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WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
amount accrued is reasonably possible, the Company discloses an estimate of the amount of the loss or range of possi-
ble losses for the claim if a reasonable estimate can be made, unless the amount of such reasonably possible losses is
not material to the Company's financial position, results of operations or cash flows. Unless otherwise stated below, for
each of the matters described below, the Company has either recorded an accrual for losses that are probable and
reasonably estimable or has determined that, while a loss is reasonably possible (including potential losses in excess of
the amounts accrued by the Company), a reasonable estimate of the amount of loss or range of possible losses with
respect to the claim or in excess of amounts already accrued by the Company cannot be made. The ability to predict
the ultimate outcome of such matters involves judgments, estimates and inherent uncertainties. The actual outcome of
such matters could differ materially from management's estimates.
Solely for purposes of this footnote, "WD" refers to Western Digital Corporation or one or more of its sub-
sidiaries prior to the acquisition of HGST, "HGST" refers to HGST or one or more of its subsidiaries as of the Closing
Date, and "the Company" refers to Western Digital Corporation and all of its subsidiaries on a consolidated basis
including HGST.
Intellectual Property Litigation
On June 20, 2008, plaintiff Convolve, Inc. ("Convolve") filed a complaint in the Eastern District of Texas against
WD, HGST, and one other company alleging infringement of U.S. Patent Nos. 6,314,473 and 4,916,635. The com-
plaint sought unspecified monetary damages and injunctive relief. On October 10, 2008, Convolve amended its com-
plaint to allege infringement of only the `473 patent. The `473 patent allegedly relates to interface technology to
select between certain modes of a disk drive's operations relating to speed and noise. A trial in the matter began on
July 18, 2011 and concluded on July 26, 2011 with a verdict against WD and HGST in an amount that is not
material to the Company's financial position, results of operations or cash flows. WD and HGST have filed post-trial
motions challenging the verdict and will evaluate their options for appeal after the court rules on the post-trial
motions.
On December 8, 2008, plaintiffs MagSil Corporation and the Massachusetts Institute of Technology filed a
complaint in the District of Delaware against WD, HGST and six other companies in the disk drive industry alleging
infringement of U.S. Patent Nos. 5,629,922 and 5,835,314. The complaint seeks unspecified monetary damages and
injunctive relief. The asserted patents allegedly relate to tunneling magneto resistive technology. In January 2010,
MagSil amended its complaint to allege infringement of only the `922 patent. As disclosed in the Company's Annual
Report on Form 10-K, filed with the SEC on August 13, 2010, MagSil and WD settled the matter for an amount that
was not material to the Company's financial position, results of operations or cash flows. With respect to the claim
pending against HGST, in February 2011, HGST obtained a ruling invalidating the patent on summary judgment.
MagSil appealed the decision, and in August 2012, the appellate court affirmed the trial court's decision granting
HGST summary judgment. HGST intends to continue to defend itself vigorously in this matter.
On July 15, 2009, plaintiffs Carl B. Collins and Farzin Davanloo filed a complaint in the Eastern District of
Texas against WD, HGST and nine other companies alleging infringement of U.S. Patent Nos. 5,411,797 and
5,478,650. Plaintiffs are seeking injunctive relief and unspecified monetary damages, fees and costs. The asserted
patents allegedly relate to nanophase diamond films. On October 11, 2011, plaintiffs and WD filed a joint motion to
stay all deadlines applicable to claims involving WD, indicating that the parties had reached an agreement in princi-
ple that would resolve the case for an immaterial amount that was accrued by the Company in the first quarter of fiscal
2012. The court approved the motion on October 13, 2011. Plaintiffs and WD entered into a formal written settle-
ment agreement on November 18, 2011, and the court granted an order dismissing the case as to WD with prejudice
on December 7, 2011. With respect to the claim pending against HGST, mediation in the matter was held on
March 20, 2012, and the parties reached an agreement in principle to settle the case for an immaterial amount that
was accrued by the Company in the third quarter of fiscal 2012. Plaintiffs and HGST entered into a formal settlement
agreement on May 9, 2012, and the court granted an order dismissing the case against HGST with prejudice on
May 30, 2012.
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