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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 17: Litigation and Contingencies (Continued)
range from EUR 38.35 to EUR 613.56 per unit) plus interest on MFDs sold in Germany up to
December 2001. HP has appealed the Stuttgart Court of Appeal’s decision to the Bundesgerichtshof
(the German Federal Supreme Court). On September 26, 2005, VG Wort filed an additional lawsuit
against HP in the Stuttgart Civil Court in Stuttgart, Germany seeking levies on MFDs sold in Germany
between 1997 and 2001, as well as for products sold from 2002 onwards.
In July 2004, VG Wort filed a separate lawsuit against HP in the Stuttgart Civil Court seeking
levies on printers. On December 22, 2004, the court held that HP is liable for payments regarding all
printers using ASCII code sold in Germany but did not determine the amount payable per unit. HP
appealed this decision in January 2005 to the Higher Regional Court of Baden-Wuerttemberg. On
May 11, 2005, the Higher Regional Court issued a decision confirming that levies are due. On June 6,
2005, HP filed an appeal to the German Supreme Court in Karlsruhe.
In September 2003, VG Wort filed a lawsuit against Fujitsu Siemens Computer GmbH (‘‘FSC’’) in
Munich State Court seeking levies on PCs. This is an industry test case in Germany, and HP has
undertaken to be bound by a final decision. On December 23, 2004, the Munich State Court held that
PCs are subject to a levy and that FSC must pay 12 euros plus compound interest for each PC sold in
Germany since March 2001. FSC appealed this decision in January 2005 to the Higher Regional Court
of Bavaria. On December 15, 2005, the Higher Regional Court affirmed the Munich State Court
decision. FSC has the right to further appeal the decision to the German Supreme Court.
Based on industry opposition to the extension of levies to digital products, HP’s assessments of the
merits of various proceedings and HP’s estimates of the units impacted and levies, HP has accrued
amounts that it believes are adequate to address any liabilities from the matters described above.
However, the ultimate resolution of these matters, including the number of units impacted, the amount
of levies imposed and the ability of HP to recover such amounts through increased prices, remains
uncertain.
Alvis v. HP is a nationwide defective product consumer class action filed in the District Court of
Jefferson County, Texas in April 2001. In February 2000, a similar suit captioned LaPray v. Compaq was
filed in the District Court of Jefferson County, Texas. The basic allegation is that HP and Compaq sold
computers containing floppy disk controllers that fail to alert the user to certain floppy disk controller
errors. That failure is alleged to result in data loss or data corruption. The complaints in Alvis and
LaPray seek injunctive relief, declaratory relief, unspecified damages and attorneys’ fees. In July 2001, a
nationwide class was certified in the LaPray case, which the Beaumont Court of Appeals affirmed in
June 2002. The Texas Supreme Court reversed the certification and remanded to the trial court in
May 2004. On March 29, 2005, the Alvis court certified a Texas-wide class action for injunctive relief
only, which HP appealed on April 15, 2005. On June 4, 2003, each of Barrett v. HP and Grider v.
Compaq was filed in the District Court of Cleveland County, Oklahoma, with factual allegations similar
to those in Alvis and LaPray. The complaints in Barrett and Grider seek, among other things, specific
performance, declaratory relief, unspecified damages and attorneys’ fees. On December 22, 2003, the
court entered an order staying the Barrett case until the conclusion of Alvis. On September 23, 2005,
the court granted the Grider plaintiffs’ motion to certify a nationwide class action, which HP has
appealed to the Oklahoma Supreme Court. On November 5, 2004 Scott v. HP and on January 27, 2005
Jurado v. HP were filed in state court in San Joaquin County, California, with factual allegations similar
to those in LaPray and Alvis, seeking a California-only class certification, injunctive relief, unspecified
damages (including punitive damages), restitution, costs and attorneys’ fees. In addition, the Civil
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