TeleNav 2010 Annual Report Download - page 43

ITEM 3. LEGAL PROCEEDINGS
From time to time, we may be subject to legal proceedings and claims in the ordinary course of business.
We have received, and may in the future continue to receive, claims from third parties asserting infringement of
their intellectual property rights. Future litigation may be necessary to defend ourselves and our wireless carrier
partners by determining the scope, enforceability and validity of third party proprietary rights or to establish our
proprietary rights. There can be no assurance with respect to the outcome of any current or future litigation
brought against us or pursuant to which we have indemnification obligations and the outcome could have a
material adverse impact on our business, operating results and financial condition.
On November 17, 2009, WRE-Hol, LLC filed a complaint against us in the U.S. District Court for the Western
District of Washington (Case No. 2:09-cv-01642-MJP). The suit alleges that certain of our products and/or services
infringe U.S. Patent No. 7,149,625, and that we induce infringement and contribute to the infringement of U.S.
Patent No. 7,149,625 by others. According to the patent, the invention generally relates to a system and method for
providing navigation and automated guidance to a mobile user. The complaint seeks unspecified monetary damages,
fees and expenses and injunctive relief against us. On November 27, 2009, WRE-Hol served the complaint on us.
On January 25, 2010, we answered the WRE-Hol complaint asserting that the patent-in-suit is not infringed and is
invalid and unenforceable. On March 11, 2010, WRE-Hol amended its complaint to add a new defendant, and we
subsequently answered, repeating our assertions that the patent-in-suit is not infringed and is invalid and
unenforceable. On April 27, 2010, we filed a reexamination request for all of the claims of the asserted patent before
the U.S. Patent and Trademark Office. On April 29, 2010, we filed a motion to stay the litigation pending the
reexamination. On May 3, 2010, WRE-Hol filed a motion for leave to amend the complaint against us, seeking to
add claims for misappropriation of trade secrets against us and our founders, Y.C. Chao, H.P. Jin and Robert
Rennard. WRE-Hol’s motion for leave to amend also seeks to add a breach of contract claim against us and a claim
for wrongful inventorship involving two of our patents, requesting a declaratory judgment that a WRE-Hol inventor
be named as an inventor on these patents. On July 19, 2010, the U.S. Patent and Trademark Office issued an order
granting inter partes reexamination of all 51 claims of the WRE-Hol ‘625 patent. On July 23, 2010, the district court
issued an order granting WRE-Hol’s motion for leave to amend its complaint, but at the same time stayed the entire
litigation pending completion of the reexamination. The stay of the litigation extends to the new claims the court
allowed. On September 13, 2010, the U.S. Patent and Trademark Office rejected 44 of the 51 WRE-Hol patent
claims in a non-final first office action and confirmed seven of the 51 claims.
On December 31, 2009, Vehicle IP, LLC filed a complaint against us in the U.S. District Court for the
District of Delaware (Case No. 1:09-cv-01007-JJF). The suit alleges that certain of our navigation services,
including our GPS Navigator, infringe U.S. Patent No. 5,987,377, and that we induce infringement and
contribute to the infringement of U.S. Patent No. 5,987,377 by others. According to the patent, the invention
generally relates to a navigation system that determines an expected time of arrival. The complaint seeks
unspecified monetary damages, fees and expenses and injunctive relief against us. On March 11, 2010, we
answered the complaint, asserting that the patent-in-suit is not infringed and is invalid. Vehicle IP denied these
counterclaims and requested that they be dismissed. Verizon Wireless was named as a co-defendant in the
Vehicle IP litigation based on the VZ Navigator product and has demanded that we indemnify and defend
Verizon against Vehicle IP. AT&T Mobility was also named as a co-defendant in the Vehicle IP litigation based
on the AT&T Navigator product. AT&T Mobility has tendered the defense of the litigation to us and we are
defending the case on behalf of AT&T Mobility. The court has not yet ordered a scheduling conference for the
litigation. Due to the preliminary status of the lawsuit and uncertainties related to litigation, we are unable to
evaluate the likelihood of either a favorable or unfavorable outcome. Accordingly, we are unable at this time to
estimate the effects of this lawsuit on our financial condition, results of operations, or cash flows.
On April 30, 2010, Traffic Information, LLC filed a complaint against us in the U.S. District Court for the Eastern
District of Texas (Case No. 2:10-cv-00145-TJW). The suit alleges that certain of our products and/or services infringe
U.S. Patent No. 6,785,606, and that we induce infringement and contribute to the infringement of U.S. Patent
No. 6,785,606 by others. According to the patent, the invention generally relates to a system for providing traffic
information to a plurality of mobile users connected to a network. The complaint seeks unspecified monetary damages,
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