Dish Network 2011 Annual Report Download - page 54

44
44
Because both we and EchoStar were defendants in the TiVo lawsuit, we and EchoStar were jointly and severally
liable to TiVo for any final damages and sanctions that could have been awarded by the District Court. As
previously disclosed, we determined that we were obligated under the agreements entered into in connection with
the Spin-off to indemnify EchoStar for substantially all liability arising from this lawsuit. EchoStar contributed an
amount equal to its $5 million intellectual property liability limit under the receiver agreement. We and EchoStar
further agreed that EchoStar’s $5 million contribution would not exhaust EchoStar’s liability to us for other
intellectual property claims that may arise under the receiver agreement. We and EchoStar also agreed that we
would each be entitled to joint ownership of, and a cross-license to use, any intellectual property developed in
connection with any potential new alternative technology. Any amounts that EchoStar is responsible for under the
settlement agreement with TiVo are in addition to the $5 million contribution previously made by EchoStar.
Vigilos, LLC
On February 23, 2011, Vigilos, LLC filed suit against EchoStar, two EchoStar subsidiaries, Sling Media, Inc. and
EchoStar Technologies L.L.C., and Monsoon Multimedia, Inc. in the U.S. District Court for the Eastern District of
Texas alleging infringement of U.S. Patent No. 6,839,731, which is entitled “System and Method for Providing Data
Communication in a Device Network.” Subsequently in 2011, Vigilos added DISH Network L.L.C., our indirect
wholly owned subsidiary, as a defendant in its First Amended Complaint and the case was transferred to the
Northern District of California. Later in 2011, Vigilos filed a Second Amended Complaint that added claims for
infringement of a second patent, U.S. Patent No. 7,370,074, which is entitled "System and Method for Implementing
Open-Protocol Remote Device Control."
We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe the
asserted 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 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.
Voom
In January 2008, Voom filed a lawsuit against us in New York Supreme Court, alleging breach of contract and
other claims arising from our termination of the affiliation agreement governing carriage of certain Voom HD
channels on the DISH pay-TV service. At that time, Voom also sought a preliminary injunction to prevent us from
terminating the agreement. The Court denied Voom’s request, finding, among other things, that Voom had not
demonstrated that it was likely to prevail on the merits. In April 2010, we and Voom each filed motions for
summary judgment. Voom later filed two motions seeking discovery sanctions. On November 9, 2010, the Court
issued a decision denying both motions for summary judgment, but granting Voom’s motions for discovery
sanctions. The Court’s decision provides for an adverse inference jury instruction at trial and precludes our
damages expert from testifying at trial. We appealed the grant of Voom’s motion for discovery sanctions to the
New York State Supreme Court, Appellate Division, First Department. On February 15, 2011, the appellate court
granted our motion to stay the trial pending our appeal. On January 31, 2012, the appellate court affirmed the
order imposing discovery sanctions and precluding our damages expert from testifying at trial. We are seeking
leave to appeal to New York’s highest state court, the Court of Appeals. A trial date has not been set. Voom is
claiming over $2.5 billion in damages. 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.
Other
In addition to the above actions, we are subject to various other legal proceedings and claims which arise in the
ordinary course of business, including, among other things, disputes with programmers regarding fees. In our
opinion, the amount of ultimate liability with respect to any of these actions is unlikely to materially affect our
financial position, results of operations or liquidity, though the outcomes could be material to our operating results
for any particular period, depending, in part, upon the operating results for such period.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.