Rayovac 2005 Annual Report Download - page 32

District Court for the Northern District of Georgia)
were fi led by other purported class representatives.
In addition, a further action captioned Hunkapiller
v. Spectrum Brands Inc., David A. Jones and
Randall J. Steward, Civil Action No. 05-2911-WSD
was fi led November 14, 2005 in the U.S. District
Court for the Northern District of Georgia and
purportedly brought on behalf of all purchasers of
our publicly-traded securities between January 4,
2005 and November 11, 2005. By Order dated
November 18, 2005, all cases pending in the U.S.
District Court for the Northern District of Georgia
were consolidated. Defendants are not required to
answer, move or otherwise respond until 30 days
after service of a consolidated amended complaint.
On November 28, 2005, a motion was fi led to
appoint lead plaintiffs and approve selection of lead
counsel. The Court has not yet ruled on that motion.
We believe that these actions are without merit and
intend to contest them vigorously. At this stage of
the litigation, we cannot make any estimate of a
potential loss or range of loss.
On November 9, 2005, we received a request for
information from the U.S. Attorney’s Offi ce for the
Northern District of Georgia. On December 12,
2005, we received a request for the same informa-
tion from the Atlanta District Offi ce of the SEC. The
U.S. Attorney’s Offi ce and the SEC are investigating
our July 28, 2005 disclosure regarding our results
for the third quarter ended July 3, 2005 and our
revised guidance issued September 7, 2005 as to
earnings for the fourth quarter of fi scal year 2005
and fi scal year 2006. The U.S. Attorney’s Offi ce and
the SEC are also investigating the extent to which
our senior management sold shares in the thirty-day
period preceding the July 28, 2005 and September 7,
2005 disclosures. We are cooperating fully with the
investigations. We are unable to predict the outcome
of the investigations or the timing of their resolution
at this time.
We are involved in a number of legal proceedings
with Philips in Europe and Latin America with respect
to trademark or other intellectual property rights
Philips claims to have in relation to the appearance
of the faceplate of the three-headed rotary shaver.
In the fi rst such legal proceeding in Europe, we were
successful in having the Philips trademark at issue
declared invalid by the High Court of Justice in the
United Kingdom, a decision that was ultimately
upheld by the European Court of Justice (“ECJ”) in
2002. The ECJ held that a shape consisting exclu-
sively of the shape of a product is unregisterable as
a trademark (or is subject to being declared invalid if
it has been registered as a trademark) if it is estab-
lished that the essential functional features of the
shape are attributable only to the technical result.
Both prior to and following the favorable ECJ deci-
sion in 2002, litigation over the Philips trademarks
ensued between us (or one of our distributors) and
Philips in each of France, Italy, Spain, Portugal,
Germany and again in the U.K. The status of these
various matters is as follows:
• In each of France (decision of June 13, 2003),
Italy (decision of February 26, 2004) and Spain
(decision of May 6, 2004), the respective First
Instance Courts ordered that the various Philips
trademarks be cancelled. The action in France
commenced May 17, 2000, the action in Italy
commenced May 15, 2000, and the action in
Spain commenced March 12, 2003. In France,
Philips unsuccessfully fi led an appeal to the
Paris Court of Appeal, which affi rmed the cancel-
lation of Phillips marks (decision of February 16,
2005). These decisions have been appealed
by Philips to the French Supreme Court, the
Milan Court of Appeal and the Spanish Appeal
Court, respectively.
• In the second U.K. lawsuit commenced by
Philips on February 15, 2000, the U.K. High
Court of Justice (decision of October 21, 2004)
ordered that Philips’ trademarks at issue be
cancelled. Philips fi led an appeal in this matter,
and a hearing on this appeal took place during
the week of October 17, 2005 with a decision
expected in calendar 2006.
• In Germany, the Cologne District Court in
August 2002 granted Philips a preliminary
injunction that currently prevents us from sell-
ing rotary shavers in Germany. Since such time,
we have sought to cancel relevant Philips trade-
marks. In a decision dated April 1, 2004, the
German Federal Patent Court issued a ruling
canceling three Philips marks and upholding
Philips’ right to one mark. The parties appealed
this decision to the German Supreme Court.
A hearing in those actions took place in the
German Supreme Court on November 17, 2005,
and the Court has announced that it will refer
the matters back to the German Federal Patent
Court for further proceedings.
2005 Form 10-K Annual Report
Spectrum Brands, Inc.
SPECTRUM BRANDS, INC.12