HP 2011 Annual Report Download - page 150

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 18: Litigation and Contingencies (Continued)
Supreme Court decision and remitted the matter to it. On July 21, 2011, the German Federal Supreme
Court stayed the proceedings and referred several questions to the CJEU with regard to the
interpretation of the European Copyright Directive.
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 A12 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 subsequently filed a claim with the German
Federal Constitutional Court challenging that ruling. In January 2011, the Constitutional Court
published a decision holding that the German Federal Supreme Court decision was inconsistent with
the German Constitution and revoking the German Federal Supreme Court decision. The
Constitutional Court remitted the matter to the German Federal Supreme Court for further action. On
July 21, 2011, the German Federal Supreme Court stayed the proceedings and referred several
questions to the CJEU with regard to the interpretation of the European Copyright Directive.
Reprobel, a cooperative society with the authority to collect and distribute the remuneration for
reprography to Belgian copyright holders, requested HP by extra-judicial means to amend certain
copyright levy declarations submitted for inkjet MFDs sold in Belgium from January 2005 to December
2009 to enable it to collect copyright levies calculated based on the generally higher copying speed
when the MFDs are operated in draft print mode rather than when operated in normal print mode. In
March 2010, HP filed a lawsuit against Reprobel in the French-speaking chambers of the Court of First
Instance of Brussels seeking a declaratory judgment that no copyright levies are payable on sales of
MFDs in Belgium or, alternatively, that copyright levies payable on such MFDs must be assessed based
on the copying speed when operated in the normal print mode set by default in the device. The
schedule for the court proceedings has been determined, and no decision from the court is expected
before September 2012.
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 the matters described above. However, the ultimate
resolution of these matters and the associated financial impact on HP, 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.
Skold, et al. v. Intel Corporation and Hewlett-Packard Company is a lawsuit in which HP was joined
on June 14, 2004 that is pending in state court in Santa Clara County, California. The lawsuit alleges
that Intel Corporation (‘‘Intel’’) misled the public by suppressing and concealing the alleged material
fact that systems that use the Intel Pentium 4 processor are less powerful and slower than systems using
the Intel Pentium III processor and processors made by a competitor of Intel. The lawsuit alleges that
HP aided and abetted Intel’s allegedly unlawful conduct. The plaintiffs seek unspecified damages,
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