HP 2012 Annual Report Download - page 158

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 18: Litigation and Contingencies (Continued)
Litigation, Proceedings and Investigations
Copyright Levies. As described below, proceedings are ongoing or have been concluded involving
HP in certain European Union (‘‘EU’’) member countries, including litigation in Germany, Belgium
and Austria, seeking to impose or modify levies upon equipment (such as multifunction devices
(‘‘MFDs’’), personal computers (‘‘PCs’’) and printers) and alleging that these devices enable producing
private copies of copyrighted materials. Descriptions of some of the ongoing proceedings are included
below. The levies are generally based upon the number of products sold and the per-product amounts
of the levies, which vary. Some EU member countries that do not yet have levies on digital devices are
expected to implement similar legislation to enable them to extend existing levy schemes, while some
other EU member countries are expected to limit the scope of levy schemes and applicability in the
digital hardware environment. HP, other companies and various industry associations have opposed the
extension of levies to the digital environment and have advocated alternative models of compensation
to rights holders.
VerwertungsGesellschaft Wort (‘‘VG Wort’’), a collection agency representing certain copyright
holders, instituted legal proceedings against HP in the Stuttgart Civil Court seeking levies on printers.
On December 22, 2004, the court held that HP is liable for payments regarding all printers using
ASCII code sold in Germany but did not determine the amount payable per unit. HP appealed this
decision in January 2005 to the Stuttgart Court of Appeals. On May 11, 2005, the Stuttgart Court of
Appeals issued a decision confirming that levies are due. On June 6, 2005, HP filed an appeal to the
German Federal Supreme Court in Karlsruhe. On December 6, 2007, the German Federal Supreme
Court issued a judgment that printers are not subject to levies under the existing law. The court issued
a written decision on January 25, 2008, and VG Wort subsequently filed an application with the
German Federal Supreme Court under Section 321a of the German Code of Civil Procedure
contending that the court did not consider their arguments. On May 9, 2008, the German Federal
Supreme Court denied VG Wort’s application. VG Wort appealed the decision by filing a claim with
the German Federal Constitutional Court challenging the ruling that printers are not subject to levies.
On September 21, 2010, the Constitutional Court published a decision holding that the German
Federal Supreme Court erred by not referring questions on interpretation of German copyright law to
the Court of Justice of the European Union (‘‘CJEU’’) and therefore revoked the German Federal
Supreme Court decision and remitted the matter to it. On July 21, 2011, the German Federal Supreme
Court stayed the proceedings and referred several questions to the CJEU with regard to the
interpretation of the European Copyright Directive. The CJEU conducted an oral hearing in October
2012 and is expected to issue a decision approximately seven months thereafter, after which the matter
will be remitted back to the German Federal Supreme Court.
In September 2003, VG Wort filed a lawsuit against Fujitsu Siemens Computer GmbH (‘‘FSC’’) in
the Munich Civil Court in Munich, Germany seeking levies on PCs. This is an industry test case in
Germany, and HP has agreed not to object to the delay if VG Wort sues HP for such levies on PCs
following a final decision against FSC. On December 23, 2004, the Munich Civil Court held that PCs
are subject to a levy and that FSC must pay A12 plus compound interest for each PC sold in Germany
since March 2001. FSC appealed this decision in January 2005 to the Munich Court of Appeals. On
December 15, 2005, the Munich Court of Appeals affirmed the Munich Civil Court decision. FSC filed
an appeal with the German Federal Supreme Court in February 2006. On October 2, 2008, the German
Federal Supreme Court issued a judgment that PCs were not photocopiers within the meaning of the
German copyright law that was in effect until December 31, 2007 and, therefore, not subject to the
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