Blackberry 2004 Annual Report Download - page 55

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For the years ended February 28, 2004, March 1, 2003 and March 2, 2002
United States as well as entered judgment with
respect to several previously announced monetary
awards issued in favor of NTP. The Court granted
NTP the injunction requested; however, the Court
then immediately granted RIM’s request to stay the
injunction sought by NTP pending the completion of
RIM’s appeal (to the Court of Appeals for the
Federal Circuit).
In its Final Order dated August 5, 2003, the Court
awarded monetary damages of $53.7 million (the
“Final Order”) as of May 31, 2003, comprising the
following:
•Enhanced compensatory damages $ 47.5 million
•Plaintiff attorney fees $ 4.2 million
•Prejudgment interest $ 2.0 million
•Total $ 53.7 million
The Company had previously recorded provisions
for all of the above components of the Final Order
in fiscal 2003 and the first quarter of fiscal 2004.
The Company filed its Notice to Appeal on August 29,
2003.
During the second quarter of fiscal 2004, the
Company recorded an expense of $5.7 million to
provide for enhanced compensatory damages for the
period June 1, 2003 to August 30, 2003,
postjudgment interest for the period August 6, 2003
to August 30, 2003 and other net adjustments. The
Company funded $7.6 million, attributable to the
enhanced compensatory damages amount, into an
escrow account subsequent to the end of the second
quarter of fiscal 2004.
The Company sought a stay of the Court proceedings
in light of the fact that the patents in suit are the
subject of re-examination proceedings by the U.S.
Patents and Trademark Office (“PTO”). On
November 4, 2003, the United States Court of
Appeals for the Federal Circuit (“Appellate Court”)
denied the Company’s request for a stay of the
appeal proceedings.
On November 26, 2003, the Company filed its
opening appeal brief with the Appellate Court.
During the third quarter of fiscal 2004, the Company
recorded an expense of $9.2 million to provide for
additional estimated enhanced compensatory
damages and estimated postjudgment interest, for
the three months ended November 29, 2003.
NTP filed its Responding Brief on or about January
2, 2004. The Company filed its Reply Brief on
February 3, 2004.
During the fourth quarter of fiscal 2004, the
Company recorded an expense of $12.9 million to
provide for additional estimated enhanced
compensatory damages and estimated postjudgment
interest, for the three months ended February 28,
2004. The $12.9 million attributable to enhanced
compensatory damages was classified as Restricted
cash on the Consolidated Balance Sheets as at
February 28, 2004. The Company funded the
$12.9 million into an escrow account subsequent
to the end of the third quarter of fiscal 2004.
For the year ended February 28, 2004, the
Company has recorded a total provision of $35.2
million with respect to the NTP matter, representing
enhanced compensatory damages, postjudgment
interest for the period August 6, 2003 to February
28, 2004 and other net adjustments.
As at the end of the Company’s current fiscal year,
the likelihood of any further loss and the ultimate
amount of loss, if any, were not reasonably
determinable. Consequently, no additional amounts,
from those described above, have been provided for
as NTP litigation expenses as at February 28, 2004.
The actual resolution of the NTP matter may
materially differ from the estimates as at February
28, 2004 as a result of future appellate court
rulings at the conclusion of the appeals process,
therefore potentially causing future quarterly or
annual financial reporting to be materially affected,
either adversely or favorably.