Apple 2009 Annual Report Download - page 31

Table of Contents
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 County 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 and on April 28, 2009, the Court granted final approval of the settlement. On May 21, 2009, an objector filed a notice of appeal.
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, and the Court
issued its Markman ruling on January 12, 2009. The Company filed a motion for summary judgment of inequitable conduct on April 10, 2009,
and filed motions for summary judgment of invalidity and lack of written description on April 30, 2009. The Company has also filed a motion to
exclude portions of plaintiff’s expert’
s report and testimony regarding damages. Plaintiff has filed a motion to exclude damages testimony
relating to U.S. Patent No. 5,724,567. The Company has also filed a motion for sanctions.
Mediostream, Inc. v. Acer America Corp. et al.
Plaintiff filed this action against the Company, Acer America Corp., Dell, Inc. and Gateway, Inc. on August 28, 2007 in the United States
District Court for the Eastern District of Texas, Marshall Division, alleging infringement of U.S. Patent No. 7,009,655, entitled “
Method and
System for Direct Recording of Video Information onto a Disk Medium.”
An amended complaint was served on November 7, 2007. The
amended complaint seeks unspecified damages and other relief. On January 25, 2008, the Company filed an answer to the
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