Intel 2005 Annual Report Download - page 24

Table of Contents
Costs related to product defects and errata may have an adverse impact on our results of operations and business.
Costs associated with unexpected product defects and errata (deviations from published specifications) include, for example, the costs of:
These costs could be substantial and may therefore increase our expenses and adversely affect our gross margin. In addition, our reputation with our
customers or end users of our products could be damaged as a result of such product defects and errata, and the demand for our products could be
reduced. These factors could negatively impact our financial results and the prospects for our business.
We may be subject to claims of infringement of third-party intellectual property rights, which could adversely affect our business.
From time to time, third parties may assert against us or our customers alleged patent, copyright, trademark and other intellectual property rights to
technologies that are important to our business. We may be subject to intellectual property infringement claims from certain individuals and companies
who have acquired patent portfolios for the sole purpose of asserting such claims against other companies. Any claims that our products or processes
infringe the intellectual property rights of others, regardless of the merit or resolution of such claims, could cause us to incur significant costs in
responding to, defending and resolving such claims, and may divert the efforts and attention of our management and technical personnel away from
our business. As a result of such intellectual property infringement claims, we could be required to:
The occurrence of any of the foregoing could result in unexpected expenses or require us to recognize an impairment of our assets, which would
reduce the value of our assets and increase expenses. In addition, if we alter or discontinue our production of affected items, our revenue could be
negatively impacted.
We may be subject to litigation proceedings that could adversely affect our business.
In addition to the litigation risks mentioned above, we may be subject to legal claims or regulatory matters involving stockholder, consumer, antitrust
and other issues. As described in “Legal Proceedings” in Part I, Item 3 of this Form 10-K, we are currently engaged in a number of litigation matters.
Litigation is subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include money damages or, in cases
for which injunctive relief is sought, an injunction prohibiting Intel from manufacturing or selling one or more products. Were an unfavorable ruling to
occur, there exists the possibility of a material adverse impact on business and results of operations for the period in which the ruling occurred or
future periods.
We may not be able to enforce or protect our intellectual property rights, which may harm our ability to compete and adversely affect our business.
Our ability to enforce our patents, copyrights, software licenses and other intellectual property is subject to general litigation risks, as well as
uncertainty as to the enforceability of our intellectual property rights in various countries. When we seek to enforce our rights, we are often subject to
claims that the intellectual property right is invalid, is otherwise not enforceable or is licensed to the party against whom we are asserting a claim. In
addition, our assertion of intellectual property rights often results in the other party seeking to assert alleged intellectual property rights of its own
against us, which may adversely impact our business in the manner discussed above. If we are not ultimately successful in defending ourselves against
these claims in litigation, we may not be able to sell a particular product or family of products, due to an injunction, or we may have to pay material
amounts of damages, which could in turn negatively affect our results of operations. In addition, governments may adopt regulations or courts may
render decisions requiring compulsory licensing of intellectual property to others, or governments may require that products meet specified standards
that serve to favor local companies. Our inability to enforce our intellectual property rights under these circumstances may negatively impact our
competitive position and our business.
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writing down the value of inventory of defective products;
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disposing of defective products that cannot be fixed;
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recalling defective products that have been shipped to customers;
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providing product replacements for or modifications to defective products; and
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defending against litigation related to defective products.
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pay third
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party infringement claims;
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discontinue manufacturing, using or selling the infringing products;
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discontinue using the infringing technology or processes;
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develop non
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infringing technology, which could be time
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consuming and costly or may not be possible; or
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license technology from the third party claiming infringement, which license may not be available on commercially reasonable terms or at all.