iRobot 2007 Annual Report Download - page 115

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On August 17, 2007, the Company filed a lawsuit in Massachusetts Superior Court against Robotic FX, Inc.
and Jameel Ahed alleging, among other things, misappropriation of trade secrets and breach of contract, and
seeking both injunctive and monetary relief. The case was subsequently removed to the United States District Court
for the District of Massachusetts. On November 2, 2007, the court issued a preliminary injunction, and on
December 21, 2007 issued a permanent injunction, against Robotic FX, Inc. and Mr. Ahed preventing the sale of
products using certain of our trade secrets, including the Robotic FX Negotiator product.
In addition, on August 17, 2007, the Company filed a lawsuit in the United States District Court for the
Northern District of Alabama against Robotic FX, Inc. alleging willful infringement of two patents owned by the
Company, and seeking both injunctive and monetary relief. On December 21, 2007, the court entered a judgment
that Robotic FX, Inc. knowingly infringed on both asserted patents.
In a related settlement, Robotic FX, Inc. will be dissolved and certain residual assets retained by the Company
at its election. Mr. Ahed is prohibited from participating in competitive activities in the robotics industry for five
years.
The cumulative litigation and settlement-related expenditures associated with this dispute are expected to total
approximately $3.0 million, including an obligation to make cash payments up to $0.7 million through 2012,
contingent upon Mr. Ahed and Robotic FX, Inc. continuing to meet obligations pursuant to various agreements,
including but not limited to certain non-competition provisions. These contingent payments will be expensed, when
and if earned.
Lease Obligations
The Company leases its facilities. Rental expense under operating leases for 2007, 2006 and 2005 amounted to
$2.1 million, $2.1 million, and $1.3 million, respectively. Future minimum rental payments under operating leases
were as follows as of December 29, 2007:
Operating
Leases
2008 ................................................................ $ 3,295
2009 ................................................................ 2,337
2010 ................................................................ 2,226
2011 ................................................................ 2,210
2012 ................................................................ 2,162
Thereafter ............................................................ 15,333
Total minimum lease payments .......................................... $27,563
Guarantees and Indemnification Obligations
The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to
these agreements, the Company indemnifies and agrees to reimburse the indemnified party for losses incurred by
the indemnified party, generally the Company’s customers, in connection with any patent, copyright, trade secret or
other proprietary right infringement claim by any third party with respect to the Company’s software. The term of
these indemnification agreements is generally perpetual any time after execution of the agreement. The maximum
potential amount of future payments the Company could be required to make under these indemnification
agreements is unlimited. The Company has never incurred costs to defend lawsuits or settle claims related to
these indemnification agreements. As a result, the Company believes the estimated fair value of these agreements is
minimal. Accordingly, the Company has no liabilities recorded for these agreements as of December 29, 2007 and
December 30, 2006, respectively.
81
iROBOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Form 10-K