DIRECTV 2008 Annual Report Download - page 48

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THE DIRECTV GROUP, INC.
have been submitted. If necessary, there will be further proceedings and a trial of remaining issues,
which is presently scheduled for October 2009.
Early Cancellation Fees. In 2008, a number of plaintiffs filed putative class action lawsuits in state
and federal courts challenging the early cancellation fees DIRECTV assesses its customers when they
do not fulfill their programming commitments. There are several lawsuits currently pending—some in
California state court purporting to represent statewide classes, and some in federal courts purporting
to represent nationwide classes. The lawsuits seek both monetary and injunctive relief. While the
theories of liability vary, the lawsuits generally challenge these fees under state consumer protection
laws as both unfair and inadequately disclosed to customers. Each of the lawsuits is at an early stage.
Where possible, we are moving to compel these cases to arbitration in accordance with our Customer
Agreement, but in states such as California where the enforceability of the arbitration provision is
limited, we intend to defend against these allegations in court. We believe that our early cancellation
fees are adequately disclosed, and represent reasonable estimates of the costs we incur when customers
cancel service before fulfilling their programming commitments.
Other. We are subject to other legal proceedings and claims that arise in the ordinary course of
our business. The amount of ultimate liability with respect to such actions is not expected to materially
affect our financial position, results of operations or liquidity.
(b) The following previously reported legal proceeding was terminated during the fourth quarter
ended December 31, 2008.
SuperGuide Corporation. 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 alleged infringement of three U.S. patents and sought 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. In
August 2005, the Court 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.
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 were then initiated. On October 14, 2008, DIRECTV and Thomson agreed with
SuperGuide to settle the case, and DIRECTV was dismissed from the case on October 20, 2008.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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