Dish Network 2001 Annual Report Download - page 101

Download and view the complete annual report

Please find page 101 of the 2001 Dish Network annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 108

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–36
set before the District Court if the Networks withdraw their request for a preliminary injunction as they have indicated
they will do when the case was remanded to the District Court.
EchoStar is considering an appeal to the United States Supreme Court. If EchoStar decides to appeal, there is
no guarantee that the United States Supreme Court will agree to hear any petition filed or that EchoStar’s appeal will be
heard before any evidentiary hearing or trial in the District Court.
If, after an evidentiary hearing or trial, the District Court enters an injunction against EchoStar, the injunction
could force EchoStar to terminate delivery of distant network channels to a substantial portion of its distant network
subscriber base, which could also cause many of these subscribers to cancel their subscription to its other services.
Management has determined that such terminations would result in a small reduction in EchoStar’s reported average
monthly revenue per subscriber and could result in a temporary increase in churn. If EchoStar loses the case at trial, the
judge could, as one of many possible remedies, prohibit all future sales of distant network programming by EchoStar,
which would have a material adverse affect on EchoStar’s business.
Gemstar
During October 2000, Starsight Telecast, Inc., a subsidiary of Gemstar-TV Guide International, Inc., filed a
suit for patent infringement against EchoStar and certain of its subsidiaries in the United States District Court for the
Western District of North Carolina, Asheville Division. The suit alleges infringement of United States Patent No.
4,706,121 (the “121 Patent”) which relates to certain electronic program guide functions. EchoStar has examined this
patent and believes that it is not infringed by any of its products or services. EchoStar will vigorously defend against
this suit. On March 30, 2001, the court stayed the action pending resolution of the International Trade Commission
matter discussed below.
In December 2000, EchoStar filed suit against Gemstar - TV Guide (and certain of its subsidiaries) in the
United States District Court for the District of Colorado alleging violations by Gemstar of various federal and state
anti-trust laws and laws governing unfair competition. The lawsuit seeks an injunction and monetary damages.
Gemstar filed counterclaims alleging infringement of United States Patent Nos. 5,923,362 and 5,684,525 that relate to
certain electronic program guide functions. EchoStar examined these patents and believes they are not infringed by any
of EchoStar’s products or services. In August 2001, the Federal Multi-District Litigation panel combined this suit, for
discovery purposes, with other lawsuits asserting antitrust claims against Gemstar, which had previously been filed by
other plaintiffs. In January 2002, Gemstar dropped the counterclaims of patent infringement.
In February 2001, Gemstar filed patent infringement actions against us in District Court in Atlanta, Georgia
and in the International Trade Commission (“ITC”). These suits allege infringement of United States Patent Nos.
5,252,066, 5,479,268 and 5,809,204 all of which relate to certain electronic program guide functions. In addition, the
ITC action alleges infringement of the 121 Patent which is asserted in the North Carolina case. In the Atlanta District
Court case, Gemstar seeks damages and an injunction. The North Carolina and Atlanta cases have been stayed pending
resolution of the ITC action. ITC actions typically proceed according to an expedited schedule. In December 2001, the
ITC held a 15-day hearing before an administrative judge. Prior to the hearing, Gemstar dropped its allegations
regarding Unites States Patent No. 5,252,066 with respect to which EchoStar had asserted substantial allegations of
inequitable conduct. The hearing addressed, among other things, Gemstar’s allegations of patent infringement and
respondents’ (EchoStar, SCI, Scientific Atlanta and Pioneer) allegations of patent misuse. A decision by the judge is
expected by March 21, 2002 and a ruling by the full ITC is expected 60 days later. While the ITC cannot award
damages, an adverse decision in this case could temporarily halt the import of EchoStar receivers and could require
EchoStar to materially modify certain user-friendly electronic programming guides and related features EchoStar
currently offers to consumers. EchoStar has examined the patents in dispute and believes they are not infringed by any
of its products or services. EchoStar will vigorously contest the ITC, North Carolina and Atlanta allegations of
infringement and will, among other things, challenge both the validity and enforceability of the asserted patents.
EchoStar is providing a defense and indemnification to SCI in the ITC and Atlanta cases pursuant to the terms of their
contract.