Dish Network 2000 Annual Report Download - page 25

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23
Item 3. Legal Proceedings
DirecTV
During February 2000 we filed suit against DirecTV and Thomson Consumer Electronics/RCA in the
Federal District Court of Colorado. The suit alleges that DirecTV has utilized improper conduct in order to fend off
competition from the DISH Network. According to the complaint, DirecTV has demanded that certain retailers stop
displaying our merchandise and has threatened to cause economic damage to retailers if they continue to offer both
product lines in head-to-head competition. The suit alleges, among other things, that DirecTV has acted in violation
of federal and state anti-trust laws in order to protect DirecTV’s market share. We are seeking injunctive relief and
monetary damages. On December 8, 2000, we submitted an Amended Complaint adding claims against Circuit
City, Radio Shack and Best Buy, alleging that these retailers are engaging in improper conduct that has had an anti-
competitive impact on us. It is too early in the litigation to make an assessment of the probable outcome. During
October 2000, however, DirecTV filed a motion for summary judgment asking that the Court enter judgment in
DirecTV’s favor on certain of our claims. We have filed a motion asking the Court to allow us an opportunity to
conduct discovery prior to having to substantively respond to DirecTV’s motion. DirecTV’s motion for summary
judgment and our motion remain pending.
The DirecTV defendants filed a counterclaim against us. DirecTV alleges that we tortuously interfered
with a contract that DirecTV allegedly had with Kelly Broadcasting Systems, Inc. DirecTV alleges that we
“merged” with KBS, in contravention of DirecTV’s contract with KBS. DirecTV also alleges that we have falsely
advertised to consumers about our right to offer network programming. DirecTV further alleges that we improperly
used certain marks owned by PrimeStar, now owned by DirecTV. Finally, DirecTV alleges that we have been
marketing National Football League games in a misleading manner. The amount of damages DirecTV is seeking is
as yet unquantified. We intend to vigorously defend against these claims. The case is currently in discovery. It is
too early in the litigation to make an assessment of the probable outcome.
Fee Dispute
We had a contingent fee arrangement with the attorneys who represented us in the litigation with News
Corporation. The contingent fee arrangement provides for the attorneys to be paid a percentage of any net recovery
obtained by us in the News Corporation litigation. The attorneys have asserted that they may be entitled to receive
payments totaling hundreds of millions of dollars under this fee arrangement.
During mid-1999, we initiated litigation against the attorneys in the Arapahoe County, Colorado, District
Court arguing that the fee arrangement is void and unenforceable. In December 1999, the attorneys initiated an
arbitration proceeding before the American Arbitration Association. The litigation has been stayed while the
arbitration is ongoing. A two week arbitration hearing has been set to begin on April 2, 2001. It is not possible to
determine the outcome of arbitration or litigation regarding this fee dispute. We are vigorously contesting the
attorneys’ interpretation of the fee arrangement, which we believe significantly overstates the magnitude of our
liability.
WIC Premium Television Ltd.
During July 1998, a lawsuit was filed by WIC Premium Television Ltd., an Alberta corporation, in the
Federal Court of Canada Trial Division, against General Instrument Corporation, HBO, Warner Communications,
Inc., John Doe, Showtime, United States Satellite Broadcasting Company, Inc., EchoStar Communications
Corporation, and two of EchoStar’s wholly-owned subsidiaries, EchoSphere Corporation and Dish, Ltd. The
lawsuit seeks, among other things, an interim and permanent injunction prohibiting the defendants from activating
receivers in Canada and from infringing any copyrights held by WIC. It is too early to determine whether or when
any other lawsuits or claims will be filed.
During September 1998, WIC filed another lawsuit in the Court of Queen’s Bench of Alberta Judicial
District of Edmonton against certain defendants, including EchoStar. WIC is a company authorized to broadcast
certain copyrighted work, such as movies and concerts, to residents of Canada. WIC alleges that the defendants
engaged in, promoted, and/or allowed satellite dish equipment from the United States to be sold in Canada and to