Autodesk 2007 Annual Report Download - page 174

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AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 8. Commitments and Contingencies (Continued)
using, selling, and offering for sale the claimed matter of these patents without the plaintiff’s authority.
In its complaint, z4 sought compensatory damages amounting to a 1.5% royalty, injunctive relief and fees
and costs. On April 19, 2006, a jury returned a verdict finding that certain Autodesk products infringed
both patents, awarding z4 $18 million in damages. In light of the jury’s verdict, Autodesk accrued the full
amount of this verdict, which represented the best estimate of the probable loss, of which $16.8 million
was expensed during the first quarter of fiscal 2007. The court entered judgment against Autodesk on
August 18, 2006, awarding z4 $18 million in damages, pre-judgment interest and attorneys’ fees. Autodesk
filed its notice of appeal of the judgment on September 8, 2006. On December 20, 2006, Autodesk and
z4 entered into a settlement agreement which resolved all of the issues between the parties. The final
resolution of the z4 litigation did not have a material effect on Autodesk’s financial position, results of
operations or cash flows. Following the guidance set forth in Statement on Auditing Standards No. 1
“Codification of Auditing Standards and Procedures” AU Section 560 “Subsequent Events,” we reversed
$13.0 million of previously accrued reserves during the second quarter of fiscal 2007.
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, the Company
believes 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 Autodesk’s future results of operations, cash flows or financial
position in a particular period.
On July 12, 2006 New York University (“NYU”) filed suit against Autodesk in the United States District
Court, Southern District of New York, alleging infringement of U.S. Patent No. 6,115,053 (“053 patent”),
entitled “Computer Animation Method and System for Synthesizing Human-Like Gestures and Actions,”
and U.S. Patent No. 6,317,132 (“132 patent”), entitled “Computer Animation Method for Creating Computer
Generated Animated Characters.” NYU’s complaint alleged that Autodesk infringed both patents by making,
using, selling, and offering for sale the claimed matter of these patents without the plaintiff’s authority. In
its complaint, NYU seeks compensatory damages, injunctive relief and fees and costs. Autodesk cannot
determine the final financial impact of this matter; based on the facts known at this time, the Company
believes 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 Autodesk’s future results of operations, cash flows or financial
position in a particular period.
In connection with Autodesk’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 the Company undertakes litigation against alleged copyright infringers or provide information to
criminal justice authorities to conduct actions against alleged copyright infringers. Such lawsuits have
led 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 en Computación 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