Dish Network 2004 Annual Report Download - page 34

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Reinsurance Company), United States Aircraft Insurance Group; Assurances Generales De France I.A.R.T. (AGF);
Certain Underwriters at Lloyd’s, London; Great Lakes Reinsurance (U.K.) PLC; British Aviation Insurance Group; If
Skaadeforsikring (previously Storebrand); Hannover Re (a/k/a International Hannover); The Tokio Marine & Fire
Insurance Company, Ltd.; Marham Space Consortium (a/k/a Marham Consortium Management); Ace Global Markets
(a/k/a Ace London); M.C. Watkins Syndicate; Goshawk Syndicate Management Ltd.; D.E. Hope Syndicate 10009
(Formerly Busbridge); Amlin Aviation; K.J. Coles & Others; H.R. Dumas & Others; Hiscox Syndicates, Ltd.; Cox
Syndicate; Hayward Syndicate; D.J. Marshall & Others; TF Hart; Kiln; Assitalia Le Assicurazioni D’Italia S.P.A.
Roma; La Fondiaria Assicurazione S.P.A., Firenze; Vittoria Assicurazioni S.P.A., Milano; Ras - Riunione Adriatica Di
Sicurta S.P.A., Milano; Societa Cattolica Di Assicurazioni, Verano; Siat Assicurazione E Riassicurazione S.P.A,
Genova; E. Patrick; ZC Specialty Insurance; Lloyds of London Syndicates 588 NJM, 1209 MEB and 861 MEB;
Generali France Assurances; Assurance France Aviation; and Ace Bermuda Insurance Ltd.
The insurance carriers offered us a total of approximately $88.0 million, or 40% of the total policy amount, in
settlement of the EchoStar IV insurance claim. We rejected this settlement offer and submitted our claim to
arbitration pursuant to the terms of the insurance policies.
On March 4, 2005, we agreed to settle our insurance claim and related claims for accrued interest and bad faith with
all carriers who agree to pay their proportionate share of an aggregate net amount of $240.0 million. We retained
title to and use of the EchoStar IV satellite. Payment from each settling carrier is due on or before April 26, 2005,
with interest commencing to accrue on April 12, 2005. Currently, we have received signed agreements back from
insurers representing over 90% of the aggregate amount. While we believe the remaining insurers will each sign the
agreement shortly, the arbitration will continue with respect to any insurers who decline to settle.
Gemstar
During October 2000, Starsight Telecast, Inc., a subsidiary of Gemstar-TV Guide International, Inc. (“Gemstar”), filed
a suit for patent infringement against us and certain of our subsidiaries in the United States District Court for the
Western District of North Carolina, Asheville Division.
In December 2000, we filed suit against Gemstar-TV Guide (and certain of its subsidiaries) in the United States District
Court for the District of Colorado alleging violations by Gemstar of various federal and state anti-trust laws and laws
governing unfair competition. Gemstar filed counterclaims alleging infringement of additional patents and asserted
new patent infringement counterclaims.
In February 2001, Gemstar filed additional patent infringement actions against us in the District Court in Atlanta,
Georgia and with the ITC. We settled all of the litigation with Gemstar during 2004 (See Note 2 in the Notes to the
Consolidated Financial Statements in Item 15 of this Annual Report on Form 10-K).
Superguide
During 2000, Superguide Corp. (“Superguide”) filed suit against us, DirecTV and others in the United States District
Court for the Western District of North Carolina, Asheville Division, alleging infringement of United States Patent
Nos. 5,038,211, 5,293,357 and 4,751,578 which relate to certain electronic program guide functions, including the use
of electronic program guides to control VCRs. Superguide sought injunctive and declaratory relief and damages in an
unspecified amount. We examined these patents and believe that they are not infringed by any of our products or
services.
On summary judgment, the District Court ruled that none of the asserted patents were infringed by us. These rulings
were appealed to the United States Court of Appeals for the Federal Circuit. During February 2004, the Federal Circuit
affirmed in part and reversed in part the District Court’s findings and remanded the case back to the District Court for
further proceedings. Based upon the settlement with Gemstar discussed above, we now have an additional defense in
this case based upon a license from Gemstar. We will continue to vigorously defend this case. In the event that a
Court ultimately determines that we infringe on any of the patents, we may be subject to substantial damages, which
may include treble damages and/or an injunction that could require us to materially modify certain user-friendly
electronic programming guide and related features that we currently offer to consumers. It is not possible to make a
firm assessment of the probable outcome of the suit or to determine the extent of any potential liability or damages.