Time Warner Cable 2008 Annual Report Download - page 51

other defendants, infringe a number of patents purportedly relating to the Company’s customer call center
operations and/or voicemail services. The plaintiff is seeking unspecified monetary damages as well as injunctive
relief. On March 20, 2007, this case, together with other lawsuits filed by Katz, was made subject to a Multidistrict
Litigation (“MDL”) Order transferring the case for pretrial proceedings to the U.S. District Court for the Central
District of California. In April 2008, TWC and other defendants filed “common” motions for summary judgment,
which argued, among other things, that a number of claims in the patents at issue are invalid under Sections 112 and
103 of the Patent Act. On June 19 and August 4, 2008, the court issued orders granting, in part, and denying, in part,
those motions. Defendants filed additional “individual” motions for summary judgment in August 2008, which
argued, among other things, that defendants’ respective products do not infringe the surviving claims in plaintiff’s
patents. Those motions have been fully briefed, but no decision has been reached. The Company intends to defend
against this lawsuit vigorously.
On June 1, 2006, Rembrandt Technologies, LP (“Rembrandt”) filed a complaint in the U.S. District Court for
the Eastern District of Texas alleging that the Company and a number of other cable operators infringed several
patents purportedly related to a variety of technologies, including high-speed data and IP-based telephony services.
In addition, on September 13, 2006, Rembrandt filed a complaint in the U.S. District Court for the Eastern District
of Texas alleging that the Company infringes several patents purportedly related to “high-speed cable modem
internet products and services.” In each of these cases, the plaintiff is seeking unspecified monetary damages as well
as injunctive relief. On June 18, 2007, these cases, along with other lawsuits filed by Rembrandt, were made subject
to an MDL Order transferring the case for pretrial proceedings to the U.S. District Court for the District of
Delaware. The Company intends to defend against these lawsuits vigorously.
On April 26, 2005, Acacia Media Technologies (“AMT”) filed suit against TWC in the U.S. District Court for
the Southern District of New York alleging that TWC infringes several patents held by AMT. AMT has publicly
taken the position that delivery of broadcast video (except live programming such as sporting events), pay-per-view,
VOD and ad insertion services over cable systems infringe its patents. AMT has brought similar actions regarding
the same patents against numerous other entities, and all of the previously pending litigations have been made the
subject of an MDL Order consolidating the actions for pretrial activity in the U.S. District Court for the Northern
District of California. On October 25, 2005, the TWC action was consolidated into the MDL proceedings. The
plaintiff is seeking unspecified monetary damages as well as injunctive relief. The Company intends to defend
against this lawsuit vigorously.
From time to time, the Company receives notices from third parties claiming that it infringes their intellectual
property rights. Claims of intellectual property infringement could require TWC to enter into royalty or licensing
agreements on unfavorable terms, incur substantial monetary liability or be enjoined preliminarily or permanently
from further use of the intellectual property in question. In addition, certain agreements entered into may require the
Company to indemnify the other party for certain third-party intellectual property infringement claims, which could
increase the Company’s damages and its costs of defending against such claims. Even if the claims are without
merit, defending against the claims can be time consuming and costly.
As part of the TWE Restructuring, Time Warner agreed to indemnify the cable businesses of TWE from and
against any and all liabilities relating to, arising out of or resulting from specified litigation matters brought against
the TWE non-cable businesses. Although Time Warner has agreed to indemnify the cable businesses of TWE
against such liabilities, TWE remains a named party in certain litigation matters.
The costs and other effects of pending or future litigation, governmental investigations, legal and adminis-
trative cases and proceedings (whether civil or criminal), settlements, judgments and investigations, claims and
changes in those matters (including those matters described above), and developments or assertions by or against
the Company relating to intellectual property rights and intellectual property licenses, could have a material adverse
effect on the Company’s business, financial condition and operating results.
Item 4. Submission of Matters to a Vote of Security Holders.
On November 21, 2008, WCI, in its capacity as the holder of a majority of TWC’s outstanding Class A
common stock and all of its Class B common stock (representing in the aggregate 1,496,000,000 votes), consented
to amendments to TWC’s 2006 Stock Incentive Plan that were approved by TWC’s Board of Directors on August 1,
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