Dish Network 2011 Annual Report Download - page 149

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DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-55
Retailer Class Actions
During 2000, lawsuits were filed in Colorado state and federal courts attempting to certify nationwide classes on behalf
of certain of our retailers. The plaintiffs requested that 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. On September 20, 2010, we agreed to a settlement of both lawsuits
that provides, among other things, for mutual releases of the claims underlying the litigation, payment by us of up to $60
million, and the option for certain class members to elect to reinstate certain monthly incentive payments, which the
parties agreed have an aggregate maximum value of $23 million. We cannot predict with any degree of certainty how
many class members will elect to reinstate these monthly incentive payments. As a result, a $60 million “Litigation
accrual” was recorded as of December 31, 2010 on our Consolidated Balance Sheets. On February 9, 2011, the court
granted final approval of the settlement, and we made a $60 million settlement payment on April 28, 2011.
Ronald A. Katz Technology Licensing, L.P.
During 2007, Ronald A. Katz Technology Licensing, L.P. (“Katz”) filed a patent infringement action against us in the
United States District Court for the Northern District of California. The suit alleges infringement of 19 patents owned
by Katz. The patents relate to interactive voice response, or IVR, technology. The case has been transferred and
consolidated for pretrial purposes in the United States District Court for the Central District of California by order of the
Judicial Panel on Multidistrict Litigation. Only four patents remain in the case against us, one of which is subject to a
reexamination request before the U.S. Patent and Trademark Office, which was filed on February 13, 2012.
We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe any of the
asserted patents, 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. We cannot
predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.
Suomen Colorize Oy
During October 2010, Suomen Colorize Oy (“Suomen”) filed suit against DISH Network L.L.C., our indirect wholly
owned subsidiary, and EchoStar in the United States District Court for the Middle District of Florida alleging
infringement of United States Patent No. 7,277,398. The abstract of the patent states that the claims are directed to a
method and terminal for providing services in a telecommunications network. Suomen is an entity that seeks to license
an acquired patent portfolio without itself practicing any of the claims recited therein. The action was transferred to the
United States District Court for the District of Colorado, and on January 10, 2012, Suomen voluntarily dismissed the
case against us without prejudice.
Technology Development and Licensing L.L.C.
On January 22, 2009, Technology Development and Licensing L.L.C. (“TDL”) filed suit against us and EchoStar in
the United States District Court for the Northern District of Illinois alleging infringement of United States Patent No.
Re. 35,952, which relates to certain favorite channel features. TDL is an entity that seeks to license an acquired patent
portfolio without itself practicing any of the claims recited therein. In July 2009, the Court granted our motion to stay
the case pending two reexamination petitions before the Patent and Trademark Office.
We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe the asserted
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. We cannot predict
with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.