TiVo 2011 Annual Report Download - page 37

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Microsoft. The ITC's Chief Administrative Law Judge assigned the case to one of the ITC's six administrative law judges, who will schedule and hold an
evidentiary hearing. The administrative law judge will make an initial determination as to whether there is a violation of Section 337; that initial determination
is subject to review by the ITC. The ITC will make a final determination in the investigation at the earliest practicable time. Two of the four patents (USP
6,028,604 and 5,731,844) have been dropped by Microsoft from the ITC action. The hearing on the remaining two patents commenced on November 30, 2011
and ended in December 2011, and an initial determination is expected by April 20, 2012. The ITC has set a target date for completing the investigation of
August 20, 2012. On March 21, 2012, TiVo and Microsoft reached an agreement whereby Microsoft has agreed to dismiss all of its pending litigation against
TiVo, including its action in the United States International Trade Commission and both of its cases in the United States District Court for the Northern
District of California. In conjunction with these dismissals, TiVo has agreed to dismiss its counterclaim against Microsoft in the United States District Court
for the Northern District of California.
On January 24, 2011, Microsoft Corporation filed a complaint against TiVo in the United States District Court for the Western District of Washington
for alleged infringement of the following four patents, which are the same four patents alleged to be infringed in Microsoft's Complaint filed on the same date
with the ITC: U.S. Patent Nos. 5,585,838 ("Program Time Guide"); 5,731,844 ("Television Scheduling System for Displaying a Grid Representing Scheduled
Layout and Selecting a Programming Parameter for Displaying or Recording"); 6,028,604 ("User Friendly Remote System Interface Providing Previews of
Applications"); and 5,758,258 ("Selective Delivery of Programming for Interactive Televideo System"). On March 3, 2011, TiVo filed a motion to stay this
litigation in view of the ITC investigation referenced above, and to transfer the litigation to the more convenient forum of the United States District Court for
the District of Northern California. Under the February 18, 2011 stipulated order, because TiVo filed a motion to stay the litigation, the time for TiVo to
answer the Complaint has been extended indefinitely until TiVo's motion to stay and transfer has been decided on the merits. On May 19, 2011, the district
court granted TiVo's motion to stay and transferred the case to the Northern District of California. This litigation has been stayed. On March 21, 2012, TiVo
and Microsoft reached an agreement whereby Microsoft has agreed to dismiss all of its pending litigation against TiVo, including its action in the United
States International Trade Commission and both of its cases in the United States District Court for the Northern District of California. In conjunction with
these dismissals, TiVo has agreed to dismiss its counterclaim against Microsoft in the United States District Court for the Northern District of California.
On February 25, 2011, Motorola Mobility, Inc. and General Instrument Corporation, a subsidiary of Motorola, filed a complaint against TiVo in the
United States District Court for the Eastern District of Texas seeking declaratory judgment of non-infringement and invalidity of two of the patents the
Company asserted against Verizon in its August 26, 2009 complaint. Additionally, Motorola alleged infringement of U.S. Patents: 6,304,714 (“In Home
Digital Video Unit with Combined Archival Storage and High-Access Storage”); 5,949,948 (“Method and Apparatus for Implementing Playback Features for
Compressed Video”); and 6,356,708 (“Method and Apparatus for Implementing Playback Features for Compressed Video”). Motorola seeks, among other
things, damages and a permanent injunction. On April 18, 2011, the Company served its answer to the complaint and counterclaimed, seeking a declaration
that it does not infringe and the patents are invalid. On April 20, 2011, Motorola filed a reply to the Company's counterclaims. The magistrate judge has
currently indicated that trial would likely be scheduled for April 2013. The Company expects to incur material expenses in connection with this lawsuit, and
in the event it were to lose, it could be forced to pay damages for infringement, to license technology from Motorola, and it could be subject to an injunction
preventing it from infringing Motorola's technology or otherwise affecting its business, and in any such case, the Company's business would be harmed. The
Company has determined a potential loss is reasonably possible; however, based on its current knowledge, management does not believe that the amount of
such possible loss or a range of potential loss is reasonably estimable.
On October 6, 2011, Digital CBT filed a complaint against TiVo alleging infringement of U.S. Patent No. 5,805,173 ("System and Method for Capturing
and Transferring Selected Portions of a Video Stream in a Computer System"). Digital CBT seeks an injunction and unspecified damages. The Company may
incur material expenses in connection with this litigation and in the event there is an adverse outcome, the Company's business could be harmed. The
Company has determined a potential loss is reasonably possible; however, based on its current knowledge, management does not believe that the amount of
such possible loss or a range of potential loss is reasonably estimable.
Securities Litigation. On June 12, 2001, the Company and certain of its officers and directors ("TiVo defendants") were originally named as defendants
in a consolidated securities class action lawsuit filed in the United States District Court for the Southern District of New York. This action, which is captioned
Wercberger v. TiVo et al., also names several of the underwriters involved in the Company's initial public offering ("IPO") as defendants. This class action is
brought on behalf of a purported class of purchasers of the Company's common
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