Apple 2008 Annual Report Download - page 32

Table of Contents
complaint on the Company. On September 15, 2008, defendants filed a motion to quash service of summons. On October 17, 2008, the Court
denied defendants’ motion to quash. On October 20, 2008, defendants requested consolidation of this action with In re Apple Computer, Inc.
Derivative Litigation
, No. 1:06CV066692, and a stay of the action.
In re Apple iPod Nano Products Liability Litigation (formerly Wimmer v. Apple Computer, Inc.; Moschella, et al., v. Apple Computer, Inc.
;
Calado, et al. v. Apple Computer, Inc. ; Kahan, et al., v. Apple Computer, Inc .; Jennings, et al., v. Apple Computer, Inc. ; Rappel v. Apple
Computer, Inc. ; Mayo v. Apple Computer, Inc. ; Valencia v. Apple Computer, Inc. ; Williamson v. Apple Computer, Inc. ; Sioson v. Apple
Computer, Inc.
Beginning on October 19, 2005, eight complaints were filed in various United States District Courts and two complaints were filed in California
State Court alleging that the Company’s iPod nano was defectively designed so that it scratches excessively during normal use, rendering the
screen unreadable.
The federal actions were coordinated in the United States District Court for the Northern District of California and assigned to the Hon. Ronald
Whyte pursuant to an April 17, 2006 order of the Judicial Panel on Multidistrict Litigation. Plaintiffs filed a First Consolidated and Amended
Master Complaint on September 21, 2006, alleging violations of California and other states’ consumer protection and warranty laws and
claiming unjust enrichment. The Master Complaint alleges two putative plaintiff classes: (1) all U.S. residents (excluding California residents)
who purchased an iPod nano that was not manufactured or designed using processes necessary to ensure normal resistance to scratching of the
screen; and (2) all iPod nano purchasers other than U.S. residents who purchased an iPod nano that was not manufactured or designed using
processes necessary to ensure normal resistance to scratching of the screen. The Company answered the Master Complaint on November 20,
2006.
The two California State Court actions were coordinated on May 4, 2006, and assigned to the Hon. Carl West in Los Angeles Superior Court.
Plaintiffs filed a Consolidated Amended Class Action Complaint on June 8, 2006, alleging violations of California state consumer protection,
unfair competition, false advertising and warranty laws and claiming unjust enrichment. The Consolidated Complaint alleges a putative plaintiff
class of all California residents who own an iPod nano containing a manufacturing defect that results in the nano being susceptible to excessive
scratching. The Company answered the Consolidated Amended Complaint on October 6, 2006. The parties have reached a settlement, which is
subject to court approval.
Two similar complaints, Carpentier v. Apple Canada, Inc ., and Royer-Brennan v. Apple Computer, Inc. and Apple Canada, Inc . were filed in
Montreal, Quebec, Canada on October 27, 2005 and November 9, 2005, respectively, seeking authorization to institute class actions on behalf of
iPod nano purchasers in Quebec. The Royer-Brennan file was stayed in May 2006 in favor of the Carpentier file. A similar complaint, Mund v.
Apple Canada Inc. and Apple Computer, Inc.
, was filed in Ontario, Canada on January 9, 2006 seeking authorization to institute a class action
on behalf of iPod nano purchasers in Canada. Apple Canada Inc. and Apple Computer, Inc. have served Notices of Intent to Defend. The parties
have reached a settlement of the Quebec cases, and have received final court approval of the settlement.
Individual Networks, LLC v. Apple, Inc.
Plaintiff filed this action against the Company on April 24, 2007 in the United States District Court for the Eastern District of Texas, Marshall
Division, alleging infringement of U.S. Patent No. 7,117,516, entitled “Method and System for Providing a Customized Media List.” Plaintiff
alleges certain features of the iTunes store infringe the patent. The complaint seeks unspecified damages and other relief. The Company filed an
answer on July 2, 2007, denying all material allegations and asserting numerous affirmative defenses. The Company also asserted counterclaims
for declaratory judgment of non-infringement and invalidity, as well as a counterclaim against Individual Networks LLC for infringement of
U.S. Patent No. 5,724,567. The trial is scheduled for November 9, 2009. The Company has filed a petition with the United States Patent and
Trademark Office requesting reexamination of U.S. Patent No. 7,117,516. The Markman hearing took place on October 8, 2008. The Company
awaits the Court’s Markman ruling.
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