TeleNav 2010 Annual Report Download - page 34

Risks related to our intellectual property and regulation
We operate in an industry with extensive intellectual property litigation. Claims of infringement against us or
our wireless carrier partners may cause our business, operating results and financial condition to suffer.
Our commercial success depends in part upon us and our customers not infringing intellectual property
rights owned by others and being able to resolve claims of intellectual property infringement without major
financial expenditures. We operate in an industry with extensive intellectual property litigation and it is not
uncommon for our wireless carrier partners and competitors to be involved in infringement lawsuits by or against
third parties. Many industry participants that own, or claim to own, intellectual property aggressively assert their
rights, and our wireless carrier partners, which we agree in certain circumstances to indemnify for intellectual
property infringement claims related to our services, are often targets of such assertions. We cannot determine
with certainty whether any existing or future third party intellectual property rights would require us to alter our
technologies, obtain licenses or cease certain activities.
We have received, and may in the future receive, claims from third parties asserting infringement and other
related claims. For example, on November 17, 2009, WRE-Hol, LLC filed a complaint against us in the United
States District Court for the Western District of Washington (Case No. 2:09-cv-01642-MJP) alleging that we
infringe a patent owned by WRE-Hol, LLC. According to the patent, the invention generally relates to a system
and method for providing navigation and automated guidance to a mobile user. The complaint seeks unspecified
monetary damages, fees and expenses, and injunctive relief against us. On January 25, 2010, we answered the
WRE-Hol complaint asserting that the patent-in-suit is not infringed and is invalid and unenforceable. On
March 11, 2010, WRE-Hol amended its complaint to add a new defendant, and we subsequently answered,
repeating our assertions that the patent-in-suit is not infringed and is invalid and unenforceable. On April 27,
2010, we filed a reexamination request for all of the claims of the asserted patent before the U.S. Patent and
Trademark Office. On April 29, 2010, we filed a motion to stay the litigation pending the reexamination. On
May 3, 2010, WRE-Hol filed a motion for leave to amend the complaint against us, seeking to add claims for
misappropriation of trade secrets against us and our founders, Y.C. Chao, H.P. Jin and Robert Rennard.
WRE-Hol’s motion for leave to amend also seeks to add a breach of contract claim against us and a claim for
wrongful inventorship involving two of our patents, requesting a declaratory judgment that a WRE-Hol inventor
be named as an inventor on these patents. On July 19, 2010, the U.S. Patent and Trademark Office issued an
order granting inter partes reexamination of all 51 claims of the WRE-Hol ‘625 patent. On July 23, 2010, the
district court issued an order granting WRE-Hol’s motion for leave to amend its complaint, but at the same time
stayed the entire litigation pending completion of the reexamination. The stay of the litigation extends to the new
claims the court allowed. On September 13, 2010, the U.S. Patent and Trademark Office rejected 44 of the 51
WRE-Hol patent claims in a non-final first office action and confirmed seven of the 51 claims. Additionally, on
December 31, 2009, Vehicle IP, LLC filed a complaint against us in the U.S. District Court for the District of
Delaware (Case No. 1:09-cv-01007-JJF) alleging that certain of our navigation services, including our GPS
Navigator, infringe a patent owned by Vehicle IP, LLC. According to the patent, the invention generally relates
to a navigation system that determines an expected time of arrival. The complaint seeks unspecified monetary
damages, fees and expenses and injunctive relief against us. On March 11, 2010, we answered the complaint,
asserting that the patent-in-suit is not infringed and is invalid. Vehicle IP denied these counterclaims and
requested that they be dismissed. Verizon Wireless was named as a co-defendant in the Vehicle IP litigation
based on the VZ Navigator product and has demanded that we indemnify and defend Verizon against Vehicle IP.
AT&T Mobility was also named as a co-defendant in the Vehicle IP litigation based on the AT&T Navigator
product. AT&T Mobility has tendered the defense of the litigation to us and we are defending the case on behalf
of AT&T Mobility. The court has not yet ordered a scheduling conference for the litigation. Furthermore, on
April 30, 2010, Traffic Information, LLC filed a complaint against us in the U.S. District Court for the Eastern
District of Texas (Case No. 2:10-cv-00145-TJW). The suit alleges that certain of our products and/or services
infringe U.S. Patent No. 6,785,606, and that we induce infringement and contribute to the infringement of U.S.
Patent No. 6,785,606 by others. According to the patent, the invention generally relates to a system for providing
traffic information to a plurality of mobile users connected to a network. The complaint seeks unspecified
monetary damages, fees and expenses and injunctive relief against us. On May 28, 2010, Traffic Information,
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