DIRECTV 2002 Annual Report Download - page 34

HUGHES ELECTRONICS CORPORATION
invalidity and non-infringement, in addition to license, laches and estoppel, and patent misuse.
DIRECTV, Inc. intends to vigorously defend the lawsuit and pursue the counterclaims against Pegasus
Development and PMC. DIRECTV, Inc. and Hughes have demanded indemnification by the NRTC,
which the NRTC has been providing under protest. See the separate item above describing the action
pending in the United States District Court of the Central District of California with respect to the
indemnity issue.
***
On November 21, 2001, Broadcast Innovations, LLC filed suit in the United States District Court
for the District of Colorado against DIRECTV, Inc., Hughes, Thomson multimedia, Inc., Pegasus
Satellite Television, Inc., Dotcast, Inc., and EchoStar Communications Corporation, alleging
infringement of two United States patents and seeking unspecified damages and injunction. One of the
patents relates to conditional access technology, and DIRECTV, Inc. has turned over its defense to
NDS Limited, the conditional access provider to the DIRECTV system. The case is in the discovery
phase, and defendants will be filing potentially dispositive summary judgment motions. Depending on
the outcome of these motions, the case may be tried in late 2003. DIRECTV, Inc. has raised defenses
of non-infringement and invalidity, and intends to vigorously defend the lawsuit.
***
In April 1997, the International Electronics Technology Corp. filed suit in the United States District
Court for the Central District of California against DIRECTV, Inc., Hughes Aircraft Co., and Thomson
Consumer Electronics, Inc., alleging infringement of one United States patent and seeking unspecified
damages and injunction. Plaintiff has asserted an interpretation of the claims at issue that relates to
conditional access technology, and DIRECTV, Inc. has turned over the defense to NDS Limited. Trial
has not yet been scheduled. DIRECTV, Inc. has raised defenses of non-infringement and/or invalidity,
and intends to vigorously defend the lawsuit.
***
DIRECTV, Inc., DIRECTV Enterprises, LLC, and DIRECTV Operations, LLC, referred to together
below as “DIRECTV Parties,” filed a lawsuit against NDS Limited and related entities (“NDS”), the
provider of DIRECTV’s conditional access system. The lawsuit, which was filed under seal in
United States District Court in Los Angeles on September 6, 2002, alleges, among other things, breach
of contract and misappropriation of trade secrets. The DIRECTV Parties are seeking relief from the
court that includes compensatory and other damages, delivery of software technology required by the
contract, and a preliminary and permanent injunction that would enjoin NDS from engaging in further
breaches of contract and misappropriation of trade secrets. NDS filed a motion to dismiss many of the
DIRECTV Parties’ claims and on December 30, 2002, the court granted in part and denied in part
NDS’s motion. The DIRECTV Parties are evaluating their options for amending their complaint. On
October 21, 2002, NDS filed counterclaims against the DIRECTV Parties and a chip manufacturer,
alleging that the DIRECTV Parties and the chip manufacturer misappropriated NDS’s intellectual
property and infringed NDS’s patents in developing new conditional access cards. NDS is seeking
injunctive relief as well as an unspecified amount in restitution, disgorgement of profits and punitive
damages. The DIRECTV Parties dispute these allegations on the basis that they have a license to use
the technology and believes that the counterclaims are without merit, will seek to dismiss certain of the
claims and will vigorously defend the remaining claims made by NDS. On December 23, 2002, NDS
24