Seagate 2008 Annual Report Download - page 17

Table of Contents
availability of mature component technologies to our product development teams as well as allowing us to leverage and coordinate those
technologies in the design centers across our products in order to take advantage of opportunities in the marketplace. During fiscal years 2009,
2008 and 2007, we had product development expenses of approximately $953 million, $1,028 million and $904 million, respectively, which
represented 10%, 8%, and 8% of our consolidated revenue, respectively.
Patents and Licenses
As of July 3, 2009, we had approximately 4,035 U.S. patents and 660 patents issued in various foreign jurisdictions as well as
approximately 1,265 U.S. and 532 foreign patent applications pending. The number of patents and patent applications will vary at any given time
as part of our ongoing patent portfolio management activity. Due to the rapid technological change that characterizes the electronic data storage
industry, we believe that the improvement of existing products, reliance upon trade secret law, protection of unpatented proprietary know-how
and development of new products are also important to our business, in addition to patent protection, in establishing and maintaining a
competitive advantage. Accordingly, we intend to continue our efforts to protect broadly our intellectual property, including obtaining patents,
where available, in connection with our research and development program.
The electronic data storage industry is characterized by significant litigation relating to patent and other intellectual property rights. Because
of rapid technological development in the electronic data storage industry, some of our products have been, and in the future could be, alleged to
infringe existing patents of third parties. From time to time, we receive claims that our products infringe patents of third parties. Although we
have been able to resolve some of those claims or potential claims by obtaining licenses or rights under the patents in question without a material
adverse affect on us, other claims have resulted in adverse decisions or settlements. In addition, other claims are pending, which if resolved
unfavorably to us could have a material adverse effect on our business and results of operations. For more information on these claims, see
"Item 8, Note 13, Legal, Environmental, and Other Contingencies." The costs of engaging in intellectual property litigation in the past have been
and may be substantial, irrespective of the merits of the claim or the outcome. We have patent licenses with a number of companies.
Additionally, as part of our normal intellectual property practices, we may be engaged in negotiations with other major electronic data storage
companies and component manufacturers with respect to licenses.
Backlog
In view of our customers' rights to cancel or defer orders with little or no penalty, we believe backlog in the disk drive industry is of limited
indicative value in estimating future performance and results.
Environmental Matters
Our operations are subject to U.S. and foreign laws and regulations relating to the protection of the environment, including those governing
discharges of pollutants into the air and water, the management and disposal of hazardous substances and wastes and the cleanup of
contaminated sites. Some of our operations require environmental permits and controls to prevent and reduce air and water pollution, and these
permits are subject to modification, renewal and revocation by issuing authorities.
We have established environmental management systems and continually update our environmental policies and standard operating
procedures for our operations worldwide. We believe that our operations are in material compliance with applicable environmental laws,
regulations and permits. We budget for operating and capital costs on an ongoing basis to comply with environmental laws. If additional or more
stringent requirements are imposed on us in the future, we could incur additional operating costs and capital expenditures.
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