Charter 2007 Annual Report Download - page 38

ITEM 3. LEGAL PROCEEDINGS.
Patent Litigation
Ronald A. Katz Technology Licensing, L.P. v. Charter Communica-
tions, Inc. et. al. On September 5, 2006, Ronald A. Katz Technol-
ogy Licensing, L.P. served a lawsuit on Charter and a group of
other companies in the U.S. District Court for the District of
Delaware alleging that Charter and the other defendants have
infringed its interactive telephone patents. Charter denied the
allegations raised in the complaint. On March 20, 2007, the
Judicial Panel on Multi-District Litigation transferred this case,
along with 24 others, to the U.S. District Court for the Central
District of California for coordinated and consolidated pretrial
proceedings. Discovery is now proceeding. Charter is vigorously
contesting this matter.
Rembrandt Technologies, LP v. Charter Communications et al.
(Rembrandt I) On June 6, 2006, Rembrandt Technologies, LP
sued Charter and several other cable companies in the U.S. Dis-
trict Court for the Eastern District of Texas, alleging patent
infringement. Rembrandt’s complaint alleges that each defend-
ant’s high speed data service infringes three patents owned by
Rembrandt. Charter has denied Rembrandt’s allegations.
Rembrandt Technologies, LP v. Charter Communications, Inc. et al.
(Rembrandt II) On November 30, 2006, Rembrandt Technologies,
LP again filed suit against Charter and another cable company in
the U.S. District Court for the Eastern District of Texas, alleging
patent infringement of an additional five patents allegedly related
to high-speed Internet over cable. Charter has denied Rem-
brandt’s allegations.
On June 18, 2007, the Rembrandt I and Rembrandt II cases
were combined in a multi-district litigation proceeding in the
U.S. District Court for the District of Delaware to conduct pre-
trial proceedings before sending the cases back to the U.S. District
Court for the Eastern District of Texas for trial, if necessary.
Charter is vigorously contesting both Rembrandt I and Rem-
brandt II. On November 21, 2007, certain vendors of the
equipment that is the subject of Rembrandt I and Rembrandt II
cases filed a declaratory judgment against Rembrandt seeking a
declaration of non-infringement and invalidity on all but one of
the patents at issue in those cases. On January 16, 2008
Rembrandt filed an answer in that case and a third party
counterclaim against Charter and the other MSOs for infringe-
ment of all but one of the patents already at issue in Rembrandt
I and Rembrandt II. On February 7, 2008, Charter filed an
answer to Rembrandt’s counterclaims and added a counter-
counterclaim against Rembrandt for a declaration of non-
infringement on the remaining patent.
Verizon Services Corp. et al. v. Charter Communications,
Inc. et al. On February 5, 2008, four Verizon entities sued
Charter Communications, Inc. and two other Charter subsidiaries
in the U.S. District Court for the Eastern District of Texas,
alleging that the provision of telephone service by Charter
infringes eight patents owned by the Verizon entities. Charter
was served with the complaint on February 6, 2008 and intends
to vigorously defend against this lawsuit.
We are also a defendant or co-defendant in several other
unrelated lawsuits claiming infringement of various patents relat-
ing to various aspects of our businesses. Other industry partic-
ipants are also defendants in certain of these cases, and, in many
cases including those described above, we expect that any
potential liability would be the responsibility of our equipment
vendors pursuant to applicable contractual indemnification
provisions.
In the event that a court ultimately determines that we
infringe on any intellectual property rights, we may be subject to
substantial damages and/or an injunction that could require us
or our vendors to modify certain products and services we offer
to our subscribers, as well as negotiate royalty or license
agreements with respect to the patents at issue. While we believe
the lawsuits are without merit and intend to defend the actions
vigorously, all of these patent lawsuits could be material to our
consolidated results of operations of any one period, and no
assurance can be given that any adverse outcome would not be
material to our consolidated financial condition, results of opera-
tions, or liquidity.
Other Proceedings
We also are party to other lawsuits and claims that arise in the
ordinary course of conducting our business. The ultimate out-
come of these other legal matters pending against us or our
subsidiaries cannot be predicted, and although such lawsuits and
claims are not expected individually to have a material adverse
effect on our consolidated financial condition, results of opera-
tions, or liquidity, such lawsuits could have in the aggregate a
material adverse effect on our consolidated financial condition,
results of operations, or liquidity. Whether or not we ultimately
prevail in any particular lawsuit or claim, litigation can be time
consuming and costly and injure our reputation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the
fourth quarter of the year ended December 31, 2007.
CHARTER COMMUNICATIONS, INC. 2007 FORM 10-K
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