Dish Network 2000 Annual Report Download - page 82

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ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–31
During 2000, Superguide Corp. also filed suit against EchoStar, DirecTV and others in the North Carolina
Court, alleging infringement of United States Patent Nos. 5,038,211, 5,293,357 and 4,751,578 which relate to
certain electronic program guide functions, including the use of electronic program guides to control VCRs. It is
EchoStar’s understanding that these patents may be licensed by Superguide to Gemstar, although Gemstar has not
asserted the patents against EchoStar. EchoStar has examined these patents and believes that they are not infringed
by any of EchoStar’s products or services. EchoStar intends to vigorously defend against this action and assert a
variety of counterclaims.
In the event it is ultimately determined that EchoStar infringes on any of aforementioned patents EchoStar
may be subject to substantial damages, and/or an injunction that could require EchoStar to materially modify certain
user friendly electronic programming guide and related features it currently offers to consumers. It is too early to
make an assessment of the probable outcome of either suit.
IPPV Enterprises
IPPV Enterprises, LLC and MAAST, Inc. filed a patent infringement suit against EchoStar in the United
States District Court for the District of Delaware. The suit alleges infringement of 5 patents. The patents disclose
various systems for the implementation of features such as impulse-pay-per view, parental control and category
lock-out. One patent relates to an encryption technique. Three of the patents have expired. EchoStar is vigorously
defending against the suit based, among other things, on non-infringement, invalidity and failure to provide notice of
alleged infringement.
In the event it is ultimately determined that EchoStar infringes on any of these patents we may be subject to
substantial damages, and/or an injunction with respect to the two unexpired patents, that could require EchoStar to
materially modify certain user friendly features it currently offer to consumers. It is too early to make an assessment
of the probable outcome of either suit.
Retailer Class Actions
EchoStar has been sued by retailers in three separate class actions. In two separate lawsuits, Air
Communication & Satellite, Inc. and John DeJong, et. al. filed lawsuits on October 6, 2000 on behalf of themselves
and a class of persons similarly situated. The plaintiffs are attempting to certify nationwide classes allegedly
brought on behalf of persons, primarily retail dealers, who were alleged signatories to certain retailer agreements
with EchoStar Satellite Corporation. The plaintiffs are requesting the Court to declare certain provisions of the
alleged agreements invalid and unenforceable, to declare that certain unilateral changes to the agreements are invalid
and unenforceable, and to award damages for lost commissions and payments, charge backs, and other
compensation. The plaintiffs are alleging breach of contract and breach of the covenant of good faith and fair
dealing and are seeking declaratory relief, compensatory damages, injunctive relief, and pre-judgment and post-
judgment interest. EchoStar intends to vigorously defend the lawsuit and to assert a variety of counterclaims. 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.
Satellite Dealers Supply, Inc. filed a lawsuit on September 25, 2000, on behalf of itself and a class of
persons similarly situated. The plaintiff is attempting to certify a nationwide class allegedly brought on behalf of
sellers, installers, and servicers of equipment used to provide satellite who contract with EchoStar and claims the
alleged class has been “subject to improper chargebacks.” The plaintiff alleges that (1) EchoStar charged back
certain fees paid by members of the class to professional installers in violation of contractual terms; (2) EchoStar
manipulated the accounts of subscribers to deny payments to class members; and (3) EchoStar misrepresented to
class members who owns certain equipment related to provision of satellite television service. The plaintiff is
requesting a permanent injunction and monetary damages. EchoStar intends to vigorously defend the lawsuit and to
assert a variety of counterclaims. 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.