HP 2006 Annual Report Download - page 137

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Consolidated Statements of Earnings (Continued)
Note 17: Litigation and Contingencies (Continued)
European Commission OEM Investigation. In May 2002, the European Commission of the EU
publicly stated that it was considering conducting an investigation into original equipment manufacturer
activities concerning the sales of printers and supplies to consumers within the EU. The European
Commission contacted HP requesting information on the printing systems businesses. HP has
cooperated fully with this inquiry.
Settled and Concluded Litigation, Proceedings and Investigations
Compression Labs Patent Litigation. On October 25, 2006, HP and 22 other companies entered
into a Patent License and Settlement Agreement with Compression Labs, Inc., a subsidiary of Forgent
Networks (‘‘CLI’’), to resolve all outstanding patent infringement litigation with CLI related to U.S.
Patent No. 4,698,672 (the ‘‘‘672 Patent’’). The settlement agreement results in the dismissal with
prejudice of Compression Labs, Inc. v. HP et al., a lawsuit filed by CLI on April 22, 2004 in the United
States District Court for the Eastern District of Texas and subsequently consolidated for pre-trial
proceedings in the Northern District of California with nine other similar lawsuits between CLI and
one or more of the defendants. CLI sought unspecified damages, interest, costs and attorneys’ fees for
alleged infringement of the ‘672 Patent, which CLI asserted was infringed by the JPEG still-image
compression standard. Under the terms of the settlement agreement, the defendants agreed to pay CLI
an aggregate of $8 million (a portion of which was paid by HP), and CLI granted HP and the other
defendants a worldwide, nonexclusive, fully paid-up and irrevocable license in exchange.
Environmental
HP is party to, or otherwise involved in, proceedings brought by United States or state
environmental agencies under the Comprehensive Environmental Response, Compensation and
Liability Act (‘‘CERCLA’’), known as ‘‘Superfund,’’ or state laws similar to CERCLA. HP is also
conducting environmental investigations or remediations at several current or former operating sites
pursuant to administrative orders or consent agreements with state environmental agencies. It is our
policy to apply strict standards for environmental protection to sites inside and outside the United
States, even if not subject to regulations imposed by local governments.
The European Union (‘‘EU’’) has enacted the Waste Electrical and Electronic Equipment
Directive, which makes producers of electrical goods, including computers and printers, financially
responsible for specified collection, recycling, treatment and disposal of past and future covered
products. The deadline for the individual member states of the EU to enact the directive in their
respective countries was August 13, 2004 (such legislation, together with the directive, the ‘‘WEEE
Legislation’’). Producers participating in the market were financially responsible for implementing these
responsibilities under the WEEE Legislation beginning in August 2005. Implementation in certain of
the member states has been delayed into 2006 and 2007. Similar legislation has been or may be enacted
in other jurisdictions, including in the United States, Canada, Mexico, China and Japan. HP is
continuing to evaluate the impact of the WEEE Legislation and similar legislation in other jurisdictions
as individual countries issue their implementation guidance.
The liability for environmental remediation and other environmental costs is accrued when it is
considered probable and the costs can be reasonably estimated. We have accrued amounts in
conjunction with the foregoing environmental issues that we believe was adequate as of October 31,
2006. These accruals were not material to our operations or financial position, and we do not currently
anticipate material capital expenditures for environmental control facilities.
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