HP 2009 Annual Report Download - page 153

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 18: Litigation and Contingencies (Continued)
settlement agreement with VG Wort and Verwertungsgesellschaft Bild-Kunst, another collection agency
representing copyright holders (‘‘VG Bild-Kunst’’), that provides for the payment of levies on MFDs
sold from 2002 through 2007. The levies vary from approximately A13 to A307 per unit depending on
the type of device, the date sold and the copy speed and are subject to reduction if VG Wort or VG
Bild-Kunst grants more favorable rates in the future to parties within Germany that are not covered by
the settlement. HP has acceded to the settlement and paid all amounts due thereunder.
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 Stuttgart Court of Appeals. On May 11, 2005, the
Stuttgart Court of Appeals issued a decision confirming that levies are due. On June 6, 2005, HP filed
an appeal to the German Federal Supreme Court in Karlsruhe. On December 6, 2007, the German
Federal Supreme Court issued a judgment that printers are not subject to levies under the existing law.
The court issued a written decision on January 25, 2008, and VG Wort subsequently filed an
application with the German Federal Supreme Court under Section 321a of the German Code of Civil
Procedure contending that the court did not consider their arguments. On May 9, 2008, the German
Federal Supreme Court denied VG Wort’s application. In addition, VG Wort has appealed the decision
by filing a claim with the German Federal Constitutional Court challenging the ruling that printers are
not subject to levies. HP and the industry association BITKOM have responded to VG Wort’s claim.
In September 2003, VG Wort filed a lawsuit against Fujitsu Siemens Computer GmbH (‘‘FSC’’) in
the Munich Civil Court in Munich, Germany seeking levies on PCs. This is an industry test case in
Germany, and HP has agreed not to object to the delay if VG Wort sues HP for such levies on PCs
following a final decision against FSC. On December 23, 2004, the Munich Civil 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 Munich Court of
Appeals. On December 15, 2005, the Munich Court of Appeals affirmed the Munich Civil Court
decision. FSC filed an appeal with the German Federal Supreme Court in February 2006. On
October 2, 2008, the German Federal Supreme Court issued a judgment that PCs were not
photocopiers within the meaning of the German copyright law that was in effect until December 31,
2007 and, therefore, not subject to the levies on photocopiers established by that law. VG Wort has
filed a claim with the German Federal Constitutional Court challenging that ruling. FSC and BITKOM
have responded to VG Wort’s claim.
On December 29, 2005, ZPU, a joint association of various German collection societies, instituted
non-binding arbitration proceedings against HP before the arbitration board of the Patent and
Trademark Office demanding reporting of every PC sold by HP in Germany from January 2002 through
December 2005 and seeking a levy of 18.42 euros plus tax for each PC sold during that period. HP
filed a notice of defense in connection with these proceedings in February 2006, and an arbitration
hearing was held in December 2006. On July 31, 2007, the arbitration board issued a ruling proposing a
levy of 15 euros plus tax for each PC sold during that period. HP has rejected the ruling of the
arbitration board, and the arbitration proceedings have concluded. ZPU has filed a claim with the
Munich Court of Appeals to which HP has responded. A hearing date has been set by the court for
February 18, 2010.
146