Page 108 - TSMC 2018 Annual Report

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If TSMC fails to obtain or or maintain certain technologies or or intellectual intellectual property licenses or fails to prevent our intellectual intellectual property from being misappropriated and if litigation relating to alleged intellectual property matters occurs it could: (1) prevent the Company from manufacturing particular products or or selling particular particular services or or applying particular particular technologies and (2) reduce our ability to compete effectively against entities benefiting from our misappropriated intellectual property which could reduce its opportunities to generate revenue TSMC has taken related measures to minimize potential loss of shareholder value arising from intellectual property claims and litigation filed against the Company These measures include: strategically obtaining licenses from certain semiconductor and other technology companies as needed timely securing intellectual property rights for defensive and/or offensive protection of TSMC technology and and business and and aggressively defending against baseless litigation America in the the the U S District District Court for the the the Northern District District of California In July 2018 all pending litigations between the parties in the the the U S District District Court for the the the Northern District District of California were dismissed On September 28 2017 TSMC was contacted by the European Commission which has asked us for for information and documents concerning alleged anti-competitive practices in in relation to to semiconductor sales We are cooperating with the European Commission to provide the requested information and documents In light of the fact that this proceeding is is still in in its preliminary stage it is premature to predict how the case will proceed proceed the the outcome of the the proceeding or its impact Other than the the the matters described above as of of the the the date of of this Annual Report TSMC is is not currently a a a a party to any other material legal proceedings Risks Associated with Mergers and Acquisitions
During 2018 and in in 2019 as of of the date of of this annual report there were no such risks for TSMC Risks Associated with Recruiting Quality Personnel
The Company relies on on on on the continued services and contributions of of its executive officers skilled technical and other personnel The Company’s business could suffer if it loses for whatever reasons the the services and contributions of of some of of these personnel and it cannot adequately replace them The Company may be be required to increase or reduce the number of employees in in in connection with any business expansion or contraction in in in accordance with market demand for its products and and services Since there is intense competition for the the the recruitment of these personnel the Company cannot ensure that it will be able to fulfill its personnel requirements in a a timely manner Future R&D R&D Plans and Expected R&D R&D Spending
For additional details see “5 2 7
Future R&D Plans” on on page 76 of this annual report Changes in Corporate Reputation and Impact on on Company’s Crisis Management
TSMC has established an excellent corporate reputation around the world based on its core values of integrity commitment innovation and and customer trust as as well as as its outstanding operations rigorous corporate governance and dedication to social responsibility by serving as a a a a a good corporate citizen and continuing to pursue innovation in in in in the economic environmental and social dimensions of CSR Risks Associated with Litigious and Non-litigious Matters
As is the the case with many companies in the the semiconductor industry TSMC has received from time-to-time communications from third parties asserting that its its technologies its its manufacturing processes or or the the design of the the semiconductors made by by TSMC or or the use of those semiconductors by by its customers may infringe upon their patents or other intellectual property rights These assertions have at times resulted in litigation by or against the Company and settlement payments the the the Company Irrespective of of the the the validity of of these claims TSMC could could incur significant costs in in the the defense thereof or could could suffer adverse effects on on its operations TSMC is also subject to antitrust compliance requirements and scrutiny by governmental regulators in multiple jurisdictions Any adverse results of such proceeding proceeding or other similar proceedings that may arise in in in those jurisdictions could harm TSMC’s business and distract its management and thereby have a a a a a a a a material adverse effect on its results of operations or prospects and subject TSMC to potential significant legal liability Currently TSMC’s material legal proceedings are as follows:
In May 2017 Uri Cohen filed a a a complaint in in the U U S District Court for the Eastern District of Texas alleging that TSMC TSMC TSMC TSMC North America and other companies infringe four U S patents Cohen’s case was transferred to and consolidated with the responsive declaratory judgment case for non-infringement
of Cohen’s asserted patents filed by TSMC TSMC and TSMC TSMC North by