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Patent Sale and License
 12 Months Ended
Dec. 31, 2011
Patent Sale and License  
Patent Sale and License

Note 6: Patent Sale and License

        In December 2011, the Company entered into a patent purchase agreement for the sale of 43 United States and 30 related foreign memory technology patents for $35 million in cash and a license for the use of those patents in the Bandwidth Engine ICs and other limited uses. The Company recognized a $35.6 million gain on this transaction, which has been recorded as a reduction of operating expenses in the consolidated statements of operations. The gain was comprised of the $35 million of cash proceeds, plus $0.8 million for the patent license, net of transaction costs.

        Under the patent purchase agreement, the Company received a license to the sold patents to cover its Bandwidth Engine IC product line and technology partners, along with related rights to offer sublicenses to current and future partners. This right to use the patents was valued to be $0.8 million and has been recorded as an intangible asset ("patent license") (see Note 2). The value was determined based on the present value of the future cash flows that could potentially be generated by the patent license over its estimated remaining life. The patent license is amortized over its estimated useful life of seven years.