Dish Network 2000 Annual Report Download - page 79

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–28
Fee Dispute
EchoStar had a contingent fee arrangement with the attorneys who represented EchoStar 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 EchoStar 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, EchoStar 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. EchoStar is vigorously contesting the
attorneys’ interpretation of the fee arrangement, which EchoStar believes significantly overstates the magnitude of
its 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
Canadian residents and that some of the defendants allowed and profited from Canadian residents purchasing and
viewing subscription television programming that is only authorized for viewing in the United States. The lawsuit
seeks, among other things, an interim and permanent injunction prohibiting the defendants from importing hardware
into Canada and from activating receivers in Canada, together with damages in excess of $175 million.
EchoStar filed motions to dismiss each of the actions for lack of personal jurisdiction. The Court in the
Alberta action recently denied EchoStar’s Motion to Dismiss, which EchoStar appealed. The Alberta Court also
granted a motion to add more EchoStar parties to the lawsuit. EchoStar Satellite Corporation, EDBS, EchoStar
Technologies Corporation, and EchoStar Satellite Broadcast Corporation have been added as defendants in the
litigation. The newly added defendants have also challenged jurisdiction. The Court of Appeals denied EchoStar’s
appeal and the Alberta Court has asserted jurisdiction over all of the EchoStar defendants. The Court in the Federal
action has stayed that case pending the outcome of the Alberta action. The case is now currently in discovery.
EchoStar intends to vigorously defend the suit. It is too early to make an assessment of the probable outcome of the
litigation or to determine the extent of any potential liability or damages.
Broadcast network programming
Until July 1998, EchoStar obtained distant broadcast network channels (ABC, NBC, CBS and FOX) for
distribution to its customers through PrimeTime 24. In December 1998, the United States District Court for the
Southern District of Florida entered a nationwide permanent injunction requiring PrimeTime 24 to shut off distant
network channels to many of its customers, and henceforth to sell those channels to consumers in accordance with
certain stipulations in the injunction.