following unauthorized purchases for our
account of certain auction-rate securities, we initiated a
proceeding against the responsible financial institution seeking
to reverse the unauthorized purchases and recover all losses in
our account, including, but not limited to, the $46 million
impairment posted in Q4 2007.
This excerpt taken from the STM 6-K filed Nov 9, 2005. Legal Proceedings We are currently a party to legal proceedings with SanDisk. On October 15, 2004, SanDisk filed a complaint against us with the United States International Trade Commission (the “ITC”) with respect to certain NAND memory products, alleging patent infringement and seeking an order excluding our NAND products from importation into the United States. On November 15, 2004, the ITC instituted an investigation against us in response to the complaint. On October 19, 2005, Administrative Law Judge Paul J. Luckern, in his Initial Determination, ruled that our NAND products do not infringe the asserted SanDisk patent, and that there was no violation of Section 337 of the U.S. Tariff Act of 1930. No impact to our financial statements resulted from this recent decision.
9 On October 15, 2004, SanDisk also filed a complaint for patent infringement, and declaratory judgment of non-infringement and patent invalidity against us with the United States District Court for the Northern District of California. The complaint alleges that our products infringe a SanDisk U.S. patent and seeks a declaratory judgment that SanDisk does not infringe several of our U.S. patents. By order dated January 4, 2005, the court stayed SanDisk’s patent infringement claim pending a final determination in the ITC action discussed above. On January 20, 2005, the court issued an order granting our motion to dismiss the declaratory judgment causes of action. SanDisk has appealed the order to the United States Court of Appeals for the Federal Circuit. On February 4, 2005, we filed two complaints for patent infringement against SanDisk with the United States District Court for the Eastern District of Texas. The complaints allege that SanDisk products infringe seven of our U.S. patents. On April 22, 2005, SanDisk filed a counterclaim against us alleging that our products infringed two SanDisk patents. We anticipate that the first trial will be held during the first quarter of 2006 and that the second trial will be held during the third quarter of 2006. On March 28, 2005, SanDisk filed a complaint for declaratory judgment of non-infringement and patent invalidity against us with the United States District Court for the Northern District of California. The complaint seeks a declaratory judgment that SanDisk does not infringe several of our U.S. patents. On April 11, 2005, SanDisk voluntarily dismissed the case. On October 14, 2005, we filed a complaint against SanDisk and its current CEO Dr. Eli Harari before the Superior Court of California, County of Alameda. The complaint seeks, among other relief, assignment of certain SanDisk patents that resulted from inventive activity on the part of Dr. Harari that took place while he was an employee, officer and/or director of Waferscale Integration, Inc. We are the successor to Waferscale Integration, Inc. by merger. | EXCERPTS ON THIS PAGE:
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