Stamps.com 2001 Annual Report Download - page 16

with respect to one patent and to add allegations of patent infringement with respect to three other patents. On July 28, 2000 the court entered
Pitney Bowes' amended complaint. On June 18, 2001, E-Stamp and Pitney Bowes agreed to settle their litigation.
On September 18, 2000, Pitney Bowes filed another patent infringement lawsuit against us in the United States District Court for the Eastern
District of Texas, alleging that we are infringing four patents owned by Pitney Bowes related to multi-carrier shipping. The suit seeks
unspecified damages and a permanent injunction from further alleged infringement. We answered the complaint on December 1, 2000, denying
the allegations of patent infringement and asserting a number of affirmative defenses. United Parcel Service acquired our iShip multi-carrier
shipping service assets on May 18, 2001. On September 4, 2001, the court granted our motion to transfer the lawsuit to the United States
District Court for the District of Delaware.
On June 14, 2001, we filed a patent infringement lawsuit against Pitney Bowes in the United States District Court for the Central District of
California, alleging that Pitney Bowes infringes four patents we own. On January 7, 2002, the court granted Pitney Bowes' motion to transfer
the lawsuit to the United States District Court for the District of Delaware. Each of our patent lawsuits against Pitney Bowes is in the discovery
phase and is scheduled for trial in January, 2003.
The outcome of our litigation against Pitney Bowes is uncertain. Therefore, we can give no assurance that Pitney Bowes will not prevail. See
"Legal Proceedings" for a description of this litigation in which we are involved.
If Pitney Bowes prevails in its suits against us, we may be prevented from selling postage on the Internet. Alternatively, the Pitney Bowes suits
could result in limitations on how we implement our service, delays and costs associated with redesigning our service and payments of license
fees and other payments. Thus, if Pitney Bowes prevails in its suits against us, our business could be severely harmed or fail. In addition, the
litigation could result in significant expenses and diversion of management time and other resources.
On August 17, 1998, Pitney Bowes issued a press release stating that it holds dozens of US patents related to computer-based postage metering
and that it intends to engage in discussions with other marketers of computer-based postal products to license Pitney Bowes technology. Prior to
Pitney Bowes filing a lawsuit against us, we were in license discussions with Pitney Bowes. We intend to continue these discussions; however,
we cannot predict whether these discussions will continue, the outcome of these discussions or the impact of Pitney Bowes' intellectual property
claims on our business or the Internet postage market. If Pitney Bowes is able to prevail in its claims against us and if we do not enter into a
license relationship with Pitney Bowes, our business could be impacted severely or fail. In addition, as described above, Pitney Bowes could
obtain monetary and injunctive relief against us.
Success by Cybershop in its suit against us seeking damages and recognition of its ownership of the domain name stamps.com could prevent us
from using the domain name stamps.com and could require a change of name of the Company, severely harming our business or causing it to
fail.
On December 13, 2000, Cybershop (a British Columbia, Canada partnership) and its general partners filed suit against us in the U.S. District
Court for the Southern District of Texas, alleging that in 1998 a third party fraudulently transferred ownership of the Internet domain name
"stamps.com" away from Cybershop and subsequently transferred it to us. The third party is also a named defendant in the suit. The complaint
seeks legal resolution and recognition of Cybershop's ownership of the "stamps.com" domain name and seeks unspecified monetary damages
against the third party. On January 9, 2001, we filed a motion to dismiss the suit. On February 16, 2001, Cybershop filed an amended
complaint, alleging new causes of action, including conversion, invasion of privacy, trespass, and private nuisance, and seeking declaratory
judgment for return of the domain name registration to Cybershop. Cybershop later filed third and fourth amended complaints. On February 13,
2002, the court granted our summary judgment motion and dismissed all of Cybershop's pending claims against us with prejudice. Cybershop
has filed a motion asking the court to reconsider its decision.
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2002. EDGAR Online, Inc.