Intel 2005 Annual Report Download - page 82

Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Legal Proceedings
In June 2005, Advanced Micro Devices, Inc. (AMD) filed a complaint in the United States District Court for the District of Delaware alleging that
Intel and Intel’s Japanese subsidiary engaged in various actions in violation of the Sherman Act and the California Business and Professions Code,
including providing secret and discriminatory discounts and rebates and intentionally interfering with prospective business advantages of AMD.
AMD’s complaint seeks unspecified treble damages, punitive damages, an injunction and attorneys’ fees and costs. Subsequently, AMD’s Japanese
subsidiary also filed suits in the Tokyo High Court and the Tokyo District Court against Intel’s Japanese subsidiary, asserting violations of Japan’s
Antimonopoly Law and alleging damages of approximately $55 million, plus various other costs and fees. At least 79 separate class actions, generally
repeating AMD’s allegations and asserting various consumer injuries, including that consumers in various states have been injured by paying higher
prices for Intel microprocessors, have been filed in the U.S. District Courts for the Northern District of California, Southern District of California and
the District of Delaware, as well as in various California, Kansas and Tennessee state courts. All the federal class actions have been consolidated by
the Multidistrict Litigation Panel to the District of Delaware. All California class actions have been consolidated to the Superior Court of California in
Santa Clara County. Intel disputes AMD’s claims and the class-action claims, and intends to defend the lawsuits vigorously.
Intel is also subject to certain antitrust regulatory inquiries. In 2001, the European Commission commenced an investigation regarding claims by AMD
that Intel used unfair business practices to persuade clients to buy Intel microprocessors. In June 2005, Intel received an inquiry from the Korea Fair
Trade Commission requesting documents from Intel’s Korean subsidiary related to marketing and rebate programs that Intel entered into with Korean
PC manufacturers. Intel is cooperating with these agencies in their investigations and expects that these matters will be acceptably resolved.
In March 2004, MicroUnity, Inc. filed suit against Intel and Dell Inc. in the Eastern District of Texas. MicroUnity claimed that Intel
®
Pentium
®
III ,
Pentium
®
4, Pentium
®
M and Itanium
®
2 processors infringed seven MicroUnity patents, and that certain Intel chipsets infringed one MicroUnity
patent. MicroUnity sought an injunction, unspecified damages and attorneys’ fees against both Intel and Dell. In October 2005, MicroUnity and Intel
entered into a license agreement whereby Intel agreed to pay MicroUnity $300 million for a paid-up license to all MicroUnity patents and for certain
other rights including rights on behalf of Intel customers. Under the agreement, MicroUnity dismissed all claims in the lawsuit against Intel and Dell
with prejudice.
In June 2002, various plaintiffs filed a lawsuit in the Third Judicial Circuit Court, Madison County, Illinois, against Intel, Gateway Inc., Hewlett-
Packard Company and HPDirect, Inc., alleging that the defendants’
advertisements and statements misled the public by suppressing and concealing the
alleged material fact that systems containing Intel Pentium 4 processors are less powerful and slower than systems containing Intel Pentium III
processors and a competitor’s microprocessors. In July 2004, the Court certified against Intel an Illinois-only class of certain end-use purchasers of
certain Pentium 4 processors or computers containing such microprocessors. The Court denied plaintiffs’ motion for reconsideration of this ruling. In
January 2005, the Court granted a motion filed jointly by the plaintiffs and Intel that stayed the proceedings in the trial court pending appellate review
of the Court’s class certification order. The plaintiffs seek unspecified damages and attorneys’ fees and costs. Intel disputes the plaintiffs’ claims and
intends to defend the lawsuit vigorously.
The company is currently a party to various claims and legal proceedings, including those noted above. If management believes that a loss arising from
these matters is probable and can reasonably be estimated, the company records the amount of the loss, or the minimum estimated liability when the
loss is estimated using a range, and no point within the range is more probable than another. As additional information becomes available, any
potential liability related to these matters is assessed and the estimates are revised, if necessary. Based on currently available information, management
believes that the ultimate outcome of these matters, individually and in the aggregate, will not have a material adverse effect on the company’s
financial position, cash flows or overall trends in results of operations. However, litigation is subject to inherent uncertainties, and unfavorable rulings
could occur. An unfavorable ruling could include monetary damages or, in cases where injunctive relief is sought, an injunction prohibiting Intel from
selling one or more products. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the business results of
operations for the period in which the ruling occurs, or future periods.
78