Hoffy,
Do you read Form 10-Q's? If so then I'm sure you read their latest:
On October 6, 1998, HCW received notice that AII had commenced an action against it and multiple other defendants in the United States District Court for the Northern District of Illinois, alleging that the certain of HCW's products infringe on certain patent rights allegedly owned by the plaintiff. The complaint seeks unspecified compensatory and statutory damages with interest.
HCW denies such allegations and intends to vigorously defend this action. On December 22, 1998, HCW filed its Answer the "Answer"). Among other things, pursuant to the Answer, HCW denies that its products infringe AII's patent rights and asserts certain affirmative defenses, including challenging the validity of the Patent.
Notwithstanding the foregoing, because of the uncertainties of litigation, no assurances can be given as to the outcome of the AII litigation. In the event that HCW were not to prevail in this litigation, HCW could be required to pay significant damages to AII and could be enjoined from further use of such technology as it presently exists. Although a negative outcome in the AII
litigation would have a material adverse affect on HCW, including, but not limited to, its operations and financial condition, HCW believes that, if it is held that HCW's products infringe AII's patent rights, HCW would attempt to design components to replace the infringing components or would attempt to negotiate with AII to utilize its system, although no assurances can be given that HCW would be successful in these attempts. At the present time, HCW can not assess the possible cost of designing and implementing a new system or obtaining rights
from AII. As of March 31, 1999, the Company estimated that legal fees incurred were approximately $50,000.
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Bottom line, Litigation spells risk.
Chris
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