DIRECTV 2008 Annual Report Download - page 47

THE DIRECTV GROUP, INC.
We may face other risks described from time to time in periodic reports filed by us with the SEC.
We urge you to consider the above risk factors carefully in evaluating forward-looking statements
contained in this Annual Report. The forward-looking statements included in this Annual Report are
made only as of the date of this Annual Report and we undertake no obligation to publicly update
these forward-looking statements to reflect subsequent events or circumstances.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
As of December 31, 2008, we had approximately 150 owned and leased locations operating in the
United States and Latin America. The major locations of the DIRECTV U.S. segment include eight
administrative offices, two broadcast centers and six call centers. The major locations of the DIRECTV
Latin America segment include 10 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, 2008 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. No assurance can be given that any adverse outcome would not
be material to our consolidated financial position.
Finisar Corporation. As previously reported, we were successful in 2008 in our effort to have the
jury verdict in the Finisar case vacated on appeal. The original verdict found the patent to be valid and
willfully infringed, and the jury awarded approximately $79 million in damages. The trial court
increased the damages award by $25 million because of the jury finding of willful infringement and
awarded pre-judgment interest of $13 million. DIRECTV was also ordered to pay into escrow $1.60 per
new set-top receiver manufactured for use with the DIRECTV system beginning June 17, 2006 and
continuing until the patent expires in 2012 or was otherwise found to be invalid. On April 18, 2008, the
Court of Appeals reversed the verdict of the district court in part, vacated the findings of infringement,
and remanded for further proceedings on the remaining issues finding that the district court had
applied erroneous interpretations of certain terms of the claims. The Court found a principal
independent claim to be anticipated and therefore invalid, and remanded for further proceedings
regarding validity of other asserted claims in view of this finding. The Court reversed the verdict of
willful infringement, and affirmed the earlier ruling finding several claims to be invalid prior to trial.
Following these decisions, our appeal bond was terminated and the escrowed royalties were returned to
us. In the remand now pending, initial summary judgment motions on invalidity of additional claims
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