Commitments and Contingencies

Leases

We lease a majority of our field sales offices and research and development facilities under non-cancelable operating leases. In addition, we lease certain equipment used in our research and development and marketing and selling activities.

Rent expense under operating leases was as follows:



Fiscal year ended January 31,	2017		2016		2015
Rent expense	$	27,727	$	27,040	$	28,114

Future minimum lease payments under non-cancelable operating leases are approximately as follows:



Fiscal years ending January 31,	Lease Payments
2018	$	22,153
2019	20,937
2020	17,307
2021	14,554
2022	9,932
Thereafter	13,853
Total	$	98,736

Indemnifications

Our license and services agreements generally include a limited indemnification provision for claims from third parties relating to our IP. The indemnification is generally limited to the amount paid by the customer, a multiple of the amount paid by the customer, or a set cap. As of January 31, 2017, we were not aware of any material liabilities arising from these indemnification obligations.

Legal Proceedings

From time to time we are involved in various disputes and litigation matters that arise in the ordinary course of business. These include disputes and lawsuits relating to IP rights, contracts, distributorships, and employee relations matters. Periodically, we review the status of various disputes and litigation matters and assess our potential exposure. When we consider the potential loss from any dispute or legal matter probable and the amount or the range of loss can be estimated, we will accrue a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, we base accruals on the best information available at the time. As additional information becomes available, we reassess the potential liability related to pending claims and litigation matters and may revise estimates. We believe that the outcome of current litigation, individually and in the aggregate, will not have a material effect on our results of operations.

In some instances, we are unable to reasonably estimate any potential loss or range of loss. The nature and progression of litigation can make it difficult to predict the impact a particular lawsuit will have. There are many reasons why we cannot make these assessments, including, among others, one or more of the following: a proceeding being in its early stages; damages sought that are unspecific, unsupportable, unexplained or uncertain; discovery not having been started or being incomplete; the complexity of the facts that are in dispute; the difficulty of assessing novel claims; the parties not having engaged in any meaningful settlement discussions; the possibility that other parties may share in any ultimate liability; and/or the often slow pace of litigation.

In December 2012, Synopsys, Inc. (Synopsys) filed a lawsuit claiming patent infringement against us in the U.S. District Court for the Northern District of California, alleging that our Veloce^® family of products infringed four Synopsys U.S. patents. In January 2015, the court issued a summary judgment order in our favor invalidating all asserted claims of three of the Synopsys patents. In June 2015, the U.S. Patent and Trademark Office ruled that claims of the remaining patent asserted against us by Synopsys are unpatentable. This case is no longer on the court’s docket for trial. Synopsys appealed the decisions by both the district court and the U.S. Patent and Trademark Office. The Court of Appeals for the Federal Circuit has unanimously confirmed the invalidity of all four Synopsys patents.

In June 2013, Synopsys also filed a claim against us in the U.S District Court for the District of Oregon, similarly alleging that our Veloce family of products infringed two additional Synopsys U.S. patents.

We believe these lawsuits were filed in response to patent lawsuits we filed in 2010 and 2012 in the U.S. District Court for the District of Oregon against Emulation and Verification Engineering S.A. and EVE-USA, Inc. (together EVE), which Synopsys acquired in October 2012. We alleged in our lawsuits that EVE (and later Synopsys) infringed five Mentor Graphics' patents.

Both of Synopsys' patents and four of our patents were removed from the Oregon case on summary judgment, and we proceeded to trial on our one remaining patent - U.S. Patent No. 6,240,376 (the '376 Patent). On October 10, 2014, a jury found that EVE and Synopsys infringed the '376 Patent. As part of the verdict, the jury awarded us damages of approximately $36,000. As of January 31, 2017, nothing has been included in our financial results for this award. On March 12, 2015, the Oregon court granted our request for a permanent injunction against future sales of Synopsys emulators containing the infringing technology.

Synopsys filed an appeal, and sought to have the infringed claims invalidated by the U.S. Patent and Trademark Office.

On December 15, 2016, the U.S. Patent and Trademark Office dismissed Synopsys' challenge to the validity of claims 1 and 28 of the '376 Patent based on a prior proceeding. Synopsys' challenge to claims 24, 26, and 27 of the '376 Patent remains pending.

On March 16, 2017, the Federal Circuit issued its order on Synopsys' appeal, affirming the jury's finding of infringement and the $36,000 damages award in our favor. The Court also found that the litigation could continue with three of our patents, and one Synopsys patent, that had been removed from the case on summary judgment. The Court further found that we could proceed with a claim of willful infringement, which can result in a trebled damages award. The Federal Circuit's decision enables us to proceed to trial on these claims in the U.S. District Court for the District of Oregon.

We do not have sufficient information upon which to determine that a loss in connection with these matters is probable, reasonably possible, or estimable, and thus no liability has been established nor has a range of loss been disclosed.