James:
I also noted that sharp increase in lawyers' fees in the 3rd quarter.
They have now spent all of what they expected the whole case
would cost to prosecute. Maybe we should take a closer look.
9/22/95 - AXC sued Mitsubishi alleging "patent infringement and
BREACH OF LICENSE AGREEMENT in connection with the
manufacture of VHS video recorders AND television receivers."
12/12/95 - Mitsubishi countersued alleging patent infringement.
Subsequently, AXC's suit was deferred to 03/31/97 while Mitsubishi's
countersuit is scheduled to go to trial on 12/03/96.
Question #1: It's probably nothing, but why was AXC's suit deferred
to 1997 while the countersuit is scheduled to go to trial in a few
weeks? Delaware rules?
At any rate, the licensing agreement between Mitsubishi and Ampex
indicates to me a prior working relationship that MAY be useful in
crafting an eve-of-the-trial type of settlement that is common in
civil cases. For example, Ampex and Sony have sued each other
a few times in the process of developing the VCR, but that hasn't
stopped them from collaborating, even as late as 1989, in the development of the D2 tape drive format, a format that is very
popular with the video post-production crowd.
Regards,
Gus
==============================================
Excerpt from 3rd quarter 10Q 1996.
In addition, as reported in the Company's Quarterly Reports on orm
10-Q for the fiscal quarters ended March 31, 1996 and June 30, 1996, on September 22, 1995, the Company filed a lawsuit against Mitsubishi Electric Corporation and Mitsubishi Electric America Inc. in the U.S. District Court for the District of Delaware, alleging patent infringement and breach of a license agreement in connection with the manufacture of VHS video recorders and television receivers. The Company is seeking damages and injunctive relief. In
response to the Company's lawsuit, on December 12, 1995, Mitsubishi filed a lawsuit against Ampex in the U.S. District Court for the Central District of California, alleging patent infringement and seeking unspecified damages and injunctive relief. The Company's lawsuit has been deferred until March 31, 1997, and the Mitsubishi countersuit is expected to go to trial on December 3,
1996. The Company originally estimated that its legal fees in connection with this litigation would be approximately $3 million. However, the Company has already incurred approximately $2.9 million in the first nine months of 1996 (including approximately $2.1 million in the third quarter of 1996) in connection with these lawsuits, in large part because of the significant costs
of discovery incurred in preparing for the patent countersuit brought against the Company. Accordingly, the Company expects that its original estimate will be significantly exceeded, and that the level of such costs may be material to results of operations. However, due to various factors such as the timing of and strategies employed in these lawsuits, it is not possible to predict the level of such costs in any future periods. In addition, if lawsuits are brought against additional manufacturers, litigation costs would increase. |
