Time Warner Cable 2012 Annual Report Download - page 126

TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
On December 19, 2011, Sprint Communications L.P. filed a complaint in the U.S. District Court for the District of
Kansas alleging that the Company infringes 12 patents purportedly relating to Voice over Internet Protocol (“VoIP”)
services. The plaintiff is seeking unspecified monetary damages as well as injunctive relief. The Company intends to defend
against this lawsuit vigorously, but is unable to predict the outcome of this lawsuit or reasonably estimate a range of possible
loss.
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 the Company 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 MDL Order transferring the cases 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, 2008 and August 4, 2008, the court issued orders granting, in part, and denying, in
part, those motions. The defendants filed additional individual motions for summary judgment in August 2008, which
argued, among other things, that the defendants’ respective products do not infringe the surviving claims in the plaintiff’s
patents. On August 13, 2009, the district court found one additional patent invalid, but denied the 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, but is unable to predict the outcome of this
lawsuit or reasonably estimate a range of possible loss.
From time to time, the Company receives notices from third parties and, in some cases, is party to litigation alleging that
certain of the Company’s services or technologies infringe the intellectual property rights of others. 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 by the Company may require it 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.
Certain Environmental Matters
The California Attorney General and the Alameda County, California District Attorney are investigating whether certain
of the Company’s waste disposal policies, procedures and practices are in violation of the California Business and
Professions Code and the California Health and Safety Code. These entities are seeking injunctive relief, unspecified civil
penalties and attorneys’ fees. The Company is unable to predict the outcome of this investigation or reasonably estimate a
range of possible loss.
Other Matters
On June 18, 2012, the Federal Trade Commission (the “FTC”) served the Company with two civil investigative
demands (“CIDs”) addressing the Company’s practices and policies relating to the use of credit bureaus. TWC has responded
to portions of the CIDs as well as a few supplemental requests from the FTC. On February 12, 2013, TWC received a
supplemental CID from the FTC, requesting additional information about how the Company informs customers who, based
on a review of their credit scores, are required to pay a deposit or make an advance payment. The FTC has not specified the
penalty, if any, it may seek. The Company is unable to predict the outcome of this investigation or reasonably estimate a
range of possible loss.
As part of the TWE Restructuring, 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. In connection with an internal reorganization discussed further in Note 20, on
September 30, 2012, TWE merged with and into TWCE, with TWCE as the surviving entity.
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