DIRECTV 2007 Annual Report Download - page 41

THE DIRECTV GROUP, INC.
ITEM 2. PROPERTIES
As of December 31, 2007, we had 31 locations operating in 16 states and 25 cities in the United
States and 19 additional locations operating in nine countries outside the United States. At such date,
we owned two million square feet of space and leased an additional two million square feet of space.
The major locations of the DIRECTV U.S. segment include eight administrative offices, two broadcast
centers and five call centers. The major locations of the DIRECTV Latin America segment include
eleven administrative offices, four broadcast centers and eight call centers. We consider our properties
adequate for our present needs.
ITEM 3. LEGAL PROCEEDINGS
(a) Material pending legal proceedings, other than ordinary routine litigation incidental to the
business, to which we became or were a party during the year ended December 31, 2007 or subsequent
thereto, but before the filing of this report, are summarized below:
Intellectual Property Litigation. We are a defendant in several unrelated lawsuits claiming
infringement of various patents relating to various aspects of our businesses. In certain of these cases
other industry participants are also defendants, and also in certain of these cases we expect that any
potential liability would be the responsibility of our equipment vendors pursuant to applicable
contractual indemnification provisions. To the extent that the allegations in these lawsuits can be
analyzed by us at this stage of their proceedings, we believe the claims are without merit and intend to
defend the actions vigorously. The final disposition of these claims is not expected to have a material
adverse effect on our consolidated financial position, but could possibly be material to our consolidated
results of operations of any one period. Further, no assurance can be given that any adverse outcome
would not be material to our consolidated financial position.
In this connection, on June 27, 2000, SuperGuide Corporation filed suit in the U.S. District Court
for the Western District of North Carolina against DIRECTV Enterprises, LLC, DIRECTV, Inc.
DIRECTV Operations, LLC, and The DIRECTV Group, Inc.; Thomson Inc.; and EchoStar
Communications Corporation, EchoStar Satellite Corporation and EchoStar Technologies Corporation.
The action alleges infringement of three U.S. patents and seeks unspecified damages and injunctive
relief. Gemstar Development Corp. was added as a third party defendant because it asserted 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
and DIRECTV system manufacturers under all asserted claims of the patents in the case, and
judgment for all defendants dismissing the claims of infringement 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. In August, 2005 the court again
granted summary judgment on two of the patents, dismissing the claims of infringement relating to
them with prejudice, leaving only one patent at issue which expired in 2005. The court then stayed
activity relating to the remaining patent, pending determination of the issue of Gemstar’s license rights.
After a bench trial, on July 19, 2007 the court entered judgment denying Gemstar’s assertion and
holding that SuperGuide has the relevant rights relating to the remaining patent. Proceedings regarding
the remaining patent are now underway, and trial on the issues of infringement, enforceability and
validity is expected in the second half of 2008.
Finisar Corporation. On April 4, 2005, Finisar Corporation filed a patent infringement action in
the United States District Court for the Eastern District of Texas (Beaumont) alleging that the
company, DIRECTV Holdings LLC, DIRECTV Enterprises, LLC, DIRECTV Operations, LLC,
DIRECTV, Inc., and DTV Network Systems, Inc. infringed U.S. Patent No. 5,404,505. On June 23,
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