eFax 2011 Annual Report Download - page 24

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On May 10, 2011, Klausner Technologies, Inc. (“Klausner”)
filed suit against 24 defendants, including us, in the United States District
Court for the Eastern District of Texas, Tyler Division. The complaint alleges infringement of U.S. Patent Numbers 5,572,576 and 5,283,818.
Klausner is seeking a permanent injunction against continued infringement, compensatory damages, attorneys’
fees, interest and costs. We filed
an answer to the complaint on September 2, 2011. Discovery has commenced.
We do not believe, based on current knowledge, that the foregoing legal proceedings or claims, including those where an unfavorable
outcome is reasonably possible, after giving effect to existing reserves, are likely to have a material adverse effect on our 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 our consolidated financial position, results of operations or cash flows in a particular period. We have 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 the amount of any losses reasonably estimable.
Item 4. Mine Safety Disclosures
Not applicable.
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