iRobot 2011 Annual Report Download - page 118

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Form 10-K
iROBOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Court for the District of Massachusetts. On November 2, 2007, the court issued a preliminary injunction, and on
December 21, 2007 issued a permanent injunction, against Robotic FX, Inc. and Mr. Ahed preventing the sale of
products using certain of the Company’s trade secrets, including the Robotic FX Negotiator product.
In addition, on August 17, 2007, the Company filed a lawsuit in the United States District Court for the
Northern District of Alabama against Robotic FX, Inc. alleging willful infringement of two patents owned by the
Company, and seeking both injunctive and monetary relief. On December 21, 2007, the court entered a judgment
that Robotic FX, Inc. knowingly infringed on both asserted patents.
In a related settlement, Robotic FX, Inc. was dissolved and certain residual assets were retained by the
Company at its election. Mr. Ahed is prohibited from participating in competitive activities in the robotics
industry for five years.
The cumulative litigation and settlement-related expenditures associated with this dispute are expected to
total approximately $3.0 million, including an obligation to make cash payments up to $0.4 million through
2012, contingent upon Mr. Ahed and Robotic FX, Inc. continuing to meet obligations pursuant to various
agreements, including but not limited to certain non-competition provisions. The Company paid $0.1 million to
Mr. Ahed during the fiscal year ended December 31, 2011. These contingent payments will continue to be
expensed, when and if earned.
Lease Obligations
The Company leases its facilities. Rental expense under operating leases for fiscal 2011, 2010 and 2009
amounted to $4.1 million, $3.7 million, and $3.9 million, respectively. Future minimum rental payments under
operating leases were as follows as of December 31, 2011:
Operating
Leases
2012 ..................................................................... $ 3,030
2013 ..................................................................... 2,557
2014 ..................................................................... 2,505
2015 ..................................................................... 2,505
2016 ..................................................................... 2,505
Thereafter ................................................................ 8,187
Total minimum lease payments ............................................. $21,289
Guarantees and Indemnification Obligations
The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant
to these agreements, the Company indemnifies and agrees to reimburse the indemnified party for losses incurred
by the indemnified party, generally the Company’s customers, in connection with any patent, copyright, trade
secret or other proprietary right infringement claim by any third party with respect to the Company’s software.
The term of these indemnification agreements is generally perpetual any time after execution of the agreement.
The maximum potential amount of future payments the Company could be required to make under these
indemnification agreements is unlimited. The Company has never incurred costs to defend lawsuits or settle
claims related to these indemnification agreements. As a result, the Company believes the estimated fair value of
these agreements is minimal. Accordingly, the Company has no liabilities recorded for these agreements as of
December 31, 2011 and January 1, 2011, respectively.
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