Cisco 2013 Annual Report Download - page 41

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Cisco and a service provider customer were subject to patent claims asserted by TiVo, Inc. (“TiVo”) on June 4, 2012 in the
United States District Court for the Eastern District of Texas. TiVo alleged that our digital video recorders deployed by the
service provider customer infringed certain of its patents. TiVo sought monetary damages and injunctive relief. The trial on
these claims was scheduled to begin in March 2014. TiVo previously filed a similar patent lawsuit, which was scheduled for
trial in June 2013, against the same service provider customer, accusing digital video recorders manufactured by one of our
competitors. Beginning in late May 2013, prior to that trial, the parties to that case and Cisco conducted a mediation which
resulted in a settlement and dismissal of all outstanding litigation between the parties. Under the terms of the settlement, in
exchange for a single, lump sum monetary payment to TiVo by Cisco of $294 million, Cisco received a perpetual license to
the patents-in-suit, Cisco and TiVo entered into a ten year cross license applicable to the video field, and Cisco and TiVo
agreed not to sue one another for infringement of any other patents for a period of five years. In connection with the
settlement, we recorded $172 million to cost of sales during the fourth quarter of fiscal 2013, with the remainder of the
settlement recorded against the amounts previously reserved and as an intangible asset to be amortized over its estimated
useful life.
In addition, we are subject to legal proceedings, claims, and litigation arising in the ordinary course of business, including
intellectual property litigation. While the outcome of these matters is currently not determinable, we do not expect that the
ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial position, results of
operations, or cash flows. For additional information regarding intellectual property litigation, see “Part I, Item 1A. Risk
Factors-We may be found to infringe on intellectual property rights of others” herein.
Item 4. Mine Safety Disclosures
Not Applicable.
33