Microsoft 2015 Annual Report Download - page 74

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European copyright levies
We assumed from Nokia all potential liability due to Nokia’s alleged failure to pay “private copying levies” in various
European countries based upon sale of memory cards and mobile phones that incorporate blank memory. The levies
are based upon a 2001 European Union (“EU”) Directive establishing a right for end users to make copies of
copyrighted works for personal or private use, but also allowing the collection of levies based upon sales of blank
media or recording devices to compensate copyright holders for private copying. Various collecting societies in EU
countries initiated litigation against Nokia, stating that Nokia must pay levies not only based upon sales of blank
memory cards, but also phones that include blank memory for data storage on the phones, regardless of actual
usage of that memory. The most significant cases against Nokia are pending in Germany and Austria, due to both
the high volume of sales and high levy amounts sought in these countries. Since April 2015, we and other major
manufacturers have been engaged in settlement negotiations with the German collecting society, with the aim of
concluding negotiations by October 2015.
Other patent and intellectual property claims
In addition to these cases, there are approximately 70 other patent infringement cases pending against Microsoft.
Antitrust, Unfair Competition, and Overcharge Class Actions
A large number of antitrust and unfair competition class action lawsuits were filed against us in various state, federal,
and Canadian courts on behalf of various classes of direct and indirect purchasers of our PC operating system and
certain other software products between 1999 and 2005.
We obtained dismissals or reached settlements of all claims made in the U.S. Under the settlements, generally class
members can obtain vouchers that entitle them to be reimbursed for purchases of a wide variety of platform-neutral
computer hardware and software. The total value of vouchers that we may issue varies by state. We will make
available to certain schools a percentage of those vouchers that are not issued or claimed (one-half to two-thirds
depending on the state). The total value of vouchers we ultimately issue will depend on the number of class
members who make claims and are issued vouchers. We estimate the total remaining cost of the settlements is
approximately $200 million, all of which had been accrued as of June 30, 2015.
Three similar cases pending in British Columbia, Ontario, and Quebec, Canada have not been settled. In 2010, the
court in the British Columbia case certified it as a class action. After the British Columbia Court of Appeal dismissed
the case, in 2013 the Canadian Supreme Court reversed the appellate court and reinstated part of the British
Columbia case, which is now scheduled for trial in 2016. The other two cases are inactive.
Other Antitrust Litigation and Claims
GO Computer litigation
In June 2005, GO Computer Inc. and co-founder Jerry Kaplan filed a complaint in California state court asserting
antitrust claims under the Cartwright Act related to the business of the former GO Corporation in the early 1990s and
its successor in interest, Lucent Corporation in the early 2000s. All claims prior to June 2001 have been dismissed
with prejudice as barred by the statute of limitations. The case is moving forward with discovery, and a trial is set for
September 2015.
China State Administration for Industry and Commerce investigation
In July 2014, Microsoft was informed that China’s State Administration for Industry and Commerce (“SAIC”) had
begun a formal investigation relating to China’s Anti-Monopoly Law, and the SAIC conducted onsite inspections of
Microsoft offices in Beijing, Shanghai, Guangzhou, and Chengdu. SAIC has stated the investigation relates to
compatibility, bundle sales, and file verification issues related to Windows and Office software.
Product-Related Litigation
U.S. cell phone litigation
Nokia, along with other handset manufacturers and network operators, is a defendant in 19 lawsuits filed in the
Superior Court for the District of Columbia by individual plaintiffs who allege that radio emissions from cellular
handsets caused their brain tumors and other adverse health effects. We have assumed responsibility for these
claims as part of the NDS acquisition and have been substituted for the Nokia defendants. Nine of these cases were