TeleNav 2010 Annual Report Download - page 44

fees and expenses and injunctive relief against us. On May 28, 2010, Traffic Information, 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 the lawsuit and uncertainties related to litigation, we are
unable to evaluate the likelihood of either a favorable or unfavorable outcome. We cannot currently estimate a range of
any possible losses we may experience in connection with this case. Accordingly, we are unable at this time to estimate
the effects of this complaint on our financial condition, results of operations or cash flows.
On September 2, 2010, a purported stockholder class action was filed by David Smith in the United States
District Court for the Northern District of California (Case No. 3:10-CV-03942-SC) against us, certain of our
officers and directors, and certain of our underwriters for our May 13, 2010 IPO. The complaint purports to be
brought on behalf of all persons who acquired shares of our common stock pursuant to our May 13, 2010 IPO,
traceable to our Form S-1/A Registration Statement and Prospectus filed with the SEC on May 13, 2010. The
complaint alleges that we, certain of our officers and directors, and certain of our underwriters for the IPO violated
the Securities Act by issuing the Registration Statement and Prospectus, which the plaintiff alleges contained
material misstatements and omissions in violation of Sections 11 and 15 of the Securities Act. Specifically, the
complaint alleges that we failed to disclose in our May 13, 2010 Registration Statement and Prospectus that we
would soon be renegotiating our current contract with Sprint, our largest customer, which would result in our
revenue being reduced. The complaint seeks class certification, compensatory damages, attorneys’ fees and costs,
rescission or a rescissory measure of damages, equitable and/or injunctive relief, and such other relief as the court
may deem proper. We expect that other purported plaintiffs will file claims in this case. We deny these allegations
and believe that our defenses to this action have merit. We intend to vigorously defend against this action and file a
motion to dismiss the complaint. Due to the preliminary status of the lawsuit and uncertainties related to litigation,
we are unable to evaluate the likelihood of either a favorable or unfavorable outcome. We cannot currently estimate
a range of any possible losses we may experience in connection with this case. Accordingly, we are unable at this
time to estimate the effects of this complaint on our financial condition, results of operations or cash flows.
In addition, we have received, and expect to continue to receive, demands for indemnification from our
wireless carrier partners, which demands can be very expensive to settle or defend, and we have in the past
offered to contribute to settlement amounts and incurred legal fees in connection with certain of these indemnity
demands. A number of these indemnity demands, including demands relating to pending litigation, remain
outstanding and unresolved as of the date of this Form 10-K. Furthermore, in response to these demands we may
be required to assume control of and bear all costs associated with the defense of our wireless carrier partners in
compliance with our contractual commitments. We are not a party to the following cases; however our wireless
carrier partners have requested that we indemnify them in connection with such cases:
In 2008, Alltel, AT&T, Sprint and T-Mobile, each demanded that we indemnify and defend them against a
lawsuit brought by Emsat Advanced Geo-Location Technology LLC and Location Based Services LLC (collectively,
“Emsat”) in the Northern District of Ohio (Case Nos. 4:08-cv-822, 4:08-cv-821, 4:08-cv- 817, 4:08-cv-818) alleging
that the wireless carriers infringe U.S. Patent Nos. 5,946,611, 6,324,404, 6,847,822 and 7,289,763 in connection with
the delivery of wireless telephone services and seeking unspecified damages. The Emsat entities are patent holding
companies. In May 2009, several of the cases were stayed pending proceedings relating to a request for reexamination
of all the patents at issue in the litigation. In June 2009, the U.S. Patent and Trademark Office denied the requests for
reexamination as it relates to all of the patent claims asserted in the lawsuits. Subsequently, the defendants in certain of
the cases filed requests for reexamination of U.S. Patent No. 6,847,822 and indicated that they would do the same with
respect to U.S. Patent No. 7,289,763. On December 22, 2009, the U.S. Patent and Trademark Office granted the
request for reexamination of 17 claims of U.S. Patent No. 6,847,822. On March 16, 2010, the U.S. Patent and
Trademark Office confirmed two of the 17 claims and rejected the other 15 claims. On August 18, 2010, a third-party
requestor filed an ex parte request for reexamination of U.S. Patent No. 6,324,404. That request is pending before the
U.S. Patent and Trademark Office. In the Sprint and Alltel cases, the court has not yet lifted the stay, and denied the
plaintiff’s motion to vacate the stay on August 20, 2010. In the T-Mobile and AT&T cases, the parties voluntarily
41