DIRECTV 2012 Annual Report Download - page 50

DIRECTV
Annual Report and we undertake no obligation to publicly update these forward- aspects of our businesses. In certain of these cases other industry participants are
looking statements to reflect subsequent events or circumstances. 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
ITEM 1B. UNRESOLVED STAFF COMMENTS 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
None. the claims are without merit and intend to defend the actions vigorously. We have
determined the likelihood of a material liability in such matters is remote or have
ITEM 2. PROPERTIES made appropriate accruals and the final disposition of these claims is not expected
As of December 31, 2012, we had approximately 216 owned and leased to have a material effect on our consolidated financial position. However, if an
locations operating in the United States and Latin America. The major locations of adverse ruling is made in a lawsuit involving key intellectual property, such ruling
the DIRECTV U.S. segment include eight administrative offices, two broadcast could possibly be material to our consolidated results of operations of any one
centers and six call centers. The major locations of the DIRECTV Latin America period. No assurance can be given that any adverse outcome would not be material
segment include 11 administrative offices, four broadcast centers and eight call to our consolidated financial position.
centers. We consider our properties adequate for our present needs. Early Cancellation Fees. In 2008, a number of plaintiffs filed putative class
action lawsuits in state and federal courts challenging the early cancellation fees we
ITEM 3. LEGAL PROCEEDINGS assess our customers when they do not fulfill their programming commitments.
(a) Material pending legal proceedings, other than ordinary routine litigation Several of these lawsuits are pending, some in California state court purporting to
incidental to the business, to which we became or were a party during the year represent statewide classes, and some in federal courts purporting to represent
ended December 31, 2012 or subsequent thereto, but before the filing of the nationwide classes. The lawsuits seek both monetary and injunctive relief. While the
report, are summarized below: theories of liability vary, the lawsuits generally challenge these fees under state
consumer protection laws as both unfair and inadequately disclosed to customers.
Pegasus Development Corporation and Personalized Media Our motions to compel arbitration have been granted in all of the federal cases,
Communications L.L.C. In December, 2000, Pegasus Development Corporation, except as to claims seeking injunctive relief under California statutes. The denial of
or Pegasus, and Personalized Media Communications L.L.C., or PMC, filed suit in our motion as to those claims is currently on appeal. We believe that our early
the United States District Court for the District of Delaware against cancellation fees are adequately disclosed, and represent reasonable estimates of the
DIRECTV, Inc., Hughes Electronics Corporation, Thomson Consumer costs we incur when customers cancel service before fulfilling their programming
Electronics, Inc., and Philips Electronics North America Corporation. The suit commitments.
alleged infringement of certain claims of seven United States patents and sought an
injunction and a monetary award including damages for infringement, interest, From time to time, we receive investigative inquiries or subpoenas from state
costs, and attorney’s fees. In May, 2003, the suit was stayed pending reexamination and federal authorities with respect to alleged violations of state and federal statutes.
by the United States Patent and Trademark Office of certain claims of the asserted These inquiries may lead to legal proceedings in some cases. DIRECTV U.S. has
patents. The stay was lifted in November, 2011, and trial is presently scheduled for received a request for information from the FTC on issues similar to those resolved
November, 2013. The suit now involves claims of four of the seven patents in 2011 with a multistate group of state attorneys general. We are cooperating with
originally asserted, all of which have expired, and the validity and infringement of the FTC by providing information about our sales and marketing practices and
which are disputed by DIRECTV. customer complaints.
Other Intellectual Property Litigation. We are a defendant in several ECAD. Sky Brasil, along with other video distributors in Brazil, is disputing
unrelated lawsuits claiming infringement of various patents relating to various charges assessed by Escritorio Central de Arrecadacao, or ECAD, the organization
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