Apple 2005 Annual Report Download - page 21

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Cagney v. Apple Computer, Inc.
Plaintiff filed this purported class action on January 9, 2004 in Los Angeles County Superior Court, alleging improper collection of sales tax in
transactions involving mail-in rebates. The complaint alleges violations of California Business and Professions Code §17200 (unfair
competition) and seeks restitution and other relief. The Company filed an answer on February 20, 2004, denying all allegations and asserting
numerous affirmative defenses. The Company filed a motion to disqualify Plaintiff’s counsel, which the Court denied. The Company filed a
petition for a writ of mandate with respect to this ruling and the Court of Appeal issued an order to show cause as to why the writ should not
issue. Plaintiff’s lead counsel subsequently withdrew. On February 17, 2005 the Court of Appeal ruled that the trial court abused its discretion
in failing to grant the Company’s motion to disqualify and ordered the trial court to disqualify both of Plaintiff’s law firms upon remand. The
trial court issued the disqualification order on May 12, 2005. On May 9, 2005 Plaintiff substituted new counsel. The Company has obtained an
opinion on the tax issue from the State Board of Equalization. Discovery is stayed.
Clark v. Apple Computer, Inc.
Plaintiff filed this purported class action on February 2, 2005 in Santa Clara County Superior Court alleging defects in the Company’s “yo-yo”
power adapters. Plaintiffs request unspecified damages and other relief. The parties reached a tentative settlement in this matter. The Court
granted preliminary approval of the settlement on April 19, 2005. On November 29, 2005, the Court continued the hearing on final settlement
approval until January 10, 2006, when all claims will have been received and completely processed and relevant claim information has been
reported to the Court. Settlement of this matter on the terms preliminarily approved by the Court will not have a material effect on the
Company’s financial position or results of operation.
Compression Labs, Inc. v. Apple Computer, Inc., et al.; Apple v. Compression Labs, Inc., et al.
Plaintiff Compression Labs, Inc. filed this patent infringement action on April 22, 2004 against the Company and twenty-seven other
defendants in the United States District Court for the Eastern District of Texas, Marshall Division, alleging infringement of U.S. patent
4,698,672 (the ‘672 patent). Plaintiff alleges that the Company infringes the patent by complying with the JPEG standard as defined by CCITT
Recommendation T.81 entitled “Information Technology—Digital Compression and Coding of Continuous Tone Still Images—Requirements
and Guidelines.” Plaintiff seeks unspecified damages and other relief.
On July 2, 2004, the Company and several other defendants in the Texas action filed a lawsuit in the United States District Court in Delaware
against Compression Labs, Inc. and two other companies, requesting a declaratory judgment of noninfringement, invalidity, implied license,
and unenforceability with respect to the ‘672 patent. Additional actions regarding this patent have been filed in other jurisdictions. On
February 16, 2005, the Panel on Multi-District Litigation (MDL) granted a petition filed by certain defendants, seeking coordination and
transfer of all of these cases to one court for pre-trial proceedings. The MDL Panel has transferred all of the cases to the Northern District of
California. The defendants in the Texas and Delaware actions had filed motions to dismiss prior to the transfer and both motions are still
pending. A Markman hearing is set for February 13, 2006.
Contois Music Technology LLC v. Apple Computer, Inc.
Plaintiff Contois Music Technology (“Contois”) filed this action on June 13, 2005 in the United States District Court for Vermont, alleging
infringement by the Company of U.S. Patent No. 5,864,868, entitled “Computer Control System and User Interface for Media Playing
Devices.” The complaint, which was served on October 4, 2005, seeks unspecified damages and other relief. The Company filed an answer on
November 23, 2005 denying all material allegations and asserting numerous affirmative defenses.
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