America Online 2011 Annual Report Download - page 31

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Table of Contents
We believe that our facilities are sufficient to meet our current and projected needs. We also have an ongoing process to review and update our real
estate portfolio to meet changing business needs.
ITEM 3. LEGAL PROCEEDINGS
On April 30, 2008, Bascom Global Internet Services, Inc. filed claims against AOL Inc. in the Eastern District Court of New York alleging that AOL's
WebUnlock Parental Controls technology infringes Bascom's U.S. Patent No. 5,987,606. Bascom sought $67,000,000 in damages. During the fourth quarter
of 2011, Bascom and AOL entered into a settlement agreement and settled the claims for $8,500,000.
In addition to the matter described above, we are a party to a variety of claims, suits and proceedings that arise in the normal course of business,
including actions with respect to intellectual property claims, tax matters, labor and unemployment claims, commercial claims, claims related to our business
model for content creation and other matters. With respect to tax matters, we have received tax assessments in certain states related to sales and use taxes on
our business operations. We have appealed these tax assessments and plan to vigorously contest these matters. In addition, we have received assessments in
certain foreign countries related to income tax and transfer pricing, and plan to vigorously contest these matters as well. In certain instances, we were required
to pay a portion of the tax assessment in order to proceed with the dispute of the assessment. While the results of such normal course claims, suits and
proceedings cannot be predicted with certainty, management does not believe that, based on current knowledge and the likely timing of resolution of various
matters, any additional reasonably possible potential losses above the amount accrued for such matters would be material to our financial statements.
Regardless of the outcome, legal proceedings can have an adverse effect on us because of defense costs, diversion of management resources and other factors.
See "Item 1A—Risk Factors—Risks Relating to Our Business—If we cannot continue to enforce and protect our intellectual property rights, our business
could be adversely affected" and "Item 1A—Risk Factors—Risks Relating to Our Business—We have been, and may in the future be, subject to claims of
intellectual property infringement or tort law violations that could adversely affect our business" included in our Annual Report.
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