Overstock.com 2012 Annual Report Download - page 114

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covering search and categorization software. We believe that certain third party vendors of products and services sold to us are contractually obligated to
indemnify us in this action. On November 11, 2009, the parties stipulated to stay all proceedings in the case until resolution of a reexamination of the
patent in question, and also until a previously filed infringement action against Wal-Mart Stores, Inc. and other retailers resulted either in judgment or
dismissal. Subsequently, the parties agreed to extend the time for defendants' complaint answer until 21 days following a court order to lift the stay to
which the parties stipulated. The United States Patent and Trademark Office resolved the reexamination of the patent in question in favor of
SpeedTrack, Inc. The case remains stayed, pending the outcome and appeal of the infringement action against Wal-Mart Stores, Inc. and other retailers.
On February 22, 2012, the court in the Wal-Mart Stores case granted Wal-Mart Stores' motion for summary judgment of non-infringement. The court
also granted Speedtrack's motion for summary judgment on patent validity. Speedtrack is appealing the ruling. It is not known whether the summary
judgments granted in the Wal-Mart Stores case will have an effect on the Speedtrack case in which we are named as one of the defendants. The nature
of the loss contingencies relating to claims that have been asserted against us are described above. However no estimate of the loss or range of loss can
be made. We intend to vigorously defend this action and pursue our indemnification rights with our vendors.
On or about September 25, 2009, Alcatel-Lucent USA, Inc. filed suit against us and 12 other defendants in the United States District Court in the
Eastern District of Texas. We are alleged to have infringed three patents purportedly related to a communications protocol between a user and server
terminals, text input functionalities and search processes. We believe a third party vendor of search products and services sold to us is contractually
obligated to indemnify us in this action as it pertains to the search patent. On October 14, 2011, a jury returned a verdict in our favor, finding non-
infringement on all asserted claims, on all patents, and finding of invalidity of the Alcatel-Lucent patent, having to do with a communications protocol.
On November 29, 2011, Alcatel-Lucent filed a motion for a new trial which was denied. Alcatel-Lucent has filed an appeal which we will oppose. The
appeal is now in the briefing stage.
On September 29, 2010, a trustee in bankruptcy filed against us an adversary proceeding in the matter of In re: Petters Company, Inc., a case filed
in United States Bankruptcy Court, in the District of Minnesota. The complaint alleges principal causes of action against us under various Bankruptcy
Code sections and the Minnesota Fraudulent Transfer Act, to recover damages for alleged transfers of property from the Petters Company occurring
prior to the filing of the case initially as a civil receivership in October 2008. The trustee's complaint alleges such transfers occurred in at least one note
transaction whereby we transferred at least $2.3 million and received in return transfers totaling at least $2.5 million. The trustee does not specify a date
for the transactions; however we believe that any alleged transaction with the Petters Company would have taken place in excess of seven years from
the date of the filing of the adversary proceeding. The case is in its early stages. We filed a motion to dismiss on statute of limitations and other grounds.
The court has not ruled upon the motion to dismiss. The nature of the loss contingencies relating to claims that have been asserted against us are
described above. However, no estimate of the loss or range of loss can be made. We intend to vigorously defend this action.
On November 17, 2010 we were sued in the Superior Court of California, County of Alameda, by District Attorneys for the California Counties
of Alameda, Marin, Monterey, Napa, Santa Clara, Shasta and Sonoma County, and the County of Santa Cruz joined the suit. These district attorneys
seek damages and an injunction under claims for violations of California consumer protection laws, alleging
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