Stamps.com 2001 Annual Report Download - page 23

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technology and Internet-related companies and that have often been unrelated or disproportionate to the operating performance of these
companies. These broad market fluctuations and the perception of the valuation of the Internet company sector could adversely affect the
market price of our common stock.
ITEM 2. PROPERTIES
Our corporate headquarters are located in a 26,000 square foot facility in Santa Monica, California under a lease expiring on May 31, 2004. We
also have several properties under lease that are no longer occupied by Stamps.com, and which are either being sublet or marketed for sublet.
We have an unoccupied 14,000 square foot office facility in Irvine, California under a lease expiring in March 2004; this property is being
actively marketed for sublet. We also have an additional 14,500 square feet of space in Bellevue, Washington under a lease that expires in April
2002; this property has been sublet. We also have approximately 64,000 square feet of facilities in Santa Monica, California under leases, the
majority of which expire in May 2004, and the majority of which have been sublet. We have incorporated the costs related to excess facilities
that are not occupied by Stamps.com into our restructuring charge.
ITEM 3. LEGAL PROCEEDINGS
On June 16, 1999, Pitney Bowes sued us for alleged patent infringement in the United States District Court for the District of Delaware. The
suit originally alleged that we are infringing two patents held by Pitney Bowes related to postage application systems and electronic indicia. The
suit seeks treble damages, a preliminary and permanent injunction from further alleged infringement, attorneys' fees and other unspecified
damages. We answered the complaint on August 6, 1999, denying the allegations of patent infringement and asserting a number of affirmative
defenses. Pitney Bowes filed a similar complaint in early June 1999 against E-Stamp Corporation, alleging infringement of seven Pitney Bowes
patents. On April 13, 2000, Pitney Bowes asked the court for permission to amend its complaint to drop allegations of patent infringement 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. The 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 in its
suits against us. See Risk Factors-Success by Pitney Bowes in its suits against us alleging patent infringement could prevent us from offering
our Internet postage services and severely harm our business or cause 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
20
2002. EDGAR Online, Inc.