Dish Network 2008 Annual Report Download - page 130

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DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-48
Universal, Viacom, Fox Entertainment Group, and Walt Disney Company. The suit alleges, among other
things, that the defendants engaged in a conspiracy to provide customers with access only to bundled
channel offerings as opposed to giving customers the ability to purchase channels on an “a la carte” basis.
We filed a motion to dismiss, which the Court denied in July 2008. We intend to vigorously defend this
case. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any
potential liability or damages.
Datasec
During April 2008, Datasec Corporation (“Datasec”) sued us and DirecTV Corporation in the United
States District Court for the Central District of California, alleging infringement of U.S. Patent No.
6,075,969 (the ’969 patent). The ‘969 patent was issued in 2000 to inventor Bruce Lusignan, and is
entitled “Method for Receiving Signals from a Constellation of Satellites in Close Geosynchronous
Orbit.” In September 2008, Datasec voluntarily dismissed its case without prejudice.
Distant Network Litigation
During October 2006, a District Court in Florida entered a permanent nationwide injunction prohibiting us
from offering distant network channels to consumers effective December 1, 2006. Distant networks are
ABC, NBC, CBS and Fox network channels which originate outside the community where the consumer
who wants to view them, lives. We have turned off all of our distant network channels and are no longer
in the distant network business. Termination of these channels resulted in, among other things, a small
reduction in average monthly revenue per subscriber and free cash flow, and a temporary increase in
subscriber churn. The plaintiffs in that litigation alleged that we were in violation of the Court’s injunction
and appealed the District Court decision finding that we are not in violation. On July 7, 2008, the Eleventh
Circuit rejected the plaintiffs’ appeal and affirmed the decision of the District Court.
Enron Commercial Paper Investment
During October 2001, we received approximately $40 million from the sale of Enron commercial paper to
a third party broker. That commercial paper was ultimately purchased by Enron. During November 2003,
an action was commenced in the United States Bankruptcy Court for the Southern District of New York
against approximately 100 defendants, including us, who invested in Enron’s commercial paper. The
complaint alleges that Enron’s October 2001 purchase of its commercial paper was a fraudulent
conveyance and voidable preference under bankruptcy laws. We dispute these allegations. We typically
invest in commercial paper and notes which are rated in one of the four highest rating categories by at least
two nationally recognized statistical rating organizations. At the time of our investment in Enron
commercial paper, it was considered to be high quality and low risk. 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”) obtained a $100 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).