Intel 2007 Annual Report Download - page 22

Table of Contents
Costs related to product defects and errata may harm our results of operations and business.
Costs associated with unexpected product defects and errata (deviations from published specifications) due to, for example,
unanticipated problems in our manufacturing processes include, the costs of:
These costs could be substantial and may therefore increase our expenses and lower our gross margin. In addition, our
reputation with our customers or 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 harm 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 harm our business.
From time to time, third parties may assert against us or our customers alleged patent, copyright, trademark, or 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 or otherwise
decide it is appropriate 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 harm 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 “Note 21: Contingencies” in Part II, Item 8 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 monetary damages or, in cases for which injunctive
relief is sought, an injunction prohibiting us from manufacturing or selling one or more products. Were an unfavorable ruling
to occur, our business and results of operations could be materially harmed.
We may not be able to enforce or protect our intellectual property rights, which may harm our ability to compete and harm
our business.
Our ability to enforce our patents, copyrights, software licenses, and other intellectual property rights 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
harm our business. 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 damages that could, in turn,
harm 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 harm
our competitive position and our business.
17
•
writing off the value of inventory of defective products;
•
disposing of defective products that cannot be fixed;
•
recalling defective products that have been shipped to customers;
•
providing product replacements for, or modifications to, defective products; and/or
•
defending against litigation related to defective products.
•
pay third
-
party infringement claims;
•
discontinue manufacturing, using, or selling particular products subject to infringement claims;
•
discontinue using the technology or processes subject to infringement claims;
• develop other technology not subject to infringement claims, which could be time-consuming and costly or may not be
possible; and/or
• license technology from the third party claiming infringement, which license may not be available on commercially
reasonable terms.