Visa 2007 Annual Report Download - page 163

Table of Contents
VISA U.S.A. INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Every Penny Counts, Inc. – "Open Prepaid Cards"
On July 17, 2007, Every Penny Counts, Inc. filed a complaint in the U.S. District Court for the Middle District of Florida against Visa U.S.A.,
MasterCard and American Express for infringement of four of its patents. Plaintiff amended its complaint on September 27, 2007 to add Green Dot Corp. as a
party and to add a fifth patent to its suit. The Complaint now alleges that the defendants' "open" prepaid card products infringe U.S. Patent No. 5,621,640
("Automatic Philanthropic Contribution System"), U.S. Patent No. 6,112,191 ("Method and System to Create and Distribute Excess Funds from Consumer
Spending Transactions"), U.S. Patent No. 6,088,682 ("Funds Distribution System Connected with Point of Sale Transactions"), U.S. Patent No. 6,876,971
("Funds Distribution System Connected with Point of Sale Transaction") and U.S. Patent No. 7,171,370 ("Funds Distribution System Connected with Point of
Sale Transactions"). Visa U.S.A. filed a Motion to Dismiss, or in the Alternative for a More Definite Statement, based on the plaintiff's failure to identify
which products or services offered by Visa U.S.A. purportedly infringe which of the plaintiff's patents on October 12, 2007. The court denied the motion on
October 29, 2007. On November 13, 2007, Visa U.S.A. filed its answer and counterclaims alleging that Visa does not infringe the plaintiff's patents, that the
plaintiff's patents are invalid, and that the plaintiff's patents are unenforceable due to prosecution laches and inequitable conduct. The court issued an order on
December 13, 2007 setting procedural deadlines for the claim construction and scheduling a Markman hearing in May 2008.
Note 21—Subsequent Event
Visa Inc. Reorganization
Effective as of October 1, 2007, the Company, Visa International, Visa Canada and Inovant LLC consummated a reorganization and became direct or
indirect subsidiaries of Visa Inc., a Delaware stock corporation. Visa Europe did not become a subsidiary of Visa Inc. but rather remained owned by its
member financial institutions and entered into a set of contractual arrangements with Visa Inc. in connection with the reorganization.
In the reorganization, Visa Inc. issued different classes and series of common stock reflecting the different rights and obligations of Visa financial
institution members and Visa Europe based on the geographic region in which they are located. In addition to the common stock, Visa Inc. provided other
consideration to Visa Europe in exchange for its ownership in Visa International and Inovant based on the fair value of these interests received by Visa Inc.
The information in these consolidated financial statements is historical and therefore reflects certain contractual and other arrangements between Visa
affiliates that are no longer in place as a result of the October 2007 reorganization.
American Express Litigation Settlement
On November 1, 2007, Visa Inc., Visa U.S.A. and Visa International entered into an agreement with American Express to settle previously disclosed
litigation, American Express Travel Related Services Co., Inc. v. Visa U.S.A. Inc. et al, pending since 2004. The settlement resolves all current litigation
between American Express and Visa U.S.A. and Visa International and the related litigation between American Express and U.S. Bancorp, Wells Fargo &
Co., Washington Mutual, JP Morgan Chase & Co. and Capital One Financial Corp. Visa Inc.'s board of directors approved the settlement agreement on
November 6, 2007 and Visa U.S.A.'s members approved the settlement agreement on November 9, 2007.
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