Netgear 2012 Annual Report Download - page 89

Table of Contents NETGEAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
States Judicial Panel on Multidistrict Litigation (“JPML”). The pending motion to transfer would serve to consolidate all of the Innovatio lawsuits -
including the Company's pending declaratory judgment action in Delaware-
and transfer them to a single court for coordinated pretrial proceedings.
On December 28, 2011, the JPML issued an order transferring the Innovatio actions throughout the United States, including the Company's
declaratory judgment action, to the United States District Court for the Northern District of Illinois. Thus, the Company's declaratory judgment action
and approximately 15 other similar cases will now proceed in the Northern District of Illinois in a consolidated fashion. The status conference
originally scheduled for March 27, 2012 was postponed by the District Court until April 10, 2012. At the conference, the District Court discussed two
primary issues (1) case phasing (i.e., which subset of defendants should proceed after Markman Hearing through the remaining proceedings) and (2)
the defendants' proposal on damages contentions. The District Court stated that it tentatively felt that the case should proceed with one or more WiFi
hardware suppliers after the Markman Hearing, but was going to reserve a final ruling on the issue. The District Court also ordered that the parties
prepare a joint pretrial order reflecting the court's decisions and the schedule for the case. On July 10, 2012, Innovatio answered the Declaratory
Judgment Complaint filed by the Company with various counterclaims, cross claims, and affirmative defenses. In its answer, Innovatio accused the
Company of infringing six WiFi-related patents in addition to the 17 WiFi-
related patents on which the Company brought its declaratory judgment
action of non-
infringement and invalidity. The Company filed its answer to Innovatio's various counterclaims, cross claims, and affirmative defenses
on August 3, 2012. In addition, on October 1, 2012, Cisco, Motorola and the Company filed an amended complaint alleging racketeering, fraud,
interference with contract, unfair business practices, and conspiracy, among other things, against Innovatio. Discovery in the case in ongoing with the
following schedule in effect: 02/08/13 - Final Infringement, Unenforceability and Invalidity Contentions Due; 02/28/13 -
Innovatio's Damages
Contentions Due; 02/28/13- Final Noninfringement, Enforceability and Validity Contentions Due; 03/07/13 -
Exchange of Proposed Claim Terms to
be Construed along with Proposed Constructions; 03/14/13 - Initial Close of Fact Discovery; 03/21/13 -
Defendants' Responsive Damages
Contentions Due; 03/21/13 -
Opening Claim Construction Brief by party opposing infringement and Joint Appendix and filing of Joint Appendix
Due; 04/04/13 - Responsive Claim Construction Brief by party claiming infringement Due; 04/18/13 -
Reply Claim Construction Brief by party
opposing infringement Due; 04/25/13 - Joint Claim Construction Chart and Status Report Due; and 05/16/13 -
Claim Construction Hearing. On
February 4, 2013, the Court dismissed the offensive claims of Cisco, Motorola, and the Company that alleged Innovatio was engaging in
racketeering, fraud, and unfair business practices by demanding licensing fees from hotels, cafes and other businesses but left intact claims against
Innovatio that allege breach of contract with respect to Innovatio's RAND obligations. The trial date has not been set. It is too early to reasonably
estimate any financial impact to the Company because of this litigation matter.
Harris Corporation v. NETGEAR.
On November 26, 2011, Harris Corporation (“Harris”)
sued the Company in the U.S. District Court, Middle District of Florida alleging that the
Company willfully infringes six of Harris's patents --
U.S. Patent Nos. 6,504,515, 7,916,684, 5,787,177, 5,974,149, 6,189,104, and 6,397,336. Harris
filed an amended complaint on February 17, 2012 that removed its initial allegations of willful infringement by the Company and also removed the
allegations of direct infringement against the Company for U.S. Patent No. 7,916,684, leaving only indirect infringement allegations for the '684
Patent. The Company's answer to the amended complaint was submitted on March 2, 2012.
On April 3, 2012, the Company filed suit against Harris in the District Court of the Northern District of California asserting that Harris infringes
four of the Company's patents. In the complaint, the Company alleges that Harris infringes: a) U.S. Patent No. 6,718,030, entitled “
Virtual Private
Network System and Method Using Voice of Internet Protocol
”
through Harris's VIDA Network and products, the VIDA Telephone Interconnect
(VTI), the MASTR III Base Station, and the EDACS MASTR III repeater; b) U.S. Patent No. 7,200,400, entitled “Mobile to 802.11 Voice Multi-
Network Roaming Utilizing SIP Signaling With SIP Proxy or Redirect Server
” through Harris's VIDA Network and products, the Inter-
RF
Subsystem Interface (ISSI) Gateway, the Interoperability Gateway, and the UNITY XG-
100P Portable Radio; c) U.S. Patent No. 7,218,722, entitled
“System and Method For Proving Call Management Services in a Virtual Private Network Using Voice or Video Over Internet Protocol”
through
Harris's VIDA Network and products, the VIDA Telephone Interconnect (VTI), the P7200 Portable Radio, the OpenSky Network and Products, the
MASTR III Base Station, and EDACS MASTR III repeater; and d) U.S. Patent No. 7,936,714, entitled “
Spectrum Allocation System and Method
For Multi-Band Wireless RF Data Communications” through Harris's UNITY XG-
100P Portable Radio. Harris responded to the complaint on the
due date for its answer.
Without admitting any wrongdoing or violation of law and to avoid the distraction and expense of continued litigation and the uncertainty of a
jury verdict on the merits, on October 19, 2012, Harris and the Company signed a final settlement agreement settling the
two
patent cases that the
parties brought against each other. The settlement agreement included the following principal points: 1) dismissal with prejudice of the lawsuits
pending between the Company and Harris; 2) a one-time lump-
sum payment by the Company to Harris; 3) assignment of certain patents, and related
patents from Harris to the Company; 4) a covenant not to sue each other for ten
years by both parties that applies to lawsuits based upon any of the
parties' patents; and 5) a covenant not
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