Dish Network 2009 Annual Report Download - page 44

Download and view the complete annual report

Please find page 44 of the 2009 Dish Network annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 152

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152

34
ESPN
During 2008, we filed a lawsuit against ESPN, Inc., ESPN Classic, Inc., ABC Cable Networks Group, Soapnet
L.L.C., and International Family Entertainment (collectively, “ESPN”) for breach of contract in New York State
Supreme Court. Our complaint alleges that ESPN failed to provide us with certain high-definition feeds of the
Disney Channel, ESPN News, Toon, and ABC Family. ESPN asserted a counterclaim, and then filed a motion for
summary judgment, alleging that we owed approximately $35 million under the applicable affiliation agreements.
We brought a motion to amend our complaint to assert that ESPN was in breach of certain most-favored-nation
provisions under the applicable affiliation agreements. On April 15, 2009, the trial court granted our motion to
amend the complaint, and granted, in part, ESPN’s motion on the counterclaim, finding that we are liable for some
of the amount alleged to be owing but that the actual amount owing is disputed and will have to be determined at a
later date. We will appeal the partial grant of ESPN’s motion. Since the partial grant of ESPN’s motion, ESPN has
sought an additional $30 million under the applicable affiliation agreements. We intend to vigorously prosecute and
defend this case. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of
any potential liability or damages.
Finisar Corporation
Finisar Corporation (“Finisar”) obtained a $100 million verdict in the United States District Court for the Eastern
District of Texas against DirecTV for patent infringement. Finisar alleged that DirecTV’s electronic program guide
and other elements of its system infringe United States Patent No. 5,404,505 (the ‘505 patent).
During 2006, we and EchoStar, together with NagraStar LLC, filed a Complaint for Declaratory Judgment in the
United States District Court for the District of Delaware against Finisar that asks the Court to declare that we do not
infringe, and have not infringed, any valid claim of the ‘505 patent. During April 2008, the Federal Circuit reversed
the judgment against DirecTV and ordered a new trial. During January 2010, the Federal Circuit affirmed the
District Court’s grant of summary judgment to DirecTV, and dismissed the action with prejudice. We are evaluating
the impact of the Federal Circuit’s decision.
We intend to vigorously prosecute this case. In the event that a court ultimately determines that we infringe the
asserted patent, we may be subject to substantial damages, which may include treble damages, and/or an injunction
that could require us to modify our system architecture. We cannot predict with any degree of certainty the outcome
of the suit or determine the extent of any potential liability or damages.
Global Communications
During April 2007, Global Communications, Inc. (“Global”) filed a patent infringement action against us and
EchoStar in the United States District Court for the Eastern District of Texas. The suit alleges infringement of
United States Patent No. 6,947,702 (the ‘702 patent), which relates to satellite reception. In October 2007, the
United States Patent and Trademark Office granted our request for reexamination of the ‘702 patent and issued an
initial Office Action finding that all of the claims of the ‘702 patent were invalid. At the request of the parties, the
District Court stayed the litigation until the reexamination proceeding is concluded and/or other Global patent
applications issue.
During June 2009, Global filed a patent infringement action against us and EchoStar in the United States District
Court for the Northern District of Florida. The suit alleges infringement of United States Patent No. 7,542,717 (the
‘717 patent), which relates to satellite reception. In December 2009, we and EchoStar settled the Texas and Florida
actions with Global on terms and conditions that did not have a material impact on our results of operations.
Guardian Media
During 2008, Guardian Media Technologies LTD (“Guardian”) filed suit against us, EchoStar, EchoStar
Technologies L.L.C., DirecTV and several other defendants in the United States District Court for the Central
District of California alleging infringement of United States Patent Nos. 4,930,158 and 4,930,160. Both patents
are expired and relate to certain parental lock features. On September 9, 2009, Guardian voluntarily dismissed the
case against us with prejudice.