DIRECTV 2003 Annual Report Download - page 27

THE DIRECTV GROUP, INC.
asserts to have exclusive control of the patents by reason of a license agreement with SuperGuide Corporation.
On July 3, 2002, the court granted summary judgment of non-infringement to the DIRECTV defendants, the
Company and DIRECTV system manufacturers under all asserted claims of the patents in the case. Judgment for
all defendants dismissing all claims of infringement and awarding costs to defendants was entered on July 25,
2002. On February 12, 2004, the Court of Appeals for the Federal Circuit affirmed the decision in part and
reversed in part and remanded the action for further proceedings.
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On December 5, 2000, Personalized Media Communications, LLC and Pegasus Development Corporation
filed suit in the U.S. District Court for the District of Delaware against DIRECTV, Inc., the Company, Thomson
Consumer Electronics and Philips Electronics North American Corp., alleging patent infringement and seeking
unspecified damages and injunctive relief. On May 14, 2003, the court stayed the case pending outcome of
reexaminations of the patents by the Patent Office.
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In April 1997, the International Electronics Technology Corp. filed suit in the U.S. District Court for the
Central District of California against DIRECTV, Inc., Hughes Aircraft Co., and Thomson Inc., alleging
infringement of one U.S. 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, or NDS. Trial has not yet been scheduled. DIRECTV, Inc. has raised defenses
of non-infringement and/or invalidity.
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Other. In March 2003, the Indian Income Tax Department issued an assessment of approximately
$15.2 million against one of PanAmSat’s subsidiaries for the Indian tax year ended March 31, 1997. The tax
claim relates to withholding taxes assessed on revenues derived from broadcasters inside and outside of India
who broadcast from or into India. PanAmSat promptly appealed to the Commissioner of Indian Tax (Appeals)
and continues to contest this assessment. If PanAmSat’s appeal is unsuccessful, it could be subject to comparable
claims for subsequent years.
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(b) Previously reported legal proceedings which have been terminated during the fourth quarter of 2003 and,
in the case of voluntary petition for reorganization, subsequent thereto, but before the filing of this report, are
summarized below:
Voluntary Petition for Reorganization. On March 18, 2003, DLA LLC filed a voluntary petition for
reorganization under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court. On December 11, 2003,
DLA LLC filed a proposed Reorganization Plan, that reflected an agreement reached between DLA LLC, its
owners and unsecured creditors and on January 9, 2004, the Bankruptcy Court approved DLA LLC’s disclosure
statement for soliciting creditor approval of the proposed Reorganization Plan. The Reorganization Plan was
confirmed by the Bankruptcy Court on February 13, 2004. On February 24, 2004, the Reorganization Plan
became effective and DLA LLC emerged from bankruptcy protection as a reorganized entity. The Bankruptcy
Court has retained jurisdiction to resolve certain remaining matters primarily related to the enforcement and
interpretation of the Reorganization Plan. However, it is anticipated that the resolution of these matters will not
have a material impact on DLA LLC’s operations.
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Stockholder Litigation. In April 2003, purported class actions were filed in Delaware Chancery Court
(Young v. Pearce, et al.; Silverstein vs. Pearce, et al.; Wyser-Pratte Management Co., Inc., v. Barnevick, et al.;
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