Symantec 2004 Annual Report Download - page 73

SYMANTEC CORPORATION «71»
2004 Annual Report
connection with our WinFax™Pro product. The complaint seeks
damages and injunctive and other equitable relief, as well as
costs and attorney fees. We intend to defend the action vigorously.
On February 27, 2003, PowerQuest filed a lawsuit against us in the
United States District Court, District of Utah, alleging that our Ghost
product infringed a patent owned by them. The complaint sought
damages and injunctive relief. The case was dismissed following
Symantec’s December 2003 acquisition of PowerQuest.
On February 7, 2003, Cathy Baker filed a lawsuit against us,
Microsoft and two retailers in the California Superior Court, Marin
County, purportedly on behalf of the general public of California
and of a class of certain purchasers of software products. An
amended complaint filed in May 2003 added Greg Johnson as
plaintiff and Adobe Systems and another retailer as defendants.
The complaint alleged that our refund policies violated consumer
warranty and unfair business practice laws. The lawsuit sought
damages, rescission and injunctive relief, as well as costs and attorney
fees. In April 2004, the matter was resolved with no material
payment by Symantec, and the litigation has been dismissed.
On November 29, 2002, William Pereira filed a purported class
action lawsuit against a local retailer and us in the Supreme Court
of New York, New York County, alleging breach of contract and
deceptive business practices in connection with rebates offered
by us. The complaint was served March 26, 2003. The complaint
sought damages, costs and attorney fees. The parties stipulated
to dismiss the case in June 2003.
On June 14, 2002, Hark Chan and Techsearch LLC filed a lawsuit
against us in the United States District Court for the Northern
District of California, alleging that unspecified products sold on
CD-ROM with Internet hyperlinks and/or with the LiveUpdate
feature infringed a patent owned by Techsearch. Subsequently,
IP Innovation LLC was added as a plaintiff. The lawsuit requested
damages, injunctive relief, costs and attorney fees. In September
2003, the matter was resolved with no material payment by
Symantec, and the litigation has been dismissed.
On December 23, 1999, Altiris Inc. filed a lawsuit against us in the
United States District Court, District of Utah, alleging that unspecified
Symantec products including Norton Ghost Enterprise Edition,
infringed a patent owned by Altiris. The lawsuit requests damages,
injunctive relief, costs and attorney fees. In October 2001, a stipulated
judgment of non-infringement was entered following the court’s
ruling construing the claims of the Altiris patent, and in February
2003, the Court of Appeals for the Federal Circuit reversed the
judgment and remanded the case. We intend to defend the action
vigorously. In April 2004, we filed a lawsuit against Altiris in the
United States District Court, Eastern District of Texas, alleging that
several Altiris products infringe three patents owned by Symantec.
In July 1998, the Ontario Court of Justice (General Division) ruled
that we should pay a total of $5 million for damages, plus interest,
to Triolet Systems, Inc. and Brian Duncombe in a decade-old
copyright action, for damages arising from the grant of a preliminary
injunction against them. The damages were awarded following
the court’s ruling that evidence presented later in the case showed
the injunction was not warranted. We inherited this case through
our acquisition of Delrina Corporation, which was the plaintiff in
this lawsuit. Our appeal of the decision was denied, and our request
for further review of that decision was also denied. We recorded
a charge of $6 million during the June 1998 quarter, representing
the unaccrued portion of the judgment plus costs, and an additional
charge of $3 million for post-judgment interest and other costs
during the March 2002 quarter. In January 2003, we paid the
judgment, interest and costs of $7 million. We expect to pay the
remaining balance of costs upon further determination by the
court. As of March 31, 2004, we believe that we have adequately
accrued for both the damages and costs.
In October 1997, a complaint was filed in the United States District
Court for the District of Utah on behalf of PowerQuest, against
Quarterdeck, which we acquired in March 1999. The complaint
alleged that Quarterdeck’s partitioning software, included in
Partition-It™and Partition-It Extra Strength, violated a patent held
by PowerQuest. In January 1998, PowerQuest obtained a second
patent relating to partitioning and amended its complaint to
allege infringement of that patent as well. PowerQuest added us
as a defendant and sought an injunction against distribution of
the Partition-It and Partition-It Extra Strength products and monetary
damages. The case was dismissed following Symantec’s December
2003 acquisition of PowerQuest.
On September 15, 1997, Hilgraeve Corporation filed a lawsuit
in the United States District Court, Eastern District of Michigan,
against us, alleging that unspecified Symantec products infringed
a patent owned by Hilgraeve. The lawsuit requested damages,
injunctive relief, costs and attorney fees. In March 2000, the court
granted our summary judgment motions and dismissed the case.
In September 2001, the Court of Appeals for the Federal Circuit
reversed the summary judgment and ordered the case returned
to the District Court. On August 6, 2003, Symantec acquired the
asserted patent and the parties settled the litigation. The total
cost of purchasing the patent and licensing additional patents was
$63 million, which was paid in cash in August 2003.