HP 2013 Annual Report Download - page 157

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 17: Litigation and Contingencies (Continued)
Court decision was inconsistent with the German Constitution and revoking the German Federal
Supreme Court decision. The Constitutional Court also 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. On June 27, 2013, the CJEU issued its decision responding to those
questions. The German Federal Supreme Court subsequently scheduled a joint hearing on that matter
with other cases relating to reprographic levies on printers that was held on October 31, 2013, and is
expected to be followed by a decision in January 2014.
Reprobel, a cooperative society with the authority to collect and distribute the remuneration for
reprography to Belgian copyright holders, requested by extra-judicial means that HP 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. On
November 16, 2012, the court issued a decision holding that Belgium law is not in conformity with EU
law in a number of respects and ordered that, by November 2013, Reprobel substantiate that the
amounts claimed by Reprobel are commensurate with the harm resulting from legitimate copying under
the reprographic exception. HP subsequently appealed that court decision to the Courts of Appeal in
Brussels seeking to confirm that the Belgian law is not in conformity with EU law and that, if Belgian
law is interpreted in a manner consistent with EU law, no payments by HP are required or,
alternatively, the payments already made by HP are sufficient to comply with its obligations under
Belgian law. On October 23, 2013, the Court of Appeal in Brussels stayed the proceedings and referred
several questions to the CJEU relating to whether the Belgian reprographic copyright levies system is
in conformity with EU law.
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 number of units impacted and the amounts of
the 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 and the amount of levies imposed, remains uncertain.
Fair Labor Standards Act Litigation. HP is involved in several lawsuits in which the plaintiffs are
seeking unpaid overtime compensation and other damages based on allegations that various employees
of EDS or HP have been misclassified as exempt employees under the Fair Labor Standards Act and/or
in violation of the California Labor Code or other state laws. Those matters include the following:
•Cunningham and Cunningham, et al. v. Electronic Data Systems Corporation is a purported
collective action filed on May 10, 2006 in the United States District Court for the Southern
District of New York claiming that current and former EDS employees allegedly involved in
installing and/or maintaining computer software and hardware were misclassified as exempt
employees. Another purported collective action, Steavens, et al. v. Electronic Data Systems
Corporation, which was filed on October 23, 2007, is also now pending in the same court alleging
similar facts. The Steavens case has been consolidated for pretrial purposes with the Cunningham
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