Citrix 2007 Annual Report Download - page 109

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CITRIX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
on March 13, 2007, the court issued a claim construction ruling. On March 21, 2007, the Company moved for
leave to amend its answer in that case to assert an affirmative defense and counterclaim of inequitable conduct,
which is a complete defense. On August 28, 2007, the court granted the Company’s motion. On December 7,
2007, the Company filed motions for summary judgment in the Northern District of Ohio case, seeking judgment
that the asserted patent is invalid and that it has not infringed the patent, as well as judgments on other, non-
dispositive issues. On the same day, the Company filed a request with the United States Patent and Trademark
Office seeking inter partes reexamination of the patent in suit, and it subsequently filed a request with the court in
the Northern District of Ohio seeking a stay of the litigation pending the Patent Office’s determination of its
reexamination request. The court has all of these motions under advisement. The Patent Office has not yet ruled
on the Company’s reexamination request. Trial in the Northern District of Ohio case currently is scheduled to
begin March 24, 2008. Trial in the Southern District of Florida case currently is scheduled to begin April 28,
2008, and trial in the Eastern District of Texas case currently is scheduled to begin June 15, 2009. In addition, the
United States Patent and Trademark Office has decided to reexamine the patent at issue in the Southern District
of Florida case. The Company believes that it has meritorious defenses to the allegations made in each of the
complaints and intends to vigorously defend these lawsuits; however, it is unable to currently determine the
ultimate outcome of these matters or the potential exposure to loss, if any.
On March 6, 2007, a purported stockholder derivative action entitled Sheet Metal Workers Local 28 Pension
Fund v. Roger W. Roberts et al. (C.A. No. 07-60316), was filed in the US District Court for the Southern District
of Florida against certain of the Company’s current and former directors and officers, and against the Company
as a nominal defendant. The lawsuit asserts, among other things, that certain stock option grants made by the
Company were dated and accounted for inappropriately. The lawsuit seeks the recovery of monetary damages
and other relief for damage allegedly caused to the Company. An amended complaint, which changed the
plaintiff in the action, named additional defendants and included additional allegations concerning the
Company’s stock option granting practices, was filed on January 15, 2008 under the caption Rappaport v.
Roberts, et al. (CA No. 07-60316).
The Company also received a demand letter dated March 15, 2007 from a purported stockholder with
respect to certain stock option grants made to its current and former directors and officers during the years 1996
through 2003. That demand letter asserted, among other things, that certain stock option grants made by the
Company were dated and accounted for inappropriately. The demand letter sought, among other things, the
commencement by the Company’s Board of Directors of an action against its directors and officers from 1996
forward for alleged breaches of fiduciary duties in connection with the granting of the options. A special
committee of independent directors was appointed to review and consider the assertions contained in the demand
letter. The special committee has completed its work and has determined that it would not be in the best interests
of the Company to pursue the claims referred to in the demand letter.
In July 2007, two additional purported stockholder derivative actions entitled Ekas v. Citrix, et al. (Case
No. 07-16114-11) and Crouse v. Citrix, et al. (Case No. 07-16249-03) were filed in the Circuit Court for Broward
County, Florida state court against certain of the Company’s current and former directors and officers, and
against the Company as a nominal defendant. These actions assert, among other things, that certain stock option
grants made by the Company were dated and accounted for inappropriately. As with the Sheet Metal Workers’
action, both the Ekas and Crouse actions seek the recovery of monetary damages and other relief for damages
allegedly caused to the Company. Neither the purported stockholder derivative actions nor the demand letter
described above seeks to recover amounts from the Company. An amended complaint in the Ekas action, which
contains additional allegations concerning our stock option granting practices, was filed on December 14, 2007.
F-35