Autodesk 2006 Annual Report Download - page 111

witness should not have been considered by the jury and as a result, Spatial asserts that it is entitled to a
new trial. On March 23, 2006, the Court of Appeal denied Spatial’s appeal. As a result, Autodesk believes the
ultimate resolution of this matter will not have a material effect on its financial position, results of operations
or cash flows.
On August 26, 2005, Telstra Corporation Limited (“Telstra”) filed suit in the Federal Court of Australia,
Victoria District Registry against Autodesk Australia Pty Ltd. (“AAPL”) seeking partial indemnification for claims
filed against Telstra by SpatialInfo Pty Limited relating to Telstra’s use of certain software in the management
of its computer based cable plant records system. On December 12, 2005, SpatialInfo added AAPL as a defendant
to its lawsuit against Telstra. Autodesk is currently investigating the allegations and intends to vigorously defend
the case. Although this case is in the early stages and Autodesk cannot determine the final financial impact of
this matter, based on the facts known at this time, Autodesk believes the ultimate resolution of this matter will
not have a material effect on its financial position, results of operations or cash flows. However, it is possible
that an unfavorable resolution of this matter could occur and materially affect its future results of operations,
cash flows or financial position in a particular period.
In connection with the Company’s anti-piracy program, designed to enforce copyright protection of its
software and conducted both internally and through the Business Software Alliance (“BSA”), from time to time
it undertakes litigation against alleged copyright infringers or provide information to criminal justice authorities
to conduct actions against alleged copyright infringers. Such lawsuits have lead to counter claims alleging
improper use of litigation or violation of other local law and have recently increased in frequency, especially in
Latin America. On March 1, 2002, Consultores enComputacio´n y Contabilidad, S.C., a Mexican hardware/software
reseller and its principals (collectively, “CCC”) filed a lawsuit in the Mexico Court in the First Civil Court of the
Federal District, against, Autodesk, Adobe Systems, Microsoft and Symantec (all members of the BSA and
collectively the “Defendants”). CCC had been the target of a criminal anti-piracy enforcement action carried out
by the Mexican police authorities on August 11, 1998 on the basis of a complaint filed by the Defendants in 1997
based on evidence provided to the Defendants that CCC had engaged in software piracy of the Defendants’
products. CCC alleged in the lawsuit that it had suffered $100 million in damages to its reputation as a result
of the enforcement action, known as “moral damages.” CCC did not claim economic damages. On November 11,
2002, the trial court judge ruled in favor of the Defendants, holding that no moral damage occurred, since CCC
was unable to prove the illegal nature of the Defendants’ actions. After subsequent appeals, all of which were
won by the Defendants, a court of appeals held that the Defendants were liable to CCC for “moral” damages,
and the court remanded the case to the First Civil Court for a determination of the amount. On December 13,
2005, the First Civil Court awarded CCC $90 million in damages. The Defendants are appealing the verdict, as
are the plaintiffs, who are seeking additional damages. If, after all appeals have been exhausted, the existing
verdict stands and is enforceable in the United States, Autodesk would be responsible for approximately
$10 million of the judgment. Based on the facts and circumstances of this case known at this time, Autodesk
believes the ultimate resolution of this matter will not have a material effect on its financial position, results
of operations or cash flows. However, it is possible that an unfavorable resolution of this matter could occur
and materially affect its future results of operations, cash flows or financial position in a particular period.
In addition, Autodesk is 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 the Company’s opinion, resolution of pending matters
is not expected to have a material adverse impact on its consolidated results of operations, cash flows or financial
position. However, it is possible that an unfavorable resolution of one or more such proceedings could in the
future materially affect its future results of operations, cash flows or financial position in a particular period.
2006 Annual Report
AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 7. Commitments and Contingencies (Continued)
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