Autodesk 2005 Annual Report Download - page 73

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Legal Proceedings
On December 27, 2001, Spatial Corp. (“Spatial”) filed suit in Marin County Superior Court against Autodesk
and one of our consultants, D-Cubed Ltd., seeking among other things, termination of a development and license
agreement between Spatial and Autodesk and an injunction preventing Autodesk from working with contractors
under the agreement. On October 2, 2003, a jury found that Autodesk did not breach the agreement. As the
prevailing party in the action, the court awarded Autodesk approximately $2.4 million for reimbursement of
attorneys’ fees and the costs of trial, which was paid during the second quarter of fiscal 2005 and recorded as
other income. Spatial filed a notice of appeal on December 2, 2003 appealing the decision of the jury. Spatial
claims that certain testimony of a witness should not have been considered by the jury and as a result, Spatial
asserts that it is entitled to a new trial. Autodesk filed its opposition to Spatial’s appeal in August 2004. At the
present time, the appeal has not been set for hearing by the appellate court. After reviewing the arguments made
in the appeal, we believe the ultimate resolution of this matter will not have a material effect on Autodesk’s
financial position, results of operations or cash flows. However, it is possible that an unfavorable resolution of
this matter could occur and materially affect our future results of operations, cash flows or financial position
in a particular period.
On May 13, 2004, Nuvo Services, LLC (“Nuvo”) filed suit in United States District Court, District of Arizona
against Autodesk seeking to compel arbitration of Nuvo’s claim that Autodesk breached a contract that allegedly
existed between Nuvo and a company acquired by Buzzsaw.com in 2000. In March 2005, the parties entered
into a settlement agreement resolving all claims and counterclaims among them. The resolution of this matter
will not materially affect our future results of operations, cash flows or financial position.
On September 22, 2004, Plaintiff z4 Technologies, Inc. (“z4”) filed suit against Autodesk and Microsoft
Corporation in the United States District Court, Eastern District of Texas, alleging infringement of U.S. Patent
No. 6,044,471, entitled “Method and Apparatus for Securing Software to Reduce Unauthorized Use,” and U.S.
Patent No. 6,785,825, entitled “Method for Securing Software to Decrease Software Piracy.” z4’s complaint alleges
that Autodesk infringes the ‘471 patent and the ‘825 patent by making, using, selling, and offering for sale the
claimed matter of these patents without the plaintiff’s authority. z4 seeks unspecified compensatory damages,
injunctive relief and fees and costs. We believe the allegations made in the complaint have no merit and intend
to vigorously defend against the case. While Autodesk believes the ultimate resolution of this case will not have
a material effect on our financial position, results of operations or cash flows, it is possible that an unfavorable
resolution of this matter could occur and materially affect our future results of operations, cash flows or financial
position in a particular period.
In connection with our anti-piracy program, designed to enforce copyright protection of our software and
conducted both internally and through the Business Software Alliance (“BSA”), from time to time we undertake
litigation against alleged copyright infringers. Such lawsuits may lead to counter claims alleging improper use
of litigation or violation of other local law and have recently increased in frequency, especially in Latin American
countries. To date, none of such counter claims has resulted in material damages and the Company does not
believe that any such pending claims, individually or in the aggregate, will result in a material adverse effect on
our future results of operations, cash flows or financial position.
In addition, we are involved in legal proceedings from time to time arising from the normal course of business
activities including claims of alleged infringement of intellectual property rights, commercial, employment, piracy
prosecution and other matters. In our opinion, resolution of pending matters is not expected to have a material
adverse impact on our consolidated results of operations, cash flows or our financial position. However, it is
possible that an unfavorable resolution of one or more such proceedings could in the future materially affect
our future results of operations, cash flows or financial position in a particular period.
AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 5. Commitments and Contingencies (Continued)
61