Symantec 2015 Annual Report Download - page 156

under the GSA schedule is approximately $145 million; since the initial meeting, the government’s analysis of
our potential damages exposure relating to direct sales has increased. The government has also indicated they are
going to pursue claims for certain sales to New York, California, and Florida as well as sales to the federal
government through reseller GSA Schedule contracts, which could significantly increase our potential damages
exposure.
In 2012, a sealed civil lawsuit was filed against Symantec related to compliance with the GSA Schedule
contract and contracts with California, Florida, and New York. On July 18, 2014, the Court-imposed seal
expired, and the government intervened in the lawsuit. On September 16, 2014, the states of California and
Florida intervened in the lawsuit, and the state of New York notified the Court that it would not intervene. On
October 3, 2014, the Department of Justice filed an amended complaint, which did not state a specific damages
amount. On October 17, 2014, California and Florida combined their claims with those of the Department of
Justice and the relator on behalf of New York in an Omnibus Complaint; the state claims also do not state
specific damages amounts.
It is possible that the litigation could lead to claims or findings of violations of the False Claims Act, and
could be material to our results of operations and cash flows for any period. Resolution of False Claims Act
investigations can ultimately result in the payment of somewhere between one and three times the actual
damages proven by the government, plus civil penalties in some cases, depending upon a number of factors. Our
current estimate of the low end of the range of the probable estimated loss from this matter is $25 million, which
we have accrued. This amount contemplates estimated losses from both the investigation of compliance with the
terms of the GSA Schedule contract as well as possible violations of the False Claims Act. There is at least a
reasonable possibility that a loss may have been incurred in excess of our accrual for this matter, however, we are
currently unable to determine a range of estimated losses resulting from this matter.
IV
On December 8, 2010, Intellectual Ventures (“IV”) sued Symantec for patent infringement in the U.S.
District Court in Delaware. The complaint alleged infringement of four patents by various Symantec internet
security products, including Norton security products, Symantec Endpoint Protection, and other Symantec email
and web security products. In October 2014, one patent was dismissed from the case. On January 26, 2015, a jury
trial began on the remaining three patents. At trial, IV requested a damages award of approximately $299 million.
Symantec offered evidence that the three patents were invalid and not infringed. Symantec also offered evidence
that, even if any of the patents are found to be valid and infringed, any damages would be significantly lower
than the amount requested by IV.
On February 6, 2015, after a nine-day trial, the jury issued a verdict finding that Symantec infringed two
patents, that Symantec did not infringe the third patent, that Symantec had not established that the patents are
invalid based on prior art, and that the proper measure of damages for Symantec’s past and future use of
the two patents until their expiration was $17 million ($9 million for one patent and $8 million for the second
patent). On April 10, 2015, the Court heard a post-trial motion brought by Symantec specifically addressing
whether the three patents-in-suit are invalid under 35 U.S.C. § 101 due to lack of patentable subject matter. On
April 22, 2015, the Court issued an order holding that two of the patents are invalid, including one of the patents
Symantec was found to infringe. Therefore, the $9 million jury verdict related to that patent has been rendered
moot. Symantec is still considering its options to seek to overturn all or part of the remaining $8 million
verdict. Symantec does not believe that it is probable that it has incurred a material loss and, as a result, has not
made an accrual for this matter.
Other
See Note 13 for information regarding an agreement in principle to settle litigation. We are also involved in
a number of other judicial and administrative proceedings that are incidental to our business. Although adverse
decisions (or settlements) may occur in one or more of the cases, it is not possible to estimate the possible loss or
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