Dish Network 2011 Annual Report Download - page 145

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DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-51
Broadcast Innovation, L.L.C.
During 2001, Broadcast Innovation, L.L.C. (“Broadcast Innovation”) filed a lawsuit against us, DirecTV, Thomson
Consumer Electronics and others in United States District Court in Denver, Colorado. Broadcast Innovation is an entity
that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. The suit
alleges infringement of United States Patent Nos. 6,076,094 (the “‘094 patent”) and 4,992,066 (the “‘066 patent”). The
‘094 patent relates to certain methods and devices for transmitting and receiving data along with specific formatting
information for the data. The ‘066 patent relates to certain methods and devices for providing the scrambling circuitry
for a pay television system on removable cards. Subsequently, DirecTV and Thomson settled with Broadcast Innovation
leaving us as the only defendant.
During 2004, the District Court issued an order finding the ‘066 patent invalid. Also in 2004, the District Court found
the ‘094 patent invalid in a parallel case filed by Broadcast Innovation against Charter and Comcast. In 2005, the United
States Court of Appeals for the Federal Circuit overturned that finding of invalidity with respect to the ‘094 patent and
remanded the Charter case back to the District Court. During June 2006, Charter filed a request for reexamination of the
‘094 patent with the U.S. Patent and Trademark Office and, on December 13, 2011, the U.S. Patent and Trademark
Office issued a certificate cancelling all claims of the ‘094 patent. On February 2, 2012, Broadcast Innovation dismissed
the case against us with prejudice.
Channel Bundling Class Action
During 2007, a purported class of cable and satellite subscribers filed an antitrust action against us in the United States
District Court for the Central District of California. The suit also names as defendants DirecTV, Comcast, Cablevision,
Cox, Charter, Time Warner, Inc., Time Warner Cable, NBC Universal, Viacom, Fox Entertainment Group and Walt
Disney Company. The suit alleges, among other things, that the defendants engaged in a conspiracy to provide
customers with access only to bundled channel offerings as opposed to giving customers the ability to purchase channels
on an “a la carte” basis. On October 16, 2009, the District Court granted defendants’ motion to dismiss with prejudice.
On June 3, 2011, the U.S. Court of Appeals for the Ninth Circuit affirmed the District Court’s motion to dismiss with
prejudice. The plaintiff class sought rehearing en banc. On October 31, 2011, the Ninth Circuit issued an order vacating
the June 3, 2011 order, directing that a 3-judge panel be reconstituted, and denying the plaintiff class’ motion for
rehearing. We intend to vigorously 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.
Cyberfone Systems, LLC (f/k/a LVL Patent Group, LLC)
On September 15, 2011, LVL Patent Group, LLC filed a complaint against our wholly-owned subsidiary DISH Network
L.L.C., as well as EchoStar, EchoStar Technologies L.L.C., a wholly-owned subsidiary of EchoStar, and DirecTV in the
United States District Court for the District of Delaware alleging infringement of United States Patent No. 6,044,382,
which is entitled “Data Transaction Assembly Server.” On November 18, 2011, Cyberfone Systems, LLC (f/k/a LVL
Patent Group, LLC) filed an amended complaint making the same claim. DirecTV was dismissed from the case on
January 4, 2012.
We intend to vigorously defend 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 materially modify certain features that we currently offer to consumers. We cannot predict with any degree
of certainty the outcome of the suit or determine the extent of any potential liability or damages.