TeleNav 2015 Annual Report Download - page 42

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In addition, we have received, and expect to continue to receive, demands for indemnification from our customers, 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 customers in compliance with our contractual commitments. At this time, we are not a
party to the following cases; however our customers have requested that we indemnify them in connection with such cases:
In 2008, Alltel, AT&T, Sprint and T-Mobile USA, or T-Mobile, each demanded that we indemnify and defend them against patent
infringement lawsuits brought by patent holding companies EMSAT Advanced Geo-Location Technology LLC and Location Based Services
LLC (collectively, EMSAT) in the U.S. District Court for the Northern District of Ohio. In March 2011, EMSAT and AT&T settled their claims.
The PTO reexamined two of the patents in suit, confirming the validity of only two of the asserted claims from those patents. All patent claims
that EMSAT alleged to be infringed by the Telenav GPS Navigator product were cancelled during reexamination. In the suits against T-Mobile,
Alltel and Sprint, EMSAT amended its allegations to remove allegations of infringement of the patent claims that were cancelled during
reexamination. EMSAT and T-Mobile stipulated to a dismissal and their case was dismissed on January 28, 2015. On March 20, 2015, the Court
dismissed and closed the Alltel case and on April 10, 2015 the Court dismissed and closed the Sprint case. We have not yet determined the
extent of our indemnification obligations to AT&T. We believe that it is reasonably possible that we will incur additional loss; however, we
cannot currently estimate a range of other possible losses we may experience in connection with this case. Accordingly, we are unable at this
time to estimate the overall effects of this matter on our financial condition, results of operations, or cash flows.
In March 2009, AT&T demanded that we indemnify and defend them against a patent infringement lawsuit brought by Tendler Cellular of
Texas LLC, or Tendler, in the U.S. District Court for the Eastern District of Texas. 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 and the amount of our contribution was not
material; however, there continues to be a disagreement as to whether any additional amounts are owed to AT&T for legal fees and expenses
related to the defense of the matter. We believe that it is reasonably possible that we will incur additional loss; however, we cannot currently
estimate a range of other possible losses we may experience in connection with this case. Accordingly, we are unable at this time to estimate the
overall effects on our financial condition, results of operations, or cash flows.
While we presently believe that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm our
financial position, cash flows or overall trends in results of operations, legal proceedings are subject to inherent uncertainties and unfavorable
rulings could occur. Nevertheless, were unfavorable final outcomes to occur, there exists the possibility of a material adverse impact on our
business, financial position, cash flows or overall trends in results of operations.
Large future indemnity payments and associated legal fees and expenses, including potential indemnity payments and legal fees and
expenses relating to our wireless carrier and other customers’ 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 to date we have not agreed to defend or indemnify our customers for
outstanding and unresolved indemnity demands where we do not believe we have an obligation to do so or that our solution infringes on asserted
intellectual property rights, we may in the future agree to defend and indemnify our customers 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 customers’ indemnity demands, including the outstanding demands,
which may lead to disputes with our customers, negatively impact our relationships with them or result in litigation against us. Our wireless
carrier or other customers 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
customers are negatively impacted, or any of our customer agreements is terminated, our business, operating results and financial condition
could be materially harmed.
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ITEM 4. MINE SAFETY DISCLOSURES