Clearwire 2009 Annual Report Download - page 117

Lega
lp
rocee
d
ing
s
— As more
f
u
ll
y
d
escr
ib
e
db
e
l
ow, we are
i
nvo
l
ve
di
navar
i
ety o
fl
awsu
i
ts, c
l
a
i
ms,
i
nvest
i
gat
i
ons an
d
procee
di
ngs concern
i
ng
i
nte
ll
ectua
l
property,
b
us
i
ness pract
i
ces, commerc
i
a
l
an
d
ot
h
er matters
.
W
e determine whether we should accrue an estimated loss for a contin
g
enc
y
in a particular le
g
al proceedin
g
b
y
assess
i
ng w
h
et
h
er a
l
oss
i
s
d
eeme
d
pro
b
a
bl
ean
d
can
b
e reasona
bl
y est
i
mate
d
. We reassess our v
i
ews on est
i
mate
d
l
osses on a quarter
l
y
b
as
i
store
fl
ect t
h
e
i
mpact o
f
any
d
eve
l
opments
i
nt
h
e matters
i
nw
hi
c
h
we are
i
nvo
l
ve
d
. Lega
l
p
roceedin
g
s are inherentl
y
unpredictable, and the matters in which we are involved often present complex le
g
al an
d
factual issues. We vigorously pursue defenses in legal proceedings and engage in discussions where possible t
o
r
eso
l
ve t
h
ese matters on terms
f
avora
bl
e to us. It
i
s
p
oss
ibl
e,
h
owever, t
h
at our
b
us
i
ness,
fi
nanc
i
a
l
con
di
t
i
on an
d
r
esu
l
ts o
f
operat
i
ons
i
n
f
uture per
i
o
d
s cou
ld b
e mater
i
a
lly
a
ff
ecte
dbyi
ncrease
dli
t
ig
at
i
on expense, s
ig
n
ifi
can
t
s
ettlement costs and/or unfavorable damage awards.
On Decem
b
er 1, 2008, A
d
apt
i
x, Inc., w
hi
c
h
we re
f
er to as A
d
apt
i
x,
fil
e
d
su
i
t
f
or patent
i
n
f
r
i
ngement aga
i
nst us
and Sprint in the United States District Court for the Eastern District of Texas, alle
g
in
g
that we and Sprint infrin
g
ed
s
ix patents purportedly owned by Adaptix. On February 10, 2009, Adaptix filed an Amended Complaint allegin
g
i
n
f
r
i
ngement o
f
a sevent
h
patent. A
d
apt
i
xa
ll
eges t
h
at
b
yo
ff
er
i
ng 4G mo
bil
eW
i
MAX serv
i
ces to su
b
scr
ib
ers
i
n
c
ompliance with the 802.1
6
e WiMAX standard, and b
y
makin
g
, usin
g
and/or sellin
g
the supportin
g
WiMA
X
n
etwork used to provide such WiMAX services, we and Sprint infringe the seven patents. Adaptix is seeking
m
onetary damages, attorneys’ fees and a permanent injunction enjoining us from further acts of alleged infringe
-
m
ent. On Februar
y
25, 2009, we filed an Answer to the Amended Complaint, den
y
in
g
infrin
g
ement and assertin
g
s
everal affirmative defenses, includin
g
that the asserted patents are invalid. We filed an Amended Answer on
June 2
5
, 2009, adding a counter-claim for declaratory judgment of non-infringement and invalidity of the subject
p
atents. A tr
i
a
li
ssc
h
e
d
u
l
e
df
or Decem
b
er 2010, an
d
t
h
e part
i
es commence
ddi
scovery
i
n ear
l
y 2009. O
n
D
ecember 21, 2009, Adaptix filed but did not serve an additional suit for patent infrin
g
ement in the United
S
tates D
i
str
i
ct Court
f
or t
h
e Eastern D
i
str
i
ct o
f
Texas. T
h
at su
i
ta
ll
eges
i
n
f
r
i
ngement o
f
one patent re
l
ate
d
to t
h
os
e
asserte
di
nt
h
e prev
i
ous
l
y
fil
e
d
su
i
t. We
h
ave not
b
een serve
d
an
d
t
h
ere
f
ore
h
ave not appeare
di
nt
h
enew
l
y-
fil
e
d
su
i
t.
O
n Februar
y
23, 2010, we reached a resolution with Adaptix and Sprint re
g
ardin
g
Adaptix’s patent infrin
g
ement
li
t
i
gat
i
ons pen
di
ng
i
nt
h
eUn
i
te
d
States D
i
str
i
ct Court
f
or t
h
e Eastern D
i
str
i
ct o
f
Texas, w
h
ere
b
yt
h
e pen
di
ng
li
t
i
gat
i
ons w
ill b
e
di
sm
i
sse
d
w
i
t
h
out pre
j
u
di
ce.
On April 22, 2009, a purported class action lawsuit was filed a
g
ainst us in Superior Court in Kin
g
Count
y
,
W
ashin
g
ton b
y
a
g
roup of five plaintiffs from Hawaii, Minnesota, North Carolina and Washin
g
ton. The lawsuit
genera
ll
ya
ll
eges t
h
at we
di
ssem
i
nate
df
a
l
se a
d
vert
i
s
i
ng a
b
out t
h
e qua
li
ty an
d
re
li
a
bili
ty o
f
our serv
i
ces;
i
mpose
d
a
n
unlawful earl
y
termination fee; and invoked unconscionable provisions of our Terms of Service to the detriment o
f
c
ustomers. Amon
g
other thin
g
s, the lawsuit seeks a determination that the alle
g
ed claims ma
y
be asserted on a
cl
ass-w
id
e
b
as
i
s; an or
d
er
d
ec
l
ar
i
ng certa
i
n prov
i
s
i
ons o
f
our Terms o
f
Serv
i
ce,
i
nc
l
u
di
ng t
h
e ear
l
y term
i
nat
i
on
f
ee
p
rov
i
s
i
on, vo
id
an
d
unen
f
orcea
bl
e; an
i
n
j
unct
i
on pro
hibi
t
i
n
g
us
f
rom co
ll
ect
i
n
g
ear
ly
term
i
nat
i
on
f
ees an
df
urt
h
er
false advertisin
g
; restitution of an
y
earl
y
termination fees paid b
y
our subscribers; equitable relief; and an award of
unspecified damages and attorneys’ fees. On May 27, 2009, an amended complaint was filed and served, adding
s
even a
ddi
t
i
ona
l
p
l
a
i
nt
iff
s,
i
nc
l
u
di
n
gi
n
di
v
id
ua
l
s
f
rom New Mex
i
co, V
i
r
gi
n
i
aan
d
W
i
scons
i
n. On June 2, 2009,
p
laintiffs served the amended com
p
laint. We removed the action to the United States District Court for the Western
D
istrict of Washington. On July 23, 2009, we filed a motion to dismiss the amended complaint. The Court staye
d
di
scovery pen
di
ng
i
ts ru
li
ng on t
h
e mot
i
on. T
h
e Court grante
d
our mot
i
on to
di
sm
i
ss
i
n
i
ts ent
i
rety on Fe
b
ruary 2,
2010. Plaintiffs have 30 da
y
s to move the Court for leave to amend the complaint. Whether plaintiffs will seek such
leave is unknown.
On Septem
b
er 1, 2009, we were serve
d
w
i
t
h
a purporte
d
c
l
ass act
i
on
l
awsu
i
t
fil
e
di
nK
i
ng County Super
i
o
r
Court. T
h
e comp
l
a
i
nt a
ll
e
g
es we p
l
ace
d
un
l
aw
f
u
l
te
l
ep
h
one ca
ll
sus
i
n
g
automat
i
c
di
a
li
n
g
an
d
announc
i
n
gd
ev
i
ces. I
t
s
eeks declarator
y
,in
j
unctive, and/or equitable relief and statutor
y
dama
g
es under federal and state law. On
O
cto
b
er 1, 2009, we remove
d
t
h
e case to t
h
eUn
i
te
d
States D
i
str
i
ct Court
f
or t
h
e Western D
i
str
i
ct o
f
Was
hi
ngton. O
n
O
cto
b
er 22, 2009, t
h
e Court
i
ssue
d
ast
i
pu
l
ate
d
or
d
er grant
i
ng p
l
a
i
nt
iff
unt
il
Octo
b
er 29, 2009 to
fil
e an Amen
d
e
d
Com
p
laint. The
p
arties further sti
p
ulated to allow a Second Amended Com
p
laint, which
p
laintiffs filed on
107
CLEARWIRE CORPORATION AND
S
UB
S
IDIARIE
S
N
OTES TO CONSOLIDATED FINANCIAL STATEMENTS —
(
Continued
)