Vistaprint 2010 Annual Report Download - page 93

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Form 10-K
In response to opposing motions filed by the plaintiffs and the Defendants, on December 11,
2008, the Judicial Panel on Multidistrict Litigation ordered the transfer of all of the outstanding cases
to the United States District Court for the Southern District of Texas for coordinated pretrial
proceedings. As a result of the ruling of the Judicial Panel on Multidistrict Litigation, on March 2, 2009
four of the existing plaintiffs filed a Consolidated Complaint with the United States District Court for
the Southern District of Texas.
On August 31, 2009, the United States District Court for the Southern District of Texas
dismissed all of the claims against the Defendants and ruled on substantive grounds that the
Defendants had not violated any of the statutes or common law claims cited by the plaintiffs. In
September 2009, the plaintiffs filed an appeal with the U.S. Fifth Circuit Court of Appeals, and on
August 23, 2010, the Court of Appeals affirmed the District Court’s ruling and dismissal.
On June 26, 2009, Vistaprint Limited, the Company’s wholly owned subsidiary, and Vistaprint
USA, Incorporated, a wholly owned subsidiary of Vistaprint Limited, together with sixteen other
companies unaffiliated with Vistaprint Limited or Vistaprint USA, Incorporated, were named as
defendants in a complaint for patent infringement by Soverain Software LLC in the United States
District Court for the Eastern District of Texas. The complaint alleges that the named defendants are
infringing U.S. Patents 5,715,314, 5,909,492 and 7,272,639. Two of the asserted patents relate
generally to network-based sales systems employing a customer computer, a shopping cart computer
and a shopping cart database. The third patent relates generally to the use of session identifiers in
connection with requests transmitted through a network between a client and a server. The plaintiff is
seeking declarations that the patents at issue are valid and enforceable and that the defendants
infringe the patents, as well as the entry of a preliminary and permanent injunction and damages. The
Company is unable to express an opinion as to its likely outcome.
On July 21, 2009, Vistaprint Limited and OfficeMax Incorporated were named as defendants in
a complaint for patent infringement filed by ColorQuick LLC in the United States District Court for the
Eastern District of Texas. The complaint alleges that Vistaprint Limited and OfficeMax Incorporated
are infringing U.S. patent 6,839,149, relating generally to systems and methods for processing
electronic files stored in a page description language format, such as PDF. The plaintiff is seeking a
declaration that the patent at issue is valid and enforceable, a declaration that Vistaprint Limited
infringes, the entry of a preliminary and permanent injunction, and damages. The Company is unable
to express an opinion as to its likely outcome.
The Company is not currently party to any other material legal proceedings. The Company is
involved, from time to time, in various legal proceedings arising from the normal course of business
activities. Although the results of litigation and claims cannot be predicted with certainty, the Company
does not expect resolution of these matters to have a material adverse impact on our consolidated
results of operations, cash flows or financial position. However, an unfavorable resolution of such a
proceeding could, depending on its amount and timing, materially affect the Company’s results of
operations, cash flows or financial position in a future period. Regardless of the outcome, litigation
can have an adverse impact on the Company because of defense costs, diversion of management
resources and other factors.
13. Allowance for Doubtful Accounts
The Company offsets gross trade accounts receivable with an allowance for doubtful accounts.
The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit
losses in the Company’s existing accounts receivable. The Company reviews its allowance for
doubtful accounts on a monthly basis and all past due balances are reviewed individually for
collectability. Account balances are charged off against the allowance after all means of collection
have been exhausted and the potential for recovery is considered remote.
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