Lexmark 2007 Annual Report Download - page 95

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$117 million and $98 million, respectively, for the pending copyright fee issues, including litigation
proceedings, local legislative initiatives and/or negotiations with the parties involved.
As of December 31, 2007, approximately $58.1 million of the $117 million accrued for the copyright fee
issues was related to single function printer devices sold in Germany prior to December 31, 2007. On
December 6, 2007, the Bundesgerichtshof (the “German Federal Supreme Court”) issued a judgment in
litigation brought by VerwertungsGesellschaft Wort (“VG Wort”), a collection society representing certain
copyright holders, against Hewlett-Packard Company (“HP”), finding that single function printer devices
sold in Germany prior to December 31, 2007 were not subject to the law authorizing the German copyright
fee levy (German Federal Supreme Court, file reference I ZR 94/05). The Company and VG Wort entered
into an agreement pursuant to which both VG Wort and the Company agreed to be bound by the outcome
of the VG Wort/HP litigation. The Company was informed that the formal written decision(s) of the German
Federal Supreme Court supporting the judgment rendered on December 6, 2007 was served on VG Wort
on January 24, 2008. VG Wort has until February 25, 2008 to file a claim with the German Federal
Constitutional Court (Bundesverfassungsgericht, the “Constitutional Court”) challenging the decision(s) of
the German Federal Supreme Court, and VG Wort has indicated it is considering such a claim. Pending a
review of any arguments VG Wort or HP may make if VG Wort should decide to challenge the German
Federal Supreme Court’s decision(s) in the Constitutional Court, the Company believes the amount
accrued represents its best estimate of the copyright fee issues currently pending.
As of December 31, 2007, approximately $0.4 million of the $117 million accrued for copyright fee issues
was related to all-in-one and/or multifunction devices (“AIO/MFDs”) sold in Germany prior to December 31,
2001. At an oral hearing on January 30, 2008, the German Federal Supreme Court issued a judgment in
litigation brought by VG Wort against HP seeking to impose copyright levies, at the statutory rates
published for photocopier devices, on AIO/MFDs, which judgment confirmed the claim of VG Wort that the
statutory copyright rates for photocopier devices shall be applied to AIO/MFDs sold prior to December 31,
2001 without any reduction (German Federal Supreme Court, file reference I ZR 131/05). The Company is
not a party to this litigation and has not agreed to be bound by the outcome of this litigation. The German
Federal Supreme Court has not yet issued its formal written decision(s) supporting the judgment. HP will
have 30 days from receipt of the German Federal Supreme Court’s formal written decision(s) to file a claim
with the Constitutional Court challenging the decision(s) of the German Federal Supreme Court. Pending a
review of the German Federal Supreme Court’s formal written decision as well as any arguments HP or VG
Wort may make if HP should decide to challenge the German Federal Supreme Court’s ruling(s), the
Company believes the amount accrued represents its best estimate of the copyright fee issues currently
pending.
For those AIO/MFDs sold in Germany after December 31, 2001 through December 31, 2007, VG Wort
instituted non-binding arbitration proceedings against the Company in December 2006 before the
arbitration board of the Patent and Trademark Office relating to whether and to what extent copyright
levies should be imposed on such AIO/MFDs.
The Company believes the amounts accrued represent its best estimate of the copyright fee issues
currently pending and these accruals are included in Accrued liabilities on the Consolidated Statements of
Financial Position.
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