HP 2005 Annual Report Download - page 128

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 17: Litigation and Contingencies (Continued)
On October 21, 2004, HPDC filed suit in the United States District Court for the Western District
of Wisconsin against eMachines, a wholly-owned subsidiary of Gateway, alleging infringement of
various HPDC patents relating to personal and desktop computers. On February 17, 2005, the action
was transferred to the Southern District of Texas (Houston division). HPDC seeks an injunction,
unspecified monetary damages, interest and attorneys’ fees. On September 7, 2005 the court stayed the
action as to two of the three patents remaining in the suit because of related proceedings in the ITC.
On June 6, 2005, HP and HPDC filed suit in the Superior Court of California for the County of
Santa Clara against eMachines. The complaint alleges that eMachines failed to observe its contractual
obligation to permit an audit of eMachines’ compliance with the terms of its royalty-bearing license to
HP and HPDC. HP and HPDC seek specific performance, specified costs and attorneys’ fees.
On July 6, 2005, HPDC filed a complaint with the ITC that alleges infringement by both Gateway
and eMachines of five computer technology patents, seeking to enjoin Gateway and eMachines from
importing certain personal computers found to infringe the HPDC patents. Trial is scheduled for no
later than May 1, 2006.
On July 2, 2004, Gateway filed a complaint with the ITC alleging HP’s infringement of various
patents relating to audio control, imaging and computerized television technologies, of which only the
patent relating to computerized television technologies remains in suit. Gateway seeks an injunction
against HP’s importation of its media center PCs and digital entertainment centers, among other
similar multimedia products. The trial was held in May 2005. In October 2005, the Administrative Law
Judge ruled that the Gateway patent asserted is unenforceable and that each asserted claim is invalid.
The Administrative Law Judge also found the asserted patent was procured through inequitable
conduct. On October 17, 2005, Gateway filed a petition for review before the ITC and HP filed a
conditional petition for review if the ITC decides to review the initial determination. A final
determination is expected by the ITC in February 2006.
Also on July 2, 2004, Amiga Development LLC, renamed AD Technologies (‘‘AD’’), an entity
affiliated with Gateway, filed a lawsuit against HP in the United States District Court for the Eastern
District of Texas, alleging infringement of patents relating to computer monitoring, imaging and
decoder technologies. In October 2005, the United States Patent and Trademark Office granted HP’s
request to reexamine one of the patents in suit, and HP has filed a motion to stay the action in light of
this reexamination. AD Technologies seeks an injunction, unspecified monetary damages, interest and
attorneys’ fees. HP and HPDC answered and counterclaimed, alleging infringement by Amiga and
Gateway of HPDC patents related to personal computer technology. The trial is scheduled for April 3,
2006.
On August 18, 2004, Gateway filed a declaratory relief action against HPDC in the United States
District Court for the Southern District of California seeking a declaration of non-infringement and
invalidity of HPDC patents relating to personal computer technology. HPDC answered and
counterclaimed and alleged infringement of the same patents, and the claims were consolidated into
the litigation pending in the Southern District of California commenced in March 2004. HP seeks an
injunction, unspecified monetary damages, interest and attorneys’ fees.
On February 22, 2005, eMachines filed a declaratory judgment action against HPDC in the
Southern District of Texas on the patents relating to personal and desktop computers at issue in
HPDC’s suit against eMachines; eMachines subsequently dismissed this declaratory judgment action.
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