Stamps.com 2002 Annual Report Download - page 70

Table of Contents
STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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 the Company 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 the Company. The complaint sought legal resolution and
recognition of Cybershop’ s ownership of the “stamps.com” domain name. On January 17, 2003, the Company agreed to terms to settle the
Cybershop domain name lawsuit. Pursuant to the settlement, the Company will keep the domain name www.stamps.com and pay the plaintiffs
an immaterial amount of cash.
In May and June, 2001, the Company was named, together with certain of the Company’ s current or former board members and/or officers, as a
defendant in eleven purported class-action lawsuits, filed in the United States District Court for the Southern District of New York. The
lawsuits allege violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 in connection with the Company’ s initial public
offering and secondary offering of common stock. The lawsuits also name as defendants the principal underwriters in connection with the
Company’ s initial and secondary public offerings, including Goldman, Sachs & Co. (in some of the lawsuits sued as The Goldman Sachs Group
Inc.) and BancBoston Robertson Stephens, Inc. The lawsuits allege that the underwriters engaged in improper commission practices and stock
price manipulations in connection with the sale of the Company’ s common stock. The lawsuits also allege that the Company and/or certain of
the Company’ s officers or directors knew of or recklessly disregarded these practices by the underwriter defendants, and failed to disclose them
in the Company’ s public filings. Plaintiffs seek damages and statutory compensation, including prejudgment and post-judgment interest, costs
and expenses (including attorneys’ fees), and rescissionary damages. In April 2002, plaintiffs filed a consolidated amended class action
complaint against the Company and certain of the Company’ s current and former board members and/or officers. The consolidated amended
class action complaint includes similar allegations to those described above and seeks similar relief. In July 2002, the Company moved to
dismiss the consolidated amended class action complaint. In October 2002, pursuant to a stipulation and tolling agreement with plaintiffs, the
Company’ s current and former board members and/or officers were dismissed without prejudice. In February of 2003, the court denied the
Company’ s motion to dismiss the consolidated amended class action complaint.
In addition to the class action lawsuits against the Company, over 1,000 similar lawsuits have also been brought against over 250 companies
which issued stock to the public in 1998, 1999, and 2000, and their underwriters. These lawsuits (including those naming the Company)
followed publicized reports that the SEC was investigating the practice of certain underwriters in connection with initial public offerings. All of
these lawsuits have been consolidated for pretrial purposes before United States District Court Judge Shira Scheindlin of the Southern District
of New York. The Company has placed our underwriters on notice of the Company’ s rights to indemnification, pursuant to the Company’ s
agreements with the underwriters. The Company has also provided notice to our directors and officers insurers, and believe that we have
insurance applicable to the lawsuits. The Company also believes that the claims against it and its officers and directors are without merit, and
intends to defend the lawsuits vigorously. The Company cannot estimate a range of probable losses, if any, related to this suit.
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2003. EDGAR Online, Inc.