Time Warner Cable 2010 Annual Report Download - page 41

seeking, among other things, unspecified treble monetary damages, injunctive relief, restitution and attorneys’ fees. The
Company intends to defend against each of these lawsuits vigorously.
On January 17, 2011, the Company entered into a settlement agreement with Mecklenburg County settling
Mecklenburg County’s suit against TWE-A/N alleging that TWE-A/N’s predecessor failed to construct an
institutional network in 1981 and that TWE-A/N assumed that obligation. This suit had been removed to the U.S.
District Court for the Western District of North Carolina in July 2005. The terms of the settlement are not material to the
Company.
Certain Patent Litigation
On September 1, 2006, Ronald A. Katz Technology Licensing, L.P. (“Katz”) filed a complaint in the U.S. District
Court for the District of Delaware alleging that TWC and several other cable operators, among other defendants, infringe
18 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. On August 13, 2009, the district court found one additional patent invalid, but
denied defendants’ motions for summary judgment on three remaining patents, and on October 27, 2009, the district court
denied the defendants’ requests for reconsideration of the decision. Based on motions for summary judgment brought by
other defendants, the district court found, in decisions on January 29, 2010 and December 3, 2010, two of the three
remaining patents invalid with respect to those defendants. 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.” 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. In November
2008, the district court issued its claims construction orders. In response to these orders, the plaintiff has indicated it will
dismiss its claims relating to the alleged infringement of eight patents purportedly relating to high-speed data and
IP-based telephony services. The plaintiff has not indicated that it will dismiss its claim relating to one remaining patent
alleged to relate to digital video decoder technology. Summary judgment motions are pending relating to the remaining
claim. The Company intends to defend against the remaining claim 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 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 restructuring of TWE in 2003, Time Warner agreed to
indemnify the Company 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
Company against such liabilities, TWE remains a named party in certain litigation matters.
The costs and other effects of future litigation, governmental investigations, legal and administrative cases and
proceedings (whether civil or criminal), settlements, judgments and investigations, claims and changes in pending 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.
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