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CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
the supporting WiMAX network used to provide such WiMAX services, we and Sprint infringe the seven
patents. Adaptix is seeking monetary damages, attorneys’ fees and a permanent injunction enjoining us from
further acts of alleged infringement. On February 25, 2009, we filed an Answer to the Amended Complaint,
denying infringement and asserting several affirmative defenses, including that the asserted patents are invalid.
We filed an Amended Answer on June 25, 2009, adding a counter-claim for declaratory judgment of
non-infringement and invalidity of the subject patents. A trial is scheduled for December 2010, and the parties
commenced discovery in early 2009. On December 21, 2009, Adaptix filed but did not serve an additional suit
for patent infringement in the United States District Court for the Eastern District of Texas. That suit alleges
infringement of one patent related to those asserted in the previously filed suit. We have not been served and
therefore have not appeared in the newly-filed suit. On February 23, 2010, we reached a resolution with Adaptix
and Sprint regarding Adaptix’s patent infringement litigations pending in the United States District Court for the
Eastern District of Texas, whereby the pending litigations will be dismissed without prejudice.
On April 22, 2009, a purported class action lawsuit was filed against us in Superior Court in King County,
Washington by a group of five plaintiffs from Hawaii, Minnesota, North Carolina and Washington. The lawsuit
generally alleges that we disseminated false advertising about the quality and reliability of our services; imposed
an unlawful early termination fee; and invoked unconscionable provisions of our Terms of Service to the
detriment of customers. Among other things, the lawsuit seeks a determination that the alleged claims may be
asserted on a class-wide basis; an order declaring certain provisions of our Terms of Service, including the early
termination fee provision, void and unenforceable; an injunction prohibiting us from collecting early termination
fees and further false advertising; restitution of any early termination fees paid by our subscribers; equitable
relief; and an award of unspecified damages and attorneys’ fees. On May 27, 2009, an amended complaint was
filed and served, adding seven additional plaintiffs, including individuals from New Mexico, Virginia and
Wisconsin. On June 2, 2009, plaintiffs served the amended complaint. We removed the action to the United
States District Court for the Western District of Washington. On July 23, 2009, we filed a motion to dismiss the
amended complaint. The Court stayed discovery pending its ruling on the motion. The Court granted our motion
to dismiss in its entirety on February 2, 2010. Plaintiffs have 30 days to move the Court for leave to amend the
complaint. Whether plaintiffs will seek such leave is unknown.
On September 1, 2009, we were served with a purported class action lawsuit filed in King County Superior
Court. The complaint alleges we placed unlawful telephone calls using automatic dialing and announcing
devices. It seeks declaratory, injunctive, and/or equitable relief and statutory damages under federal and state
law. On October 1, 2009, we removed the case to the United States District Court for the Western District of
Washington. On October 22, 2009, the Court issued a stipulated order granting plaintiff until October 29, 2009 to
file an Amended Complaint. The parties further stipulated to allow a Second Amended Complaint, which
plaintiffs filed on December 23, 2009. We then filed a motion to dismiss that was fully briefed on January 15,
2010. Prior to the Court ruling on the motion to dismiss, plaintiff moved the Court for leave to file a further
amended complaint. On February 22, 2010 the Court granted our motion to dismiss in part, dismissing certain
claims with prejudice and granting plaintiff 20 days to amend the complaint. The Court dismissed plaintiff’s
motion for leave to amend as moot. This case is in the early stages of litigation, and its outcome is unknown.
In addition to the matters described above, we are often involved in certain other proceedings which arise in
the ordinary course of business and seek monetary damages and other relief. Based upon information currently
available to us, none of these other claims are expected to have a material adverse effect on our business,
financial condition or results of operations.
Indemnification agreements — We are currently a party to indemnification agreements with certain
officers and each of the members of our Board of Directors. No liabilities have been recorded in the consolidated
balance sheets for any indemnification agreements, because they are not probable nor estimable.
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