NetSpend 2011 Annual Report Download - page 29

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for the 419th Judicial District for further proceedings. In February 2011, we filed a motion for partial summary judgment on Alexsam's
fraudulent inducement claim. Following a hearing, the court denied the motion. Trial is scheduled to begin in April 2012. We plan to
vigorously contest Alexsam's claims and to vigorously pursue our own claims.
Frederick J. Baker ("Baker") filed a consumer class action case against NetSpend, as well as one of our Issuing Banks and card
associations (collectively, the "Defendants"), in the U.S District Court for the District of New Jersey in November 2008 seeking damages and
unspecified equitable relief. In May 2009 Baker filed an amended complaint alleging that the Defendants violated the New Jersey Consumer
Fraud Act (CFA), the New Jersey Truth-in-Consumer Contract, Warranty, and Notice Act (TCCWNA) and claiming unjust enrichment in
connection with the Defendants' alleged marketing, advertising, sale and post-sale handling of NetSpend's gift card product in the State of New
Jersey. In March 2011, the court heard oral arguments on Defendants' motion to dismiss Baker's amended complaint and on January 19, 2012,
the court granted Defendants' motion in part and dismissed all claims except for the cause of action based on the alleged violation of the CFA.
We filed our answer and affirmative defenses on February 3, 2012 and plan to vigorously contest Baker's claims.
Integrated Technological Systems, Inc. ("ITS") filed a patent infringement case against NetSpend in the U.S. District Court for the District
of Nevada on October 7, 2011 and served its complaint on NetSpend on October 13, 2011. ITS asserts in its complaint that NetSpend has been
infringing a patent issued to ITS in March of 2011 as a result of providing services that utilize the system described in the patent to transfer
funds from NetSpend Reload Packs to NetSpend GPR cards and to transfer funds between NetSpend GPR cards. ITS is seeking a declaration
that: NetSpend has infringed its patent; an injunction prohibiting NetSpend from continuing the alleged infringement; damages for NetSpend's
prior alleged infringing activity; and attorneys' fees and costs. Netspend filed an answer denying all of the substantive allegations of this
complaint and asserted counterclaims seeking declarations of non-infringement and patent invalidity on November 28, 2011. We plan to
vigorously contest ITS's claims and to vigorously pursue our own claims.
TQP Development, LLC ("TQP") filed a patent infringement case against NetSpend in the U.S. District Court for the Eastern District of
Texas on February 9, 2012. TQP asserts in its complaint that NetSpend has been infringing a patent issued in May of 1995 to Telequip
Corporation based on the operation of encrypted portions of NetSpend's website. TQP is seeking a judgment that NetSpend has infringed its
patent, an injunction prohibiting NetSpend from continuing to infringe its patent, damages for NetSpend's alleged prior infringing activity and
attorneys' fees and costs. We are reviewing the invention claimed in the patent in an effort to form a view regarding its applicability to the
operation of NetSpend's website and the validity of the claimed invention in light of the relevant prior art.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable
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