TeleNav 2010 Annual Report Download - page 45

vacated the stay and a trial status conference with the court was held on September 24, 2009. A claim construction
hearing was held on May 10, 2010 and the court issued its claim construction ruling on August 23, 2010. T-Mobile and
AT&T also filed a motion for partial summary judgment on the invalidity of some asserted claims of the
patents-in-suit. On August 23, 2010, the court denied the partial summary judgment motion. Google joined as an
intervenor in the T-Mobile case because T-Mobile also sought indemnification from Google. In the AT&T case, Emsat
amended the complaint to allege a breach of contract claim and AT&T denied the allegation in its answer. The AT&T
case was consolidated with EMSAT Advanced Geo-Location Technology, LLC et al v. Tracfone Wireless, Inc. (Case
No. 5:10-CV-00245). As of the date of this Form 10-K, we and the wireless carriers have not determined whether, and
to what extent, we will provide indemnification regarding the litigation. We cannot reasonably estimate whether and to
what extent we would indemnify our wireless carrier partners or the potential losses they and we may experience in
connection with such litigation.
In March and May 2009, AT&T and Sprint demanded that we indemnify and defend them against a lawsuit
brought by Tendler Cellular of Texas LLC in the Eastern District of Texas (Case No. 6:09-cv-0115) alleging that
the wireless carriers infringe U.S. Patent No. 7,447,508 in connection with the delivery of certain LBS as part of
their wireless telephone services and seeking unspecified damages. Tendler Cellular of Texas is a patent holding
company. In May 2009, AT&T responded to the allegations, filing an answer that the patent-in-suit is not infringed,
is invalid and unenforceable. In June 2009, Sprint did the same. In June 2010, AT&T settled its claims with Tendler
and we came to an agreement with AT&T as to the extent of our contribution towards AT&T’s settlement. In July
2010, Sprint settled its claims with Tendler. We have resolved the amount of our contribution towards Sprint’s
settlement amount with Sprint, but we continue to discuss some ancillary issues with Sprint to bring this matter to a
close. These settlement amounts were accrued in our consolidated financial statements as of June 30, 2010.
In February 2010, Sprint demanded that we indemnify and defend it against a lawsuit brought by Alfred P.
Levine, an individual, in the Eastern District of Texas (Case No. 2:09-cv-00372) alleging that Sprint and
Samsung infringe U.S. Patent Nos. 6,243,030 and 6,140,943 in connection with providing wireless navigation
systems, products and services. In March 2010, Sprint responded to the allegations, filing an answer that the
patents-in-suit are not infringed, are invalid and unenforceable. Alfred Levine subsequently denied these
counterclaims and requested that they be dismissed. At an initial scheduling conference held on August 30, 2010,
the court set a claim construction hearing date of December 21, 2011 and a trial date of May 7, 2012. We agreed
to indemnify and defend Sprint against the lawsuit, with certain limitations, and we are presently negotiating the
scope of our indemnification obligations with Sprint. We cannot reasonably estimate to what extent we will
indemnify Sprint or the potential losses it and we may experience in connection with such litigation.
Large future indemnity payments and associated legal fees and expenses, including potential indemnity payments
and legal fees and expenses relating to wireless carriers’ indemnity demands with respect to pending litigation, could
materially harm our business, operating results and financial condition. When we believe a loss or a cost of
indemnification is probable and can be reasonably estimated, we accrue the estimated loss or cost of indemnification in
our consolidated financial statements. Where the outcome of these matters is not determinable, we do not make a
provision in our financial statements until the loss or cost of indemnification, if any, is probable and can be reasonably
estimated or the outcome becomes known. Although we have not agreed to defend or indemnify our wireless carrier
partners for the outstanding and unresolved indemnity demands, we may in the future agree to defend and indemnify
our wireless carrier or other partners in connection with demands for indemnification, irrespective of whether we
believe that we have an obligation to indemnify them or whether we believe our solution infringes the asserted
intellectual property rights. Alternatively, we may reject certain of our wireless carriers’ or other partners’ indemnity
demands, including the outstanding demands, which may lead to disputes with our wireless carrier or other partners,
negatively impact our relationships with them or result in litigation against us. Our wireless carrier or other partners
may also claim that any rejection of their indemnity demands constitutes a material breach of our agreements with
them, allowing them to terminate such agreements. If we make substantial payments as a result of indemnity demands,
our relationships with our wireless carrier or other partners are negatively impacted, or any of our wireless carrier or
partner agreements is terminated, our business, operating results and financial condition could be materially harmed.
ITEM 4. (REMOVED AND RESERVED)
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