Visa 2007 Annual Report Download - page 35

Table of Contents
• a patent infringement claim against Visa U.S.A. and Visa International regarding certain Visa contactless payment technology;
• a patent infringement claim against Visa U.S.A. regarding prepaid card products; and
• two civil investigative demands issued by the Antitrust Division of the U.S. Department of Justice to Visa U.S.A., one concerning PIN debit and
Visa U.S.A.'s No Signature Required Program, and the other regarding Visa U.S.A.'s agreements with financial institutions that issue Visa debit
cards, respectively.
Private plaintiffs often seek class action certification in cases against us, particularly in cases involving merchants and consumers, due to the size and
scope of our business and the large number of parties that are involved in our payment system. Although our retrospective responsibility plan is intended to
address potential monetary liabilities arising from the specific litigation described under Item 3—"Legal Proceedings—Retrospective Responsibility Plan—
Covered Litigation," the plan does not cover other litigation that we currently face, and will not cover litigation, including state court litigation, that we may
face in the future, except for cases that include claims for damages relating to the period prior to our proposed initial public offering that are transferred for
pre-trial proceedings or otherwise included in the interchange litigation. We cannot predict whether or to what extent we will be subject to litigation liability
that is not covered by our retrospective responsibility plan. If we are unsuccessful in our defense against any of the proceedings described above or in any
future proceedings, we may be forced to pay substantial damages and/or change our business practices or our pricing structure, any of which could have a
material adverse effect on our revenues, operating results, prospects for future growth and overall business.
We have received, and we may in the future receive, notices or inquiries from other companies suggesting that we may be infringing a pre-existing
patent or that we need to license use of their patents to avoid infringement. Such notices may, among other things, threaten litigation against us. Holders of
patents may pursue claims against us in the future if they believe their patents are being infringed by our product or service offerings. Based on our experience
with such claims to date, we do not believe that any such claims would prevent us from continuing to operate our payments system or market any of our
significant core products and services in substantially the same or equivalent manner as we have to date.
Limitations on our business and other penalties resulting from litigation or litigation settlements may materially and adversely affect our revenues
and profitability.
Certain limitations have been placed on our business in recent years as a result of litigation and litigation settlements. For example, as a result of the
June 2003 settlement of a U.S. merchant lawsuit against Visa U.S.A., merchants are able to reject Visa consumer debit cards in the United States while still
accepting other Visa-branded cards, and vice versa. In addition, following the final judgment entered in the litigation the U.S. Department of Justice, or DOJ,
brought against Visa U.S.A. and Visa International in 1998, as of October 2004, members of Visa U.S.A. may issue certain competing payment cards. Since
this final judgment, several members of Visa U.S.A. have begun to issue, or have announced that they will issue, American Express or Discover-branded
cards. See Item 3—"Legal Proceedings—Other Legal and Regulatory Proceedings—Department of Justice Antitrust Case and Related Litigation."
In addition, pursuant to a court order, certain Visa U.S.A. debit issuers may be able to terminate some parts of their agreements with us. Visa U.S.A.'s
bylaws provided that a settlement service fee was to be paid by certain Visa U.S.A. members that shifted a substantial portion of their offline debit card
volume to another debit brand unless that shift was to the American Express or Discover brands. In June 2007, a federal court ruled that the settlement service
fee violated the final judgment entered in the case the DOJ brought against Visa U.S.A., Visa International and MasterCard in 1998. See Item 3—"Legal
Proceedings—Other Legal and Regulatory Proceedings—Department of Justice Antitrust Case and Related Litigation." As a remedy, the court ordered Visa
U.S.A. to repeal the settlement service fee bylaw. Further, any Visa U.S.A. debit issuer subject to the settlement
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