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Table of Contents
claims of patent infringement. The Company filed its answer in the second quarter of 2008. In May 2009, without admitting any patent
infringement, wrongdoing or violation of law and to avoid the distraction and expense of continued litigation, the Company agreed to make a
one-
time lump sum payment of $350,000, recorded as a litigation settlement expense in the three months ended March 29, 2009, in consideration
for a license to the patent in suit as well as a dismissal with prejudice of the lawsuit. Under the license, the Company will pay future running
royalties on certain of its PoE products which will be recognized as a component of cost of revenue as the related products are sold.
Ruckus Wireless v. NETGEAR
In May 2008, a lawsuit was filed against the Company by Ruckus Wireless (“Ruckus”), a developer of Wi-Fi technology, in the U.S.
District Court for the Northern District of California. Ruckus alleges that the Company infringes U.S. Patent Nos. 7,358,912 and 7,193,562 in the
course of deploying Wi-Fi antenna array technology in its WPN824 RangeMax wireless router. Ruckus also sued Rayspan Corporation alleging
similar claims of patent infringement. The Company filed its answer to the lawsuit in the third quarter of 2008. The Company and Rayspan
Corporation jointly filed a request for inter partes reexamination of the Ruckus patents with the USPTO on September 4, 2008. The Court issued
a stay of the litigation while the reexaminations proceeded in the USPTO. On November 28, 2008, a reexamination was ordered with respect to
claims 11-17 of U.S. Patent No. 7,193,562, but denied with respect to claims 1-10 and 18-
36. On December 17, 2008, the defendants jointly filed
a petition to challenge the denial of reexamination of claims 1-10 and 18-36 of U.S. Patent No. 7,193,562. In July 2009, the petition was denied,
and the remaining claims 11-17 were confirmed. The Company is appealing the confirmation of claims 11-17. On December 2, 2008,
reexamination was granted to U.S. Patent No. 7,358,912. In early October 2009, the Company received an Action Closing Prosecution in the
reexamination of the 7,358,912 patent. All the claims of the 7,358,912 patent, with the exception of the unchallenged claims 7 and 8, were
finally rejected. On October 30, 2009, Ruckus submitted an “after-final” amendment in the 7,358,912 patent reexamination proceeding. The
Company’s comments to Ruckus’ “after-final” amendment were submitted on November 30, 2009. The reexaminations and related appeals are
proceeding in the USPTO. On December 1, 2009, the Court found that bifurcating the 7,193,562 patent from the 7,358,912 patent and
commencing litigation on the 7,193,562 patent while the USPTO reexamination process and appeals are still pending would be an inefficient use
of the Court’s resources. Accordingly, the Court ruled that the litigation stay remains in effect. The parties next status report is due by May 25,
2010.
On November 4, 2009, Ruckus filed a new complaint in the Northern District of California alleging the Company and Rayspan
Corporation infringe a patent that is related to the patents previously asserted against the Company and Rayspan Corporation by Ruckus, as
discussed above. This newly asserted patent is U.S. Patent No. 7,525,486 and entitled “Increased wireless coverage patterns.” As with the
previous Ruckus action, the WPN824 RangeMax wireless router is the alleged infringing device. The Company challenged the sufficiency of
Ruckus’s complaint in this new action and moved to dismiss the complaint. Ruckus opposed this motion. The Court partially agreed with the
Company’s motion and ordered Ruckus to submit a new complaint. The initial case management conference (“CMC”) occurred on February 11,
2010. At the CMC, the District Court indicated that it may stay the newly-filed action until completion of the pending re-examination in the
related action and asked the parties to brief the issue. In addition, the District Court set a Claim Construction hearing of November 17, 2010 for
the newly-filed action. If the District Court stays the newly filed action, the claim construction hearing would occur at a later date.
Northpeak Wireless, LLC v. NETGEAR
In October 2008, a lawsuit was filed against the Company and thirty other companies by Northpeak Wireless, LLC (“Northpeak”) in the
U.S. District Court for the Northern District of Alabama. Northpeak alleges that the Company’s 802.11b compatible products infringe U.S.
Patent Nos. 4,977,577 and 5,987,058. The Company filed its answer to the lawsuit in the fourth quarter of 2008. On January 21, 2009, the
District Court granted a motion to transfer the case to the U.S. District Court for the Northern District of California. In August 2009, the parties
stipulated to a litigation stay pending a reexamination request to the USPTO on the asserted
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