TeleNav 2010 Annual Report Download - page 35

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LLC filed an amended complaint, adding a new claim that certain of our products and/or services infringe U.S.
Patent No. 6,466,862, and that we induce infringement and contribute to the infringement of U.S. Patent
No. 6,466,862 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 amended complaint seeks unspecified
monetary damages, fees and expenses and injunctive relief against us. Due to the preliminary status of these
lawsuits and uncertainties related to litigation, we are unable to evaluate the likelihood of either favorable or
unfavorable outcomes. Accordingly, we are unable at this time to estimate the effects of these lawsuits on our
financial condition, results of operations, or cash flows.
These cases and future litigation may make it necessary to defend ourselves and our wireless carrier partners
by determining the scope, enforceability and validity of third party proprietary rights or to establish our
proprietary rights. Some of our competitors may have substantially greater resources than we do and may be able
to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time
than we could. In addition, patent holding companies that focus solely on extracting royalties and settlements by
enforcing patent rights may target us or our wireless carrier partners. These companies typically have little or no
product revenue and therefore our patents may provide little or no deterrence against such companies filing
patent infringement lawsuits against us. Regardless of whether claims that we are infringing patents or other
intellectual property rights have any merit, these claims are time consuming and costly to evaluate and defend
and could:
• adversely affect our relationships with our current or future wireless carrier partners;
• cause delays or stoppages in the shipment of TeleNav enabled mobile phones, or cause us to modify or
suspend the provision of our LBS;
• cause us to incur significant expenses in defending claims brought against our wireless carrier partners
or us;
• divert management’s attention and resources;
• subject us to significant damages or settlements;
• require us to enter into settlements, royalty or licensing agreements on unfavorable terms; or
• require us to cease certain activities.
In addition to liability for monetary damages against us or, in certain circumstances, our wireless carrier
partners, we may be prohibited from developing, commercializing or continuing to provide certain of our LBS
unless we obtain licenses from the holders of the patents or other intellectual property rights. We cannot assure
you that we will be able to obtain any such licenses on commercially reasonable terms, or at all. If we do not
obtain such licenses, our business, operating results and financial condition could be materially adversely
affected and we could, for example, be required to cease offering our LBS or be required to materially alter our
LBS, which could involve substantial costs and time to develop.
Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual
property infringement, damages caused by defective software and other losses.
Our agreements with our wireless carrier partners include indemnification provisions. We agree to
indemnify them for losses suffered or incurred in connection with our LBS, including as a result of intellectual
property infringement, damages caused by defects and damages caused by viruses, worms and other malicious
software. The term of these indemnity provisions is generally perpetual after execution of the corresponding
agreement, and the maximum potential amount of future payments we could be required to make under these
indemnification provisions is generally substantial and may be unlimited. In addition, some of these agreements
permit our indemnitees to terminate their agreements with us if they determine that the use of our LBS infringes
third party intellectual property.
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