Metro PCS 2007 Annual Report Download - page 54

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performance, for injunctive relief and for breach of contract. Alcatel Lucent has responded to our petition and
requested that the Court dismiss, abate, stay, and deny every claim in our petition asserted against Alcatel Lucent
and order us to amend our petition. We have responded to Alcatel Lucent’ s request. The parties have agreed to
postpone the hearing on Alcatel Lucent’ s request until after February 7, 2008. No hearing is currently scheduled for
Alcatel Lucent’ s request. We plan to vigorously prosecute our petition.
On September 22, 2006, Royal Street Communications filed a separate action in the United States District Court
for the Middle District of Florida, Tampa Division, Civil Action No. 8:06-CV-01754-T-23TBM, seeking a
declaratory judgment that Leap’ s ‘497 Patent is invalid and not being infringed upon by Royal Street
Communications. Leap responded to Royal Street Communications’ complaint by filing a motion to dismiss Royal
Street Communications’ complaint for lack of jurisdiction or, in the alternative, that the action be transferred to the
United States District Court for the Eastern District of Texas, Marshall Division, where Leap has brought suit
against the Company under the same patent. Royal Street Communications responded to this motion, but the Court
entered an Order transferring the action to the United States District Court for the Eastern District of Texas,
Marshall Division, where it remains pending. In February 2008, Leap answered the complaint and counterclaimed
against Royal Street Communications, claiming that Royal Street Communications’ infringes the ‘497 Patent and
seeking both injunctive relief and monetary damages, including treble damages, for Royal Street Communications’
alleged infringement by its wireless communication systems and associated services of the ‘497 patent. Royal Street
Communications plans to vigorously defend against Leap’ s claims relating to the ‘497 Patent.
If Leap were successful in its claim for injunctive relief in either action, we and Royal Street Communications
could be enjoined from operating our respective businesses in the manner in which we and Royal Street
Communications currently operate, which could require us and Royal Street Communications to expend additional
capital to change certain technologies and operating practices, or could prevent both us and Royal Street
Communications from offering some or all of the services we each provide using some or all of the existing systems.
In addition, if Leap were successful in its claim for monetary damages, we both could be forced to pay Leap
substantial damages, including treble damages, for past infringement and/or ongoing royalties on a portion of both
our revenues, which could materially adversely impact our financial performance and Royal Street
Communications’ financial performance.
On August 15, 2006, we filed a separate action in the California Superior Court, Stanislaus County, Case
No. 382780, against Leap and others for unfair competition, misappropriation of trade secrets, interference with
contracts, breach of contract, intentional interference with prospective business advantage, and trespass. In this suit
we seek monetary and punitive damages and injunctive relief. We have amended our complaint in response to
demurrers and motions filed by Leap and Orders of the Court. On August 16, 2007, we filed our Third Amended
Complaint which among other things eliminated the trespass claims. On September 20, 2007, Defendants demurred
to the Third Amended Complaint alleging that the claims were uncertain and we have responded. On October 24,
2007, the parties filed a stipulation to request that the Court stay the suit and discovery for 90 days following the
entry of the Order granting the stay. On January 28, 2008, the Court entered an order staying the suit and discovery
until May 27, 2008. If the Court reinstates the suit at the request of either party, we believe the Court will most
likely set new dates for the suit and discovery. We intend to vigorously prosecute this complaint.
On January 7, 2008, Freedom Wireless, Inc., or Freedom Wireless, filed suit against Verisign, Inc., our billing
vendor, and several telecommunications providers who use Verisign’ s billing system, including us, in the United
States District Court for the Northern District of California, San Francisco Division, Civil Action Number CV-08-
112-JL, for infringement of U.S. Patent No. 5,722,067 entitled “Security Cellular Telecommunications System,”
U.S. Patent No. 6,157,823 entitled “Security Cellular Telecommunications System,” and U.S. Patent No. 6,236,851
entitled “Prepaid Security Cellular Telecommunications System”, or collectively the Freedom Wireless Patents, held
by Freedom Wireless. The complaint seeks both injunctive relief and monetary damages, including treble damages,
for our alleged infringement of the Freedom Wireless Patents. We plan to vigorously defend against Freedom
Wireless’ claims relating to the Freedom Wireless Patents. We have tendered this action to Verisign and they have
indicated that they are reviewing our indemnification request. Verisign also has indicated that it plans to leave the
telecommunications service business and cease providing us with billing services through the end of our current
contract. We can give no assurance that Verisign will defend us against this action or that Verisign may not cease
providing us with billing services altogether. We plan to vigorously defend against Freedom Wireless’ claims
related to the Freedom Wireless Patents.