TeleNav 2014 Annual Report Download - page 101

Table of Contents
the Patent Trial and Appeal Board, or PTAB, confirmed the invalidity of these claims. Plaintiff filed a request for reconsideration of this decision
with the PTAB, which was denied on January 13, 2014. In light of the reexamination and plaintiff's appeal of the reexamination findings, the
Court stayed the case and the case will remains stayed and administratively closed unless the plaintiff obtains a favorable decision on appeal
before the PTAB or Federal Circuit Court of Appeals. On March 12, 2014, Traffic Information filed an appeal with the U.S. Appeals Court for
the Federal Circuit. 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. We believe that it is reasonably possible that we will incur a loss; however, we cannot currently
estimate a range of any possible losses we may experience in connection with this case. Accordingly, we are unable at this time to estimate the
effects of this complaint on our financial condition, results of operations or cash flows.
In addition, we have received, and expect to continue to receive, demands for indemnification from our customers, which demands can be
very expensive to settle or defend, and we have in the past offered to contribute to settlement amounts and incurred legal fees in connection with
certain of these indemnity demands. A number of these indemnity demands, including demands relating to pending litigation, remain
outstanding and unresolved as of the date of this Form 10-K. Furthermore, in response to these demands we may be required to assume control
of and bear all costs associated with the defense of our customers in compliance with our contractual commitments. At this time, we are not a
party to the following cases; however our customers have requested that we indemnify them in connection with such cases:
In 2008, Alltel, AT&T, Sprint and T-Mobile USA, or T-Mobile, each demanded that we indemnify and defend them against patent
infringement lawsuits brought by patent holding companies EMSAT Advanced Geo-Location Technology LLC and Location Based Services
LLC (collectively, “EMSAT”) in the U.S. District Court for the Northern District of Ohio. After T-Mobile also sought indemnification and
defense from Google, Inc., Google intervened in the T-
Mobile litigation. After claim construction and related motion practice, EMSAT agreed to
dismiss all claims against Google in at least the T-Mobile suit, and in March 2011, EMSAT and AT&T settled their claims. By March 2011, all
the EMSAT cases were either dismissed or stayed while the PTO completed its reexamination of the validity of the patents at issue. The PTO has
concluded its reexamination of two of the patents in suit, confirming the validity of only two of the asserted claims from those patents. At this
time, all patent claims that EMSAT alleged to be infringed by the Telenav GPS Navigator product have been cancelled during reexamination. In
the suits against T-
Mobile, Alltel and Sprint, EMSAT has amended its allegations to remove allegations of infringement of the patent claims that
were cancelled during reexamination. Accordingly, the Court has lifted the stays in those suits and the matters are ongoing. However, in the T-
Mobile suit, EMSAT and T-Mobile have stipulated to a dismissal of the case. Due to uncertainties related to litigation, we are unable to evaluate
the likelihood of either a favorable or unfavorable outcome. We have arbitrated with and compensated one carrier for our defense obligations,
without a negative effect on our financial condition, results of operations, or cash flows. We have not yet determined the extent of our
indemnification and defense obligations to the other wireless carriers. We believe that it is reasonably possible that we will incur additional loss;
however, we cannot currently estimate a range of other possible losses we may experience in connection with this case. Accordingly, we are
unable at this time to estimate the overall effects of these cases on our financial condition, results of operations, or cash flows.
In March 2009, AT&T demanded that we indemnify and defend them against a patent infringement lawsuit brought by Tendler Cellular of
Texas LLC, or Tendler, in the U.S. District Court for the Eastern District of Texas. In June 2010, AT&T settled its claims with Tendler and we
came to an agreement with AT&T as to the extent of our contribution towards AT&T's settlement and the amount of our contribution was not
material; however, there continues to be a disagreement as to whether any additional amounts are owed to AT&T for legal fees and expenses
related to the defense of the matter. We believe that it is reasonably possible that we will incur additional loss; however, we cannot currently
estimate a range of other possible losses we may experience in connection with this case. Accordingly, we are unable at this time to estimate the
overall effects on our financial condition, results of operations, or cash flows.
7. Guarantees and indemnifications
Our agreements with our customers generally include certain provisions for indemnifying them against liabilities if our products and
services infringe a third party’s intellectual property rights or for other specified matters. We have in the past received indemnification requests
or notices of their intent to seek indemnification in the future from our customers with respect to specific litigation claims in which our
customers have been named as defendants.
We have agreed to indemnify our directors, officers and certain other employees for certain events or occurrences, subject to certain limits,
while such persons are or were serving at our request in such capacity. We may terminate the indemnification agreements with these persons
upon the termination of their services with us, but termination will not affect claims for indemnification related to events occurring prior to the
effective date of termination. The maximum amount of potential future
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