Rosetta Stone 2014 Annual Report Download - page 25

Table of Contents
In June 2011, Rosetta Stone GmbH, a subsidiary of the Company, was served with a writ filed by Langenscheidt KG (“Langenscheidt”) in the District
Court of Cologne, Germany alleging trademark infringement due to Rosetta Stone GmbH’s use of the color yellow on its packaging of its language-learning
software and the advertising thereof in Germany. Langenscheidt sought relief in the form of monetary damages and injunctive relief; however there has not
been a demand for a specific amount of monetary damages and there has been no specific damage amount awarded to Langenscheidt. In January 2012, the
District Court of Cologne ordered an injunction against specific uses of the color yellow made by Rosetta Stone GmbH in packaging, on its website and in
television commercials and declared Rosetta Stone GmbH liable for damages, attorneys’ fees and costs to Langenscheidt. In its decision, the District Court of
Cologne also ordered the destruction of Rosetta Stone GmbH’s product and packaging which utilized the color yellow and which was deemed to have
infringed Langenscheidt’s trademark. The Court of Appeals in Cologne and the German Federal Supreme Court have affirmed the District Court's decision.
The Company has filed special complaints with the German Federal Supreme Court and the German Constitutional Court directed to constitutional issues in
the German Federal Supreme Court’s decision.
In August 2011, Rosetta Stone GmbH commenced a separate proceeding for the cancellation of Langenscheidt’s German trademark registration of
yellow as an abstract color mark. In June 2012, the German Patent and Trademark Office rendered a decision in the cancellation proceeding denying our
request to cancel Langenscheidt’s German trademark registration. The German Federal Supreme Court has denied Rosetta Stone GmbH's further appeal but
has not yet issued its written decision denying further appeal.
Rosetta Stone GmbH expects that damages will be awarded to Langenscheidt based on the finding of trademark infringement. However, at this point,
the Company cannot predict the amount of damages which Langenscheidt will be awarded nor when any damages will be required to be paid. The Company
has concluded that Rosetta Stone GmbH will be required to pay court costs and opposing counsel fees and Langenscheidt has filed a Motion for Attorneys’
Fees to which Rosetta Stone GmbH has objected. The Company will continue to incur legal fees and other costs in connection with the resolution of this
case.
From time to time, we have been subject to various claims and legal actions in the ordinary course of our business. We are not currently involved in any
legal proceeding the ultimate outcome of which, in our judgment based on information currently available, would have a material impact on our business,
financial condition or results of operations.

Not applicable.
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