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ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-35
patents held by others and the availability and cost of any such licenses. Various parties have asserted patent and other
intellectual property rights with respect to components within EchoStar’s direct broadcast satellite system. EchoStar
cannot be certain that these persons do not own the rights they claim, that its products do not infringe on these rights,
that it would be able to obtain licenses from these persons on commercially reasonable terms or, if it was unable to
obtain such licenses, that it would be able to redesign its products to avoid infringement.
Fee Dispute
EchoStar had a dispute regarding the contingent fee arrangement with the attorneys who represented EchoStar
in prior litigation with The News Corporation, Ltd. In early July 2002, the parties resolved their dispute.
WIC Premium Television Ltd
During July 1998, a lawsuit was filed by WIC Premium Television Ltd., an Alberta corporation, in the Federal
Court of Canada Trial Division, against General Instrument Corporation, HBO, Warner Communications, Inc., John
Doe, Showtime, United States Satellite Broadcasting Company, Inc., EchoStar, and certain EchoStar subsidiaries.
During September 1998, WIC filed another lawsuit in the Court of Queen’s Bench of Alberta Judicial District
of Edmonton against certain defendants, including EchoStar. WIC is a company authorized to broadcast certain
copyrighted work, such as movies and concerts, to residents of Canada. WIC alleges that the defendants engaged in,
promoted, and/or allowed satellite dish equipment from the United States to be sold in Canada and to Canadian residents
and that some of the defendants allowed and profited from Canadian residents purchasing and viewing subscription
television programming that is only authorized for viewing in the United States. The lawsuit seeks, among other things,
interim and permanent injunctions prohibiting the defendants from importing satellite receivers into Canada and from
activating satellite receivers located in Canada to receive programming, together with damages in excess of $175
million.
The Court in the Alberta action denied EchoStar’s Motion to Dismiss, and EchoStar’s appeal of that decision.
The Federal action has been stayed pending the outcome of the Alberta action. EchoStar intends to continue to
vigorously defend the suit. Recently, the Supreme Court of Canada ruled that the receipt in Canada of programming
from United States pay television providers is prohibited. While EchoStar was not a party to that case, the ruling could
aversely affect EchoStar’s defense. It is too early to make an assessment of the probable outcome of the litigation or to
determine the extent of any potential liability or damages.
Distant Network Litigation
Until July 1998, EchoStar obtained feeds of distant broadcast network channels (ABC, NBC, CBS and FOX)
for distribution to its customers through PrimeTime 24, an independent third party programming provider. In December
1998, the United States District Court for the Southern District of Florida entered a nationwide permanent injunction
requiring that provider to shut off distant network channels to many of its customers, and henceforth to sell those
channels to consumers in accordance with certain stipulations in the injunction.
In October 1998, EchoStar filed a declaratory judgment action against ABC, NBC, CBS and FOX in the
United States District Court for the District of Colorado. EchoStar asked the Court to enter judgment declaring that its
method of providing distant network programming did not violate the Satellite Home Viewer Act and hence did not
infringe the networks’ copyrights. In November 1998, the networks and their affiliate groups filed a complaint against
EchoStar in Miami Federal Court alleging, among other things, copyright infringement. The Court combined the case
that EchoStar filed in Colorado with the case in Miami and transferred it to the Miami Federal Court. The case remains
pending in Florida. While the networks have not sought monetary damages, they have sought to recover attorney fees if
they prevail.