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ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–41
Forgent
In July 2005, Forgent Networks, Inc. (“Forgent”) filed a lawsuit against us in the United States District Court for the
Eastern District of Texas. The suit also named DirecTV, Charter, Comcast, Time Warner Cable, Cable One and
Cox as defendants. The suit alleges infringement of United States Patent No. 6,285,746 (the ‘746 patent).
The ‘746 patent discloses a video teleconferencing system which utilizes digital telephone lines. We have examined
this patent and do not believe that it is infringed by any of our products or services. We intend to vigorously defend
this case. In the event that a Court ultimately determines that we infringe this patent, we may be subject to
substantial damages, which may include treble damages and/or an injunction that could require us to materially
modify certain user-friendly features that we currently offer to consumers. Trial is currently scheduled for May
2007 in Tyler, Texas. On October 2, 2006, the Patent and Trademark Office granted our petition for reexamination
of the ‘746 patent. On October 27, 2006, the Patent and Trademark Office issued its initial office action rejecting all
of the claims of the ‘746 patent in light of several prior art references. Forgent will have an opportunity to challenge
the initial office action. We cannot predict with any degree of certainty the outcome of the suit or determine the
extent of any potential liability or damages.
Finisar Corporation
Finisar Corporation (“Finisar”) recently obtained a $100.0 million verdict in the United States District Court for the
Eastern District of Texas against DirecTV for patent infringement. Finisar alleged that DirecTV's electronic
program guide and other elements of its system infringe United States Patent No. 5,404,505 (the ‘505 patent).
On July 10, 2006, we, together with NagraStar LLC, filed a Complaint for Declaratory Judgment in the United
States District Court for the District of Delaware against Finisar that asks the Court to declare that they and we do
not infringe, and have not infringed, any valid claim of the ‘505 patent. Trial is not currently scheduled. We intend
to vigorously defend our rights in this action. In the event that a Court ultimately determines that we infringe this
patent, we may be subject to substantial damages, which may include treble damages and/or an injunction that could
require us to modify our system architecture. We cannot predict with any degree of certainty the outcome of the suit
or determine the extent of any potential liability or damages.
Trans Video
In August 2006, Trans Video Electronic, Ltd. (“Trans Video”) filed a patent infringement action against us in the
United States District Court for the Northern District of California. The suit alleges infringement of United States
Patent Nos. 5,903,621 (the ‘621 patent) and 5,991,801 (the ‘801 patent). The patents relate to various methods
related to the transmission of digital data by satellite. Trial has been set for July 2008. We intend to vigorously
defend this case. In the event that a Court ultimately determines that we infringe any of the patents, we may be
subject to substantial damages, which may include treble damages and/or an injunction. We cannot predict with any
degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.
Retailer Class Actions
During 2000, lawsuits were filed by retailers in Colorado state and federal court attempting to certify nationwide
classes on behalf of certain of our satellite hardware retailers. The plaintiffs are requesting the Courts declare certain
provisions of, and changes to, alleged agreements between us and the retailers invalid and unenforceable, and to award
damages for lost incentives and payments, charge backs, and other compensation. We are vigorously defending against
the suits and have asserted a variety of counterclaims. The federal court action has been stayed during the pendency of
the state court action. We filed a motion for summary judgment on all counts and against all plaintiffs. The plaintiffs
filed a motion for additional time to conduct discovery to enable them to respond to our motion. The Court granted
limited discovery which ended during 2004. The plaintiffs claimed we did not provide adequate disclosure during the
discovery process. The Court agreed, and recently denied our motion for summary judgment as a result. A trial date