Netgear 2013 Annual Report Download - page 95

Download and view the complete annual report

Please find page 95 of the 2013 Netgear annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 121

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121

Table of Contents NETGEAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Pragmatus Telecom, LLC v. NETGEAR, Inc.
On December 6, 2012, Pragmatus Telecom, LLC (“Pragmatus”),
filed a lawsuit against the Company asserting that the Company's use of a system
“to provide live chat service over the Internet”
infringes U.S. Patent Nos. 6,311,231, 6,668,286, and 7,159,043 ("'231 patent", "'286 patent", and "'043
patent", respectively).
The '231 patent is entitled "Method and System for Coordinating Data and Voice Communications via Customer Contact,”
the '286 patent is
entitled "Method and System for Coordinating Data and Voice Communications via Customer Contact Channel Changing System Over IP," and the '043
patent is entitled "Method and System for Coordinating Data and Voice Communications via Contact Channel Changing System," The patents very
generally allegedly relate to “
live chat" services of companies, which can give customers the ability to exchange text messages with a virtual or real
customer support person. It appears that most companies named in the various lawsuits by Pragmatus license the “live chat”
technology and software
from a third-party supplier. A few of these third-party suppliers have been named in some of the over 100
lawsuits filed by Pragmatus in California,
Delaware, and the Eastern District of Texas, and two third-party suppliers of text-
chat (LivePerson and LogMeIn) have filed declaratory judgment
actions on the patents in suit in Delaware. There is a pending reexamination on one of the three asserted patents.
Pragmatus and the Company agreed to extend the deadline for the Company to answer or otherwise respond to Pragmatus's complaint until
February 11, 2013. The Company answered the complaint on that day by denying Pragmatus's infringement allegations and requesting a declaratory
judgment by the Court that the patents in suit are not infringed and invalid. On February 20, 2013, the Company filed a motion to stay the case, and, on
March 6, 2013, Pragmatus filed its opposition to the Company's motion to stay the case. The Company filed its reply on March 13, 2013. On May 14,
2013, the Court granted the Company's motion to stay “pending final exhaustion of all pending reexamination proceedings.”
On June 22, 2013, both the
'231 and '286 patents, which were the two asserted patents against the Company that were put into reexam by the defendants in a parallel Delaware
action and the basis of the stay in the Pragmatus' case against the Company, emerged from reexam. In addition, the Delaware court lifted the stay in the
Pragmatus cases pending in Delaware. The parties submitted a status report to the Court in January of 2014 indicating that: (1) the ‘
231 Patent emerged
from reexamination with all claims confirmed, and all rights of appeal have been exhausted; (2) the request for reexamination of the ‘
043 Patent was
denied; and (3) all claims of the ’286 patent were confirmed during reexamination, but the reexamination requestor appealed the examiner’
s decision
and the matter is now on appeal. The parties have asked the Court to lift the stay of the case and set a case management conference and an early neutral
evaluation.
It is too early to reasonably estimate any financial impact to the Company because of this litigation matter.
Freeny v. NETGEAR, Inc.
On April 29, 2013, the Company and several other companies, including Apple, ASUSTek, Belkin, Buffalo, D-Link, IC Intracom, Ruckus, TP-
Link,
Vizio, and Western Digital, were sued in separate actions in the Eastern District of Texas by Charles C. Freeny III, Bryan E. Freeny, and James P.
Freeny. The complaint alleges that dual-
band wireless routers infringe U.S. Patent No. 7,110,744. The patent lists Charles Freeny as the inventor. Mr.
Freeny's sons, Charles III and Bryan, now own the '744 patent, as Mr. Freeny is deceased. On June 21, 2013, the Company's answer and counterclaims
were timely filed with the Court. The initial status conference was held on August 8, 2013. At the status conference, the Markman hearing was
scheduled for August 7, 2014, and the trial date was set for April 6, 2015.
On August 2, 2013, Freeny produced its initial infringement contentions to the Company. The Company’
s initial disclosures were given to Freeny
on September 23, 2013, and, on October 10, 2013, the Company produced initial technical documents, as required by the Court’
s local rules. Discovery
is ongoing.
It is too early to reasonably estimate any financial impact to the Company because of this litigation matter.
Concinnitas v. NETGEAR, Inc.
On May 2, 2013, the Company was added to an existing case against Sierra Wireless America, Inc. and Sierra Wireless S.A. that was brought by
Concinnitas, LLC and George W. Hindman in the Eastern District of Texas. The accused products will be the Company's Aircard products that it
acquired from Sierra Wireless. On July 20, 2013, the Company's answer and counterclaims were timely filed with the Court. The Court set an initial
scheduling conference for September 5, 2013, and at that conference the Court consolidated Concinnitas’s case against the Company with Concinnitas’
s
case against Samsung for discovery and claims construction purposes. Based on the date of the scheduling conference, Concinnitas’
s infringement
contentions were submitted on August 30, 2013, and the Company’
s invalidity contentions and technical document production were submitted on
October 17,
92