Dish Network 2011 Annual Report Download - page 146

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-52
ESPN
During 2008, we filed a lawsuit against ESPN, Inc., ESPN Classic, Inc., ABC Cable Networks Group, Soapnet L.L.C.
and International Family Entertainment (collectively, “ESPN”) for breach of contract in New York State Supreme
Court. Our complaint alleges that ESPN failed to provide us with certain high-definition feeds of the Disney Channel,
ESPN News, Toon and ABC Family. In October 2011, the jury returned a verdict in favor of the defendants. We intend
to appeal.
ESPN had asserted a counterclaim alleging that we owed approximately $35 million under the applicable affiliation
agreements. On April 15, 2009, the New York State Supreme Court granted, in part, ESPN’s motion for summary
judgment on the counterclaim, finding that we are liable for some of the amount alleged to be owing but that the actual
amount owing is disputed. On December 29, 2010, the New York State Supreme Court, Appellate Division, First
Department affirmed the partial grant of ESPN’s motion on the counterclaim. After the partial grant of ESPN’s motion
for summary judgment, ESPN sought an additional $30 million under the applicable affiliation agreements. On March
15, 2010, the New York State Supreme Court affirmed the prior grant of ESPN’s motion and ruled that we owe the full
amount of approximately $66 million under the applicable affiliation agreement. As of December 31, 2010, we had $42
million recorded as a “Litigation accrual” on our Consolidated Balance Sheets.
On June 21, 2011, the First Department affirmed the New York Supreme Court’s ruling that we owe approximately $66
million under the applicable affiliation agreements and, on October 18, 2011, denied our motion for leave to appeal that
decision to New York’s highest court, the New York Court of Appeals. We sought leave to appeal directly to the New
York Court of Appeals and, on January 10, 2012, the New York Court of Appeals dismissed our motion for leave on the
ground that the ruling upon which we appealed does not fully resolve all claims in the action. As a result of the First
Department’s June 2011 ruling, during the year ended December 31, 2011, we recorded $24 million of “Litigation
Expense” on our Consolidated Statements of Operations and Comprehensive Income (Loss) and increased our
“Litigation accrual” to a total of $66 million as of December 31, 2011. This reflects our estimated exposure for ESPN’s
counterclaim. On February 6, 2012, ESPN filed a motion seeking $5 million in attorneys’ fees as the prevailing party on
both our claim and ESPN’s counterclaim, which we intend to oppose. We intend to vigorously prosecute and defend
this case.
Ganas, L.L.C.
During August 2010, Ganas, L.L.C. (“Ganas”) filed suit against DISH DBS Corporation, our indirect wholly owned
subsidiary, Sabre Holdings Corporation, SAP America, Inc., SAS Institute Inc., Scottrade, Inc., TD Ameritrade, Inc.,
The Charles Schwab Corporation, TiVo Inc., Unicoi Systems Inc., Xerox Corporation, Adobe Systems Inc., AOL Inc.,
Apple Inc., Axibase Corporation, DirecTV, E*Trade Securities L.L.C., Exinda Networks, Fidelity Brokerage Services
L.L.C., Firstrade Securities Inc., Hewlett-Packard Company, iControl Inc., International Business Machines Corporation
and JPMorgan Chase & Co. in the United States District Court for the Eastern District of Texas alleging infringement of
United States Patent Nos. 7,136,913, 7,325,053, and 7,734,756. The patents relate to hypertext transfer protocol and
simple object access protocol. Ganas is an entity that seeks to license an acquired patent portfolio without itself
practicing any of the claims recited therein. On January 23, 2012, Ganas dismissed the case against us with prejudice
pursuant to a settlement in which our contribution was not material.