Stamps.com 2001 Annual Report Download - page 68

STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
injunction from further alleged infringement. The Company answered the complaint on December 1, 2000, denying the allegations of patent
infringement and asserting a number of affirmative defenses. The United Parcel Service acquired the Company's iShip multi-carrier shipping
service assets on May 18, 2001. On September 4, 2001, the court granted the Company's motion to transfer the lawsuit to the United States
District Court for the District of Delaware.
On June 14, 2001, the Company filed a patent infringement lawsuit against Pitney Bowes in the United States District Court for the Central
District of California, alleging that Pitney Bowes infringes four patents owned by the Company. On January 7, 2002, the court granted Pitney
Bowes' motion to transfer the lawsuit to the United States District Court for the District of Delaware. Each of the Company's patent lawsuits
with Pitney Bowes is in the discovery phase and is scheduled for trial in January 2003.
The outcome of the Company's litigation against Pitney Bowes is uncertain and the Company cannot estimate a range of probable losses, if any.
Therefore, the Company can give no assurance that Pitney Bowes will not prevail in its suits against Stamps.com. See Risk Factors-Success by
Pitney Bowes in its suits against us alleging patent infringement could prevent us from offering our Internet postage services and severely harm
our business or cause it to fail.
On December 13, 2000, Cybershop (a British Columbia, Canada partnership) and its general partners filed suit against the Company in the U.S.
District Court for the Southern District of Texas, alleging that in 1998 a third party fraudulently transferred ownership of the Internet domain
name "stamps.com" away from Cybershop and subsequently transferred it to the Company. The third party is also a named defendant in the suit.
The complaint seeks legal resolution and recognition of Cybershop's ownership of the "stamps.com" domain name and seeks unspecified
monetary damages against the third party. On January 9, 2001, the Company filed a motion to dismiss the suit. On February 16, 2001,
Cybershop filed an amended complaint, alleging new causes of action, including conversion, invasion of privacy, trespass, and private nuisance,
and seeking declaratory judgment for return of the domain name registration to Cybershop. Cybershop later filed third and fourth amended
complaints. On February 13, 2002, the court granted our summary judgment motion and dismissed all of Cybershop's pending claims against
the Company with prejudice. Cybershop has filed a motion asking the court to reconsider its decision.
The final outcome of the litigation is uncertain, and the Company can give no assurance that Cybershop and its general partners will not prevail.
See Risk Factors- Success by Cybershop in its suit against us seeking damages and recognition of its ownership of the domain name
stamps.com could prevent us from using the domain name stamps.com and could require a change of name of the Company, severely harming
our business or causing it to fail.
On or about April 6, 2000, Metro Fulfillment, Inc. filed a lawsuit against Weigh-Tronix, Inc. for breach of contract, fraud, negligent
misrepresentation, intentional inference with contract, negligent interference, breach of implied warranty and breach of express warranty. Metro
Fulfillment, Inc. alleges that pursuant to its agreement with Weigh-Tronix, Inc., Metro Fulfillment, Inc. was not required to pay for postal scales
that were purchased from Weigh-Tronix, Inc. until Metro Fulfillment, Inc. had actually sold those scales to end users. These scales were
supposed to be sold through the Company's Web site. Metro Fulfillment, Inc. further alleged that Weigh-Tronix, Inc. breached the agreement by
seeking payment before the scales were actually sold to customers in breach of the agreement. Weigh-Tronix, Inc. in turn filed a third party
complaint against the Company and Metro Fulfillment, Inc. for breach of contract and several common counts. The third party complaint seeks
approximately $700,000 in compensatory damages, plus interest and attorney's fees. The Company filed an answer to the third party complaint
denying the allegations of the lawsuit. The parties reached a tentative settlement agreement, pursuant to which the Company would pay
Weigh-Tronix, Inc. $200,000 and
F-22
2002. EDGAR Online, Inc.