Philips 2015 Annual Report Download - page 156

Group nancial statements 12.9
156 Annual Report 2015
In September 2015, prior to the resubmission of a class
certication motion by the direct purchaser plaintis,
PLDS entered into a settlement agreement with the
direct purchaser plaintis under which the Company
was released from the direct purchaser claims.
In addition, various individual entities have led
separate actions against the Company, PLDS, PLDS
USA and other defendants. The allegations contained
in these individual complaints are substantially
identical to the allegations in the direct purchaser class
complaints. All of these matters have been
consolidated into the action in the Northern District of
California for pre-trial purposes and discovery is being
coordinated.
Also, in June 2013, the State of Florida led a separate
complaint in the Northern District of California against
the Company, PLDS, PLDS USA and other defendants
containing largely the same allegations as the class and
individual complaints. Florida seeks to recover
damages sustained in its capacity as a buyer of ODDs
and, in its parens patriae capacity, on behalf of its
citizens. The defendants’ motion to dismiss has been
denied and Philips led an answer to the complaint.
This case has been joined with the ODD class action
cases in the Northern District of California for pre-trial
purposes.
The Company and certain Philips Group companies
have also been named as defendants, in proposed
class proceedings in Ontario, Quebec, British Columbia,
Manitoba and Saskatchewan, Canada along with
numerous other participants in the industry. These
complaints assert claims against various ODD
manufacturers under federal competition laws as well
as tort laws and may involve joint and several liability
among the named defendants. Philips intends to
vigorously defend these lawsuits. Plaintis in the British
Columbia case have proceeded with their application
to certify that proceeding as a class action. The hearing
was held in January 2015. The Court’s decision on class
certication is still pending.
Due to the considerable uncertainty associated with
these matters, on the basis of current knowledge, the
Company has concluded that potential losses cannot
be reliably estimated with respect to these matters.
Consumer Electronics products and small Domestic
Appliances
Several companies, among which the Company, are
involved in an investigation by the European
Commission into alleged restrictions of online sales of
consumer electronic products and small domestic
appliances. This investigation commenced in
December 2013 when Philips was one of the companies
that was inspected by ocials of the European
Commission. Philips is fully cooperating with the
European Commission.
Due to the considerable uncertainty associated with
this matter, on the basis of current knowledge, the
Company has concluded that potential losses cannot
be reliably estimated with respect to these matters.
Masimo
On October 1, 2014 a jury awarded USD 467 million (EUR
366M) to Masimo Corporation (Masimo) in the patent
infringement lawsuit by Masimo in the United States
District Court for the District of Delaware against the
Company. The decision by the jury is part of extensive
litigation, which started in 2009, between Masimo and
the Company involving several claims and
counterclaims related to a large number of patents in
the eld of pulse oximetry. The lawsuit led by Masimo
alleges that certain Philips products infringe certain
Masimo patents. In response to these claims, the
Company led its answer and counterclaims alleging
infringement of a number of Philips’ patents and
violation of US antitrust laws and patent misuse by
Masimo. The Court has decided to handle the litigation
in several phases, the rst phase of which was tried in
September 2014. The October 2014 decision by the jury
is associated with this rst phase of the litigation. An
additional ongoing (i.e. second) phase of the litigation
addresses the alleged infringement of certain Masimo
patents which were not included in the rst phase of the
litigation.
In February 2015 the United States District Court for the
District of Delaware held a bench trial regarding the
enforceability of one of Masimo’s patents and a hearing
addressing several post-trial motions following the
October 2014 jury decision. In May 2015, the Court
decided that the Masimo patent was not held
unenforceable, denied the Company’s motions to
reverse the October 2014 jury decision regarding the
validity of the Masimo patents-in-suit and/or the
damages awarded by the jury to Masimo and denied
the Company’s request for a new trial. The Court also
denied Masimo’s motion to dismiss the Company’s
complaint directed to antitrust violations and patent
misuse by Masimo. The antitrust and patent misuse (i.e.
third) phase of the litigation has now proceeded to the
merits phase. The Company continues to pursue all
avenues of appeal regarding the October 2014 decision
before the Appellate courts in the US. In September
2015, the Court scheduled both the second and third
phases of the litigation for trial during the rst quarter
of 2017.
Due to the considerable uncertainty associated with
these next phases of the litigation, including the impact
of the appeals thereon, the Company has concluded
that, on the basis of current knowledge, potential losses
cannot be reliably estimated with respect to the
remaining phases of the litigation.
Miscellaneous
As part of the divestment of the Television and Audio,
Video, Multimedia & Accessories businesses in 2012
and 2014, the Company transferred economic