Lexmark 2011 Annual Report Download - page 140

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$1.5 million decrease in the liability compared to December 31, 2010 was due to foreign currency
translation. Although it is reasonably possible that amounts may exceed the amount accrued by the
Company, such amount, or range of possible loss, given the complexities of the legal issues in these
matters, cannot be reasonably estimated by the Company at this time.
As of December 31, 2011, approximately $52 million of the $63.3 million accrued for the pending
copyright fee issues was related to single function printer devices sold in Germany prior to
December 31, 2007. The VerwertungsGesellschaft Wort (“VG Wort”), a collection society representing
certain copyright holders, instituted legal proceedings against Hewlett-Packard Company (“HP”) in July
of 2004 relating to whether and to what extent copyright levies for photocopiers should be imposed in
accordance with copyright laws implemented in Germany on single function printers. The Company is
not a party to this lawsuit, although the Company and VG Wort entered into an agreement in October
2002 pursuant to which both VG Wort and the Company agreed to be bound by the outcome of the VG
Wort/HP litigation. On December 6, 2007, the Bundesgerichtshof (the “German Federal Supreme
Court”) in the VG Wort litigation with HP issued a judgment that single function printer devices sold in
Germany prior to December 31, 2007 are not subject to levies under the then existing law (German
Federal Supreme Court, file reference I ZR 94/05). VG Wort filed an appeal with the
Bundesverfassungsgericht (the “German Federal Constitutional Court”) challenging the ruling that
single function printers are not subject to levies. On September 21, 2010, the German Federal
Constitutional Court published a decision holding that the German Federal Supreme Court erred by not
considering referring questions on interpretation of German copyright law to the Court of Justice of the
European Communities and therefore revoked the German Federal Supreme Court decision and
remitted the matter to it. On July 21, 2011, the German Federal Supreme Court has stayed the
proceedings and has submitted several questions regarding the interpretation of Directive 2001/29/EC
on the harmonization of certain aspects of copyright and related rights in the information society to the
European Court of Justice for a decision.
On or about December 15, 2009, VG Wort instituted non-binding arbitration proceedings against the
Company before the arbitration board of the Patent and Trademark Office in Munich relating to whether
and to what extent copyright levies should be imposed on single function printers sold by the Company
in Germany from 2001 to 2007. In its submissions to the Patent and Trademark Office in Munich the
Company asserted that all claims for levies on single function printers sold by the Company in
Germany should be dismissed. On February 22, 2011 the arbitration board issued a partial decision
finding that the claims of VG Wort for the years 2001 through 2005 are time barred by the statute of
limitations. On October 27, 2011, the arbitration board further found that the copyright levy claims for
single function printers for the years 2006 and 2007 should be dismissed pursuant to the October 2002
agreement between the Company and VG Wort finding the parties agreed to be bound by the
judgment of the German Federal Supreme Court of December 6, 2007 which dismissed VG Wort’s
copyright levy claims for single function printers. VG Wort has filed objections against these
non-binding decisions and further proceedings in German civil court on these issues are expected.
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.
Other Litigation
There are various other lawsuits, claims, investigations and proceedings involving the Company, that
are currently pending. The Company has determined that although a potential loss is reasonably
possible for certain matters, that for such matters in which it is possible to estimate a loss or range of
loss, the estimate of the loss or estimate of the range of loss are not material to the Company’s
consolidated results of operations, cash flows, or financial position.
136