Charter 2012 Annual Report Download - page 39

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St. Louis corporate office. We lease space for our offices in Denver, Colorado and for our corporate headquarters in Stamford,
Connecticut.
The physical components of our cable systems require maintenance as well as periodic upgrades to support the new services and
products we introduce. See “Item 1. Business – Our Network Technology.” We believe that our properties are generally in good
operating condition and are suitable for our business operations.
Item 3. Legal Proceedings.
Patent Litigation
Ronald A. Katz Technology Licensing, L.P. v. Charter Communications, Inc. et. al. In 2006, Ronald A. Katz Technology Licensing,
L.P. filed a lawsuit against Charter and other parties in the U. S. District Court for the District of Delaware alleging that Charter
and the other defendants infringed its interactive call processing patents. In 2007, the lawsuit was combined with other cases filed
by Katz in a multi-district litigation proceeding in the U.S. District Court for the Central District of California for coordinated and
consolidated pretrial proceedings. In 2010, the court denied Katz's motion for summary judgment, struck two affirmative defenses
that Charter had raised, invalidated one of the nine remaining claims Katz had asserted and entered a ruling restricting Katz's
damages claims by limiting the time period from which Katz may seek damages. A consolidated appeal involving other co-
defendants was held, with the U.S. Court of Appeals for the Federal Circuit confirming invalidity of certain claims and remanding
certain rulings back to the district court for further consideration. Based on the Federal Circuit's opinion, the district court ordered
additional summary judgment briefing and some limited pre-trial briefing. In 2012, the court granted Charter's second motion for
summary judgment and invalidated one of the claims asserted against Charter, leaving eight claims. In related litigation against
others, the court invalidated four of these patent claims which will result in four claims being asserted against Charter when this
ruling is applied in our case. Charter initiated ex parte examinations with the U.S. Patent Office challenging the validity of all
eight patent claims asserted against Charter. The Patent Office granted all of these examinations finding a substantial new question
as to whether the claims are valid over prior art not previously considered by the Patent Office. When all pre-trial proceedings
are completed, any matters remaining for trial will be transferred back to the District Court in Delaware. No trial date has been
set. Charter continues to vigorously contest this matter although we cannot predict the ultimate outcome of this lawsuit nor can
we reasonably estimate a range of possible loss.
We are also defendants or co-defendants in several other unrelated lawsuits claiming infringement of various patents relating to
various aspects of our businesses. Other industry participants are also defendants in certain of these cases.
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, no assurance can be given that any adverse outcome would not be material to
our consolidated financial condition, results of operations, or liquidity.
Bankruptcy Proceedings
On March 27, 2009, Charter filed a Chapter 11 petition in the United States Bankruptcy Court for the Southern District of New
York. On November 17, 2009, the Bankruptcy Court issued its Order and Opinion confirming the Plan over the objections of
various objectors. Charter consummated the Plan on November 30, 2009.
Two appeals are pending relating to confirmation of the Plan, the appeals by (i) Law Debenture Trust Company of New York
(“LDT”) (as the Trustee with respect to the $479 million in aggregate principal amount of 6.50% convertible senior notes due
2027 issued by Charter which are no longer outstanding following consummation of the Plan and the holders of which already
received distributions of approximately $168 million pursuant to the Plan); and (ii) R2 Investments, LDC (“R2 Investments”) (a
former equity interest holder in Charter). The appeals by LDT and R2 Investments were denied by the District Court for the Southern
District of New York in March 2011. On August 31, 2012, the 2nd Circuit Court of Appeals unanimously affirmed the district
court's decision holding that R2 Investments and LDT's appeals are equitably moot. Thereafter, R2 Investments and LDT sought
a rehearing en banc with the 2nd Circuit which was denied. On January 10, 2013, R2 Investments and LDT filed a petition for a
writ of certiorari with the United States Supreme Court, asking that court to review the 2nd Circuit's decision claiming there is a
split among the Circuit Courts regarding the equitable mootness principle that the Supreme Court should resolve. Charter continues
to vigorously contest this matter although we cannot predict the ultimate outcome of this lawsuit nor can we reasonably estimate
a range of possible loss.