Symantec 1999 Annual Report Download - page 85

SYMANTEC CORPORATION
Notes to Consolidated Financial Statements, Continued
71
NOTE 16. LITIGATION
On March 18, 1996, a class action complaint was filed by the law firm of Milberg, Weiss, Bershad, Hynes & Lerach
in Superior Court of the State of California, County of Santa Clara, against the Company and several of its current and
former officers and directors. The complaint alleges that Symantec insiders inflated the stock price and then sold
stock based on inside information that sales were not going to meet analysts’ expectations. The complaint seeks
damages in an unspecified amount. The complaint has been refiled twice in state court, most recently on January 13,
1997, following Symantec’s demurrers directed to previous complaints. The parties are currently conducting
discovery. On January 7, 1997, the same plaintiffs filed a complaint in the United States District Court, Northern
District of California, based on the same facts as the state court complaint, for violation of the Securities Exchange
Act of 1934. The district court dismissed that complaint and plaintiffs served an amended complaint in April 1998.
Symantec’s motion to dismiss the new federal complaint was granted in part, substantially narrowing the complaint.
Symantec believes that neither the state court complaint nor the federal court complaint has any merit and will
vigorously defend itself against both complaints.
On April 23, 1997, Symantec filed a lawsuit against McAfee Associates, Inc., which pursuant to a merger has become
Network Associates, Inc. (“Network Associates”), in the United States District Court, Northern District of California,
for copyright infringement and unfair competition. On October 6, 1997, the court found that Symantec had
demonstrated a likelihood of success on the merits of certain copyright claims and issued a preliminary injunction (i)
prohibiting Network Associates from infringing Symantec’s rights in specified materials by marketing, selling,
transferring or directly or indirectly copying into any new Network Associates product or new version of an existing
product that has Symantec code, (ii) requiring Network Associates to notify distributors who are still selling versions
of PC Medic 97 that have Symantec’s code to tell customers that they should upgrade to versions that do not contain
Symantec code and (iii) requiring Network Associates to provide Symantec and the court with a sample of the notice
to be used. On October 17, 1997, Symantec amended its complaint to include additional claims for copyright
infringement and misappropriation of trade secrets, based on additional evidence found in the discovery process. On
April 1, 1998, Symantec amended its complaint to add claims for misappropriation of trade secrets, RICO (Racketeer
Influenced and Corrupt Organizations Act) and related claims based on additional evidence uncovered in the
litigation. Following motions by Network Associates, the court dismissed Symantec’s unfair competition and trade
secret claims regarding the copyrighted code and its RICO and interference claims. On October 22, 1998, the court
consolidated this case with the case against Network Associates and the case brought by CyberMedia, both of which
are described below.
On September 4, 1998, Symantec filed a new lawsuit against Network Associates in the United States District Court,
Northern District of California, for copyright infringement, trade secret misappropriation and unfair competition.
Symantec continues to investigate the extent to which Network Associates may have misappropriated Symantec’s
intellectual property and plans to aggressively pursue its remedies under this lawsuit, which include both injunctive
relief and monetary damages.
On September 15, 1997, Hilgraeve Corporation (“Hilgraeve”) filed a lawsuit in the United States District Court,
Eastern District of Michigan, against Symantec, alleging that unspecified Symantec products infringe a patent owned
by Hilgraeve. The lawsuit requests damages, injunctive relief and costs and attorney fees. Symantec believes this
claim has no merit and intends to defend the action vigorously.
On February 4, 1998, CyberMedia, Inc. (“CyberMedia,”), which in September 1998 was acquired by Network
Associates, filed a lawsuit in the United States District Court, Northern District of California, against Symantec,
ZebraSoft Inc. and others, alleging that Symantec’s Norton Uninstall Deluxe infringes CyberMedia’s copyright and
asserting related state law claims. The suit requests damages, injunctive relief, costs and attorneys fees. In May 1998,
CyberMedia filed a motion seeking a preliminary injunction prohibiting sale or development of the challenged code,
which preliminary injunction was granted with respect to Symantec’s domestic activities in September 1998.
Subsequently, Symantec ceased selling the Norton Uninstall Deluxe product. Symantec intends to defend the action
vigorously.
On February 19, 1998, a class action complaint was filed by the Milberg, Weiss, Bershad, Hynes & Lerach law firm
in Santa Clara County Superior Court, on behalf of a class of purchasers of pre-version 4.0 Norton AntiVirus
products. A similar complaint was filed in the same court on March 6, 1998 by an Oregon law firm. Those actions