Apple 2005 Annual Report Download - page 19

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Item 3. Legal Proceedings
The Company is subject to various legal proceedings and claims that are discussed below. The Company is also subject to certain other legal
proceedings and claims that have arisen in the ordinary course of business and which have not been fully adjudicated. In the opinion of
management, the Company does not have a potential liability related to any current legal proceedings and claims that would individually or in
the aggregate have a material adverse effect on its financial condition, liquidity or results of operations. However, the results of legal
proceedings cannot be predicted with certainty. Should the Company fail to prevail in any of these legal matters or should several of these legal
matters be resolved against the Company in the same reporting period, the operating results of a particular reporting period could be materially
adversely affected. The Company settled certain matters during 2005 that did not individually or in the aggregate have a material impact on the
Company’s results of operations.
Advanced Audio Devices LLC v. Apple Computer, Inc.
Plaintiff Advanced Audio Devices (AAD) filed this action on March 3, 2005 in the United States District Court for the Northern District of
Illinois, Eastern Division, alleging infringement by the Company of U.S. Patent 6,587,403 entitled “Music Jukebox.” The complaint sought
unspecified damages and other relief. The Company filed an answer on May 4, 2005 denying all material allegations and asserting numerous
affirmative defenses. The parties have reached a settlement. Settlement of this matter did not have a material effect on the Company’s financial
position or results of operation.
Apple Corps Ltd. v. Apple Computer, Inc.; Apple Computer, Inc. v. Apple Corps Ltd.
Plaintiff Apple Corps filed this action on July 4, 2003 in the High Court of Justice, Chancery Division, in London alleging that the Company
has breached a 1991 agreement that resolved earlier trademark litigation between the parties regarding use of certain Apple marks. Plaintiff
seeks an injunction, unspecified damages, and other relief. The Company filed a motion on October 13, 2003, challenging jurisdiction in the
U.K. The Court denied this motion on April 7, 2004. The Company filed an appeal of the Court’s decision but subsequently withdrew the
appeal. In November 2004, Plaintiff served the Company with an Amended Bill of Particulars and on December 23, 2004 the Company filed a
Defence. Plaintiff has indicated its intention to file a Re-Amended Bill of Particulars. The Company’s Defence to the Re-Amended Bill of
Particulars is not yet due. Trial is set for the week of March 27, 2006.
On October 8, 2003, the Company filed a lawsuit against Apple Corps in the United States District Court for the Northern District of California
requesting a declaratory judgment that the Company has not breached the 1991 agreement. Apple Corps challenged jurisdiction in the
California case but the Court denied that challenge on March 25, 2004. Apple Corps subsequently prevailed on a motion to stay the California
case during the pendency of the U.K. action. The Company has dismissed the California lawsuit without prejudice.
Bader v. Anderson; Bader v. Apple Computer, Inc. et. al.
Plaintiff filed this purported shareholder derivative action against the Company and each of its current executive officers and members of its
Board of Directors on May 19, 2005 in Santa Clara County Superior Court asserting claims for breach of fiduciary duty, material misstatements
and omissions, and violations of California Businesses and Professions Code §17200 (unfair competition). Plaintiff alleges that the Company’s
March 14, 2005 proxy statement was false and misleading for failure to disclose certain information relating to the Apple Computer, Inc.
Performance Bonus Plan which was approved by shareholders at the annual meeting held on April 21, 2005. Plaintiff, who ostensibly brings
suit on the Company’s behalf, has made no demand on the Board of Directors and alleges that such demand is excused. Plaintiff seeks
injunctive and other relief for purported injury to the Company. On July 27, 2005, Plaintiff filed an amended complaint alleging that, in
addition to the purported derivative claims,
adoption of the bonus plan and distribution of the proxy statement describing that plan also inflicted
injury on her
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