Blackberry 2003 Annual Report Download - page 45

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Research฀In฀Motion฀Limited฀฀|฀฀Incorporated฀Under฀the฀Laws฀of฀Ontario฀(United฀States฀dollars,฀in฀thousands฀except฀per฀share฀data฀or฀as฀otherwise฀indicated)
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For฀the฀years฀ended฀March฀1,฀2003,฀March฀2,฀2002฀and฀February฀28,฀2001
The฀Company฀has฀yet฀to฀conclude฀formal฀severance฀arrangements฀with฀only฀a฀very฀few฀individuals฀
who฀were฀terminated฀on฀November฀12,฀2002.฀Additionally,฀the฀Company฀has฀yet฀to฀vacate฀a฀leased฀
facility฀deemed฀redundant฀as฀part฀of฀the฀Plan.฀The฀Company฀expects฀to฀complete฀the฀remaining฀
elements฀of฀the฀Plan฀during฀the฀rst฀half฀of฀scal฀2004.฀
The฀pre-tax฀nancial฀components฀of฀the฀Plan฀are฀summarized฀below:
฀ ฀ ฀ ฀ ฀ ฀ Balances฀as฀at฀
฀ ฀ ฀ Restructuring฀Expense฀ Cash฀Payments฀ Write-offs฀ March฀1,฀2003
Workforce฀reduction฀and฀related฀costs฀ ฀$฀ 4,056฀฀ ฀$฀ (3,408)฀ ฀$฀ –฀฀ ฀$฀ 648฀
Excess฀facilities฀and฀capital฀assets฀ ฀฀ 2,494฀฀ ฀฀ (63)฀ ฀฀ (507)฀ ฀฀ 1,924฀
฀ ฀ ฀ ฀$฀ 6,550฀฀ ฀$฀ (3,471)฀ ฀$฀ (507)฀ ฀$฀ 2,572฀
฀
The฀balance฀of฀the฀restructuring฀provision฀of฀$2,572฀as฀at฀March฀1,฀2003฀is฀included฀in฀Accounts฀payable฀
and฀accrued฀liabilities฀on฀the฀Consolidated฀Balance฀Sheets.
14.฀Litigation฀Award
During฀November฀2001,฀the฀Company฀was฀served฀with฀a฀complaint฀led฀by฀NTP,฀Inc.฀(“NTP”)฀alleging฀
that฀the฀Company฀infringed฀on฀eight฀of฀its฀patents฀(the฀“NTP฀matter”).฀
During฀the฀second฀quarter฀of฀scal฀2003,฀the฀Company฀recorded฀an฀expense฀of฀$4.9฀million฀
for฀its฀current฀and฀estimated฀future฀costs฀with฀respect฀to฀ongoing฀legal฀fees฀for฀the฀NTP฀matter.฀
The฀NTP฀matter฀went฀to฀trial฀during฀the฀third฀quarter฀of฀2003฀in฀the฀United฀States฀District฀Court฀
for฀the฀Eastern฀District฀of฀Virginia฀(the฀“Court”).฀The฀jury฀issued฀a฀verdict฀in฀favour฀of฀NTP฀on฀
November฀21,฀2002.฀Specically,฀the฀jury฀found฀that฀certain฀of฀the฀Company’s฀products฀and฀services฀
made฀available฀in฀the฀United฀States฀over฀certain฀periods฀infringed฀on฀NTP฀patents฀(the฀“infringing฀
revenues”)฀and฀as฀a฀result฀the฀jury฀awarded฀damages฀based฀upon฀its฀assessment฀of฀the฀estimated฀
income฀derived฀from฀these฀infringing฀revenues.฀The฀jury฀also฀found฀that฀the฀infringement฀was฀wilful.฀
Based฀upon฀its฀nding฀of฀infringement,฀the฀jury฀awarded฀compensatory฀damages฀of฀$23.1฀million฀(the฀
“jury฀verdict”)฀based฀upon฀its฀assessment฀of฀the฀infringing฀revenues฀multiplied฀by฀its฀determination฀
of฀an฀appropriate฀royalty฀rate฀of฀5.7%฀(the฀“royalty฀rate”).฀Accordingly,฀during฀the฀third฀quarter฀of฀scal฀
2003,฀the฀Company฀recorded฀an฀expense฀of฀$23.1฀million฀pursuant฀to฀the฀jury฀verdict;฀and฀as฀well฀
recorded฀an฀expense฀of฀$4.7฀million฀for฀its฀current฀and฀estimated฀future฀costs฀with฀respect฀to฀ongoing฀
legal฀fees฀for฀the฀NTP฀matter฀for฀a฀total฀charge฀of฀$27.8฀million.฀The฀jury’s฀compensatory฀damages฀
award฀of฀$23.1฀million฀remains฀subject฀to฀post-trial฀motions฀and฀appeal.฀The฀Court฀scheduled฀a฀
hearing฀on฀February฀28,฀2003฀to฀rule฀on฀various฀post-trial฀motions.฀
During฀the฀fourth฀quarter฀of฀2003,฀both฀NTP฀and฀the฀Company฀led฀post-trial฀motions฀and฀supporting฀
memoranda฀with฀the฀Court฀in฀advance฀of฀the฀February฀28,฀2003฀hearing.฀NTP฀led฀motions฀for฀entry฀
of฀nal฀judgment;฀prejudgment฀and฀postjudgment฀interest;฀enhanced฀damages;฀attorney฀fees;฀and฀
an฀application฀for฀a฀permanent฀injunction.฀The฀injunction฀application฀seeks฀to฀prohibit฀the฀Company฀
from฀providing฀BlackBerry฀service฀in฀the฀United฀States฀and฀from฀selling฀and/or฀distributing฀certain฀
handhelds฀and฀software.฀The฀Company’s฀counsel฀led,฀amongst฀other฀motions,฀a฀motion฀asking฀the฀
judge฀to฀enter฀a฀judgment฀in฀favour฀of฀the฀Company฀as฀a฀matter฀of฀law,฀notwithstanding฀the฀jury’s฀
verdict;฀and฀as฀well฀a฀motion฀for฀a฀new฀trial.฀
During฀the฀hearing฀on฀February฀28,฀2003,฀the฀Court฀heard฀arguments฀in฀relation฀to฀these฀post-trial฀
motions,฀but฀did฀not฀rule฀on฀any฀of฀the฀motions฀except฀two.฀The฀Court฀ruled฀that฀NTP฀was฀entitled฀to,฀
for฀the฀purposes฀of฀determining฀additional฀compensatory฀damages,฀an฀accounting฀of฀the฀Company’s฀
infringing฀revenues฀for฀the฀period฀November฀1,฀2002฀to฀February฀28,฀2003฀(the฀“Accounting”).฀In฀
addition,฀the฀Court฀ruled฀that฀if฀the฀jury’s฀verdict฀were฀entered,฀the฀prejudgment฀interest฀rate฀would฀
be฀set฀at฀the฀prime฀rate.฀