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two of the Company’
s patents. Also on March 3, 2010 j2 Global moved to transfer the case to the United States District Court for the Central
District of California, or in the alternative to stay the case. On June 17, 2010 the Court granted the Company’
s motion, transferring the case to
the Central District of California. Discovery has not yet commenced.
On September 15, 2006, one of the Company’
s affiliates filed a patent infringement suit against Integrated Global Concepts, Inc.
(“IGC”)
in the United States District Court for the Northern District of Georgia. On May 13, 2008, IGC filed counterclaims alleging violations of
Section 2 of the Sherman Act and breach of contract. IGC is seeking damages, including treble and punitive damages, an injunction against
further violations, divestiture of certain assets, attorneys’
fees and costs. On June 13, 2008, the Company moved to dismiss the amended
counterclaims. On February 18, 2009, the Court granted j2 Global’
s motion to stay the case pending the conclusion of our appeal of a summary
judgment ruling of non
-infringement in another case
which involved the same patents and issues at issue in this action. On January 22, 2010, the
Federal Circuit affirmed the District Court’s non-
infringement ruling in the other case. On June 7, 2010 the Court lifted the stay. On July 16,
2010, the Company renewed its motion to dismiss IGC’s amended counterclaims. The Company’s motion was heard on February 15, 2011
and
the Court has yet to issue a decision.
On May 9, 2007, Bear Creek Technologies, Inc. (“Bear Creek”)
filed suit against j2 Global in the United States District Court for the
Eastern District of Texas, alleging infringement of U.S. Patent Number 6,985,494 (the “ ‘494 patent”).
Bear Creek is seeking damages in at least
the amount of a reasonable royalty, a permanent injunction against continued infringement, treble damages, attorneys’
fees, interest and costs.
On June 29, 2007, the Company filed an answer to the complaint denying liability, asserting affirmative defenses and asserting counterclaims of
non-infringement and invalidity. On September 21, 2007, Bear Creek filed its reply to the Company’
s counterclaims, denying each one. On
February 11, 2008, j2 Global filed a request for reexamination of the ‘
494 patent with the USPTO. On February 28, 2008, the Court stayed the
case during the pendency of the reexamination proceedings. On February 12, 2009, the USPTO finally rejected the reexamined claims and Bear
Creek failed to file a response within the prescribed timeframe. On June 16, 2009, the USPTO issued a right to appeal the examiner’
s rejection.
Bear Creek filed its appeal on September 16, 2009. j2 Global filed its response to Bear Creek’
s appeal on October 14, 2009. The Examiner
provided an answer on June 18, 2010, agreeing with the great majority of the Company’s positions. Bear Creek’
s reply brief was filed July 19,
2010, and the Company is awaiting a decision on Bear Creek’s appeal. On September 10, 2009, the Court “Administratively Closed”
the case
pending resolution of the reexamination proceeding.
On May 20, 2010, Lea Anne Wolfe filed a lawsuit against the Company in Los Angeles Superior Court. Wolfe asserted the following
claims: (1) physical disability discrimination in violation of the California Fair Employment and Housing Act (“FEHA”); (
2) failure to
accommodate in violation of FEHA; (3) failure to engage in the interactive process in violation of FEHA and (4) failure to pay wages in
violation of California Labor Code Sections 201 and 218. Wolfe sought compensatory damages (including back wages, unpaid wages and
emotional distress); interest and costs; attorneys’
fees; a cease and desist order against j2 Global; and an order mandating the Company and its
employees to undergo anti-
discrimination training. The Company filed an Answer on June 24, 2010. At the Case Management Conference on
October 14, 2010, the Court ordered the parties to attend private mediation, which took place on January 19, 2011. The parties entered into a
settlement agreement on February 3, 2011, and in conjunction with that settlement, dismissal of the action against the Company is pending.
On June 24, 2010, Demeter Technology, LLC (“Demeter”)
filed suit against twenty defendants, including the Company and an affiliate,
in the United States District Court for the Eastern District of Texas, Marshall Division. The complaint alleged infringement of U.S. Patent
Number 6,157,706. Demeter sought a permanent injunction against j2 Global for continued infringement, and damages, as well as attorneys
’
fees, interest and costs. The Company settled the matter in December 2010. In connection with the settlement, the Court dismissed the case
against the Company on December 27, 2010.
On September 7, 2010, Wordcheck Tech, LLC (“Wordcheck”) filed suit against fifty-
seven defendants, including j2 Global and two
affiliates, in the United States District Court for the Eastern District of Texas, Tyler Division. The complaint alleges infringement of U.S. Patent
Number 6,782,510. Wordcheck is seeking a permanent injunction against continued infringement, damages, treble damages, attorney
’
s fees,
interest and costs. The Company filed an answer to the complaint on November 18, 2010. Discovery has not yet commenced.
In December 2008, AGV Sports Group, Inc. and other co-plantiffs (collectively, “AGV”)
filed suit in the United States District
Court for the District of Maryland against the Company’s new-acquired subsidiary Protus IP Solutions, Inc. (“Protus”), three of Protus’
employees and other co-
defendants for allegedly sending at least 974 unsolicited fax advertisements to AGV in violation of the federal
Telephone Consumer Protection Act of 1991 (the “TCPA”) and the Maryland Telephone Consumer Protection Act (“MD-TCPA”).
AGV seeks
judgment against Protus and the individual Defendants for $500 for each alleged violation of the TCPA, trebled for willfulness pursuant to the
TCPA, and $500 for each violation of the MD-
TCPA. Protus filed a successful motion to dismiss for lack of personal jurisdiction on behalf of its
three employees named as individual defendants. The case is in discovery.
On February 17, 2011, Emmanuel Pantelakis (“Pantelakis”) filed suit against Protus in the Ontario Supreme Court of Justice alleging
that Protus beached a contract with Pantelakis in connection with Protus' e-mail marketing services. Pantelakis is seeking damages, attorneys’
fees, interest and costs. Protus has not yet filed a responsive pleading in the case.
j2 Global does not believe, based on current knowledge, that any of the foregoing legal proceedings or claims, after giving effect to
existing reserves, is likely to have a material adverse effect on the Company’
s consolidated financial position, results of operations or cash flows.
However, depending on the amount and the timing, an unfavorable resolution of some or all of these matters could materially affect j2 Global’
s
consolidated financial position, results of operations or cash flows in a particular period. The Company has not accrued for a loss contingency
relating to certain of these legal proceedings because unfavorable outcomes are not considered by management to be probable or reasonably
estimable.
In addition to the above-referenced matters, several pending proceedings were dismissed with prejudice following the Company’
s
acquisition of Venali, Inc. (
“
Venali
”
)
and Protus. These include the following: