8x8 2012 Annual Report Download - page 59

Minimum Third Party Network Service Provider Commitments
The Company entered into contracts with multiple vendors for third party network service providers which expire on various
dates in fiscal 2012 and 2013. At March 31, 2012, future minimum annual payments under these third party network service
contracts were as follows (in thousands):
Year ending March 31:
2013 $ 664
2014 70
2015 7
Total minimum payments $ 741
Legal Proceedings
The Company, from time to time, is involved in various legal claims or litigation, including patent infringement claims that can
arise in the normal course of the Company’ s operations. Pending or future litigation could be costly, could cause the diversion
of management’ s attention and could upon resolution, have a material adverse effect on the Company’ s business, results of
operations, financial condition and cash flows.
On October 6, 2010, the Company was named a defendant in a lawsuit, Ceres Communications Technologies, LLC (“Ceres”)
v. 8x8, Inc. et al., along with over a dozen other defendants, in the United States District Court for the District of Delaware. On
November 16, 2010, the Company agreed to represent and indemnify OfficeMax in this lawsuit for the period in which its prior
retail agreement with them was in effect, in accordance with the terms of that agreement. On June 8, 2011, the Ceres suit
against the Company and OfficeMax was settled after the Company acquired license rights for the subject patent from a
licensor of third party intellectual property.
On March 15, 2011, the Company was named a defendant in a lawsuit, Bear Creek Technologies, Inc. v. 8x8, Inc. et al., along
with more than 20 other defendants. On August 17, 2011, the Company was dismissed without prejudice from this lawsuit
under Rule 21 of the Federal Rules of Civil Procedure. On August 17, 2011, the Company was sued again by Bear Creek
Technologies, Inc. in the United States District Court for the District of Delaware. The Company filed a motion to dismiss the
complaint on October 11, 2011, which motion is still pending. The Company has not answered the complaint. The Company
believes it has factual and legal defenses to these claims and are presenting a vigorous defense. The Company cannot estimate
potential liability in this case at this early stage of litigation. Further, on April 26, 2011, the U.S. Patent & Trademark Office
initiated a Reexamination proceeding with a Reexamination Declaration explaining that there is a substantial new question of
patentability affecting each claim of the patent which is the basis for the complaint against the Company.
On October 25, 2011, the Company was named a defendant in a lawsuit, Klausner Technologies, Inc. v. Oracle Corporation et
al., along with 30 other defendants. On November 1, 2011, Klausner dismissed the Complaint voluntarily and filed new
complaints separating the defendants, including a new Complaint against 8x8. The Company believes it has factual and legal
defenses to these claims and is presenting a vigorous defense. The plaintiff has not made a specific monetary demand and the
Company cannot estimate potential liability in this case at this early stage of litigation. The Company filed a motion to dismiss
the complaint on February 23, 2012, and the motion is still pending. The Company has not answered the complaint.
State and Municipal Taxes
From time to time, the Company has received inquiries from a number of state and municipal taxing agencies with respect to
the remittance of taxes. Three states currently are conducting tax audits of the Company's records. The Company collects or
has accrued for taxes that it believes are required to be remitted. The amounts that have been remitted have historically been
within the accruals established by the Company.
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