HP 2008 Annual Report Download - page 152

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 17: Litigation and Contingencies (Continued)
appeals court in Munich to which HP has responded. A hearing date has been set by the court for
February 18, 2010.
Based on industry opposition to the extension of levies to digital products, HP’s assessments of the
merits of various proceedings and HP’s estimates of the units impacted and levies, HP has accrued
amounts that it believes are adequate to address the matters described above. However, the ultimate
resolution of these matters and the associated financial impact on HP, including the number of units
impacted, the amount of levies imposed and the ability of HP to recover such amounts through
increased prices, remains uncertain.
Sky Subscribers Services Limited and British Sky Broadcasting Limited v. EDS and EDS Limited (UK)
is a lawsuit filed on August 17, 2004 by Sky Subscribers Services Limited and British Sky Broadcasting
Limited against Electronic Data Systems Corporation (‘‘EDS’’), a company that HP acquired in
August 2008, and EDS Limited (UK) (‘‘EDS UK’’), one of EDS’s subsidiaries, alleging deceit, negligent
misrepresentation, negligent misstatement and breach of contract. The claims arose out of a customer
relationship management project that was awarded to EDS in 2000, the principal objective of which
was to develop a customer call center in Scotland. EDS’s main role in the project was as systems
integrator. On November 12, 2004, EDS and EDS UK filed their defense and counterclaim denying the
claims and seeking damages for monies owed under the contract. The trial of this action commenced
on October 15, 2007, and final arguments concluded on July 30, 2008. At trial, the plaintiffs claimed
damages in excess of £700 million, and EDS and EDS UK counterclaimed for damages of
approximately £5 million. A decision from the court is expected in early 2009.
Skold, et al. v. Intel Corporation and Hewlett-Packard Company is a lawsuit in which HP was joined
on June 14, 2004 that is pending in state court in Santa Clara County, California. The lawsuit alleges
that HP (along with Intel) misled the public by suppressing and concealing the alleged material fact
that systems that use the Intel Pentium 4 processor are less powerful and slower than systems using the
Intel Pentium III processor and processors made by a competitor of Intel. The plaintiffs seek
unspecified damages, restitution, attorneys’ fees and costs, and certification of a nationwide class. A
hearing on plaintiffs’ renewed motion for class certification was held on October 22, 2008, and the trial
court again denied the plaintiffs’ motion for class certification without prejudice to plaintiffs filing yet
another motion to certify a different class.
Inkjet Printer Litigation. As described below, HP is involved in several lawsuits claiming breach of
express and implied warranty, unjust enrichment, deceptive advertising and unfair business practices
where the plaintiffs have alleged, among other things, that HP employed a ‘‘smart chip’’ in certain
inkjet printing products in order to register ink depletion prematurely and to render the cartridge
unusable through a built-in expiration date that is hidden, not documented in marketing materials to
consumers, or both. The plaintiffs have also contended that consumers received false ink depletion
warnings and that the smart chip limits the ability of consumers to use the cartridge to its full capacity
or to choose competitive products.
• A consolidated lawsuit captioned In re HP Inkjet Printer Litigation is pending in the United
States District Court for the Northern District of California where the plaintiffs are seeking class
certification, restitution, damages (including enhanced damages), injunctive relief, interest, costs,
and attorneys’ fees. On January 4, 2008, the court heard plaintiffs’ motions for class certification
and to add a class representative and HP’s motion for summary judgment. On July 25, 2008, the
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