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Commitments and Contingencies | 3 Months Ended
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Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies Product Warranties Changes in the liability for product warranty claim costs were as follows:
(In thousands) | Three Months Ended March 31,
2020 |  | 2019
Balance at beginning of period | $ | 1,514 |  |  | $ | 276 |
Accruals for warranties issued during the period | — |  |  | — |
Settlements (in cash or in kind) during the period/Foreign exchange effects | (16 | ) |  | — |
Balance at end of period | $ | 1,498 |  |  | $ | 276 |
Litigation Ruwido Matters Belgium Lawsuits On or about June 10, 2015, FM Marketing GmbH ("FMH") and Ruwido Austria GmbH ("Ruwido") filed a Summons in Summary Proceedings in Belgium court against one of our subsidiaries, Universal Electronics BV ("UEBV"), and one of its customers, Telenet N.V. ("Telenet"), claiming that one of the products UEBV supplied to Telenet violates two design patents and one utility patent owned by FMH and/or Ruwido. By this summons, FMH and Ruwido sought to enjoin Telenet and UEBV from continued distribution and use of the product at issue. After the September 29, 2015 hearing, the court issued its ruling in our and Telenet’s favor, rejecting FMH and Ruwido’s request entirely. On October 22, 2015, Ruwido filed its notice of appeal to this ruling. On September 16, 2019, the appellate court ruled in our favor concluding that our original product did not infringe Ruwido's design rights. Ruwido subsequently filed an appeal of this decision with the Belgium Supreme Court. All parties have submitted their briefs with the Supreme Court and we are waiting for the Supreme Court to set an oral hearing date which we expect to be in late 2021. In addition, Ruwido appealed the lower court's ruling against it with respect to its claims of infringement and unfair competition. Briefing on this appeal is expected to be completed by June 3, 2020, after which the appellate court will set an oral hearing which we expect to be sometime in 2021. Subsequent to the Court's ruling in September 2017 that our second product could not be added to the first case on the merits, Ruwido filed a separate case on the merits with respect to this second product, claiming that it too infringes the same patent at issue in the first suit. We have denied these claims. The Court has postponed oral hearing on the merits with respect to this matter to March 2, 2021. European Patent Opposition In September 2015, UEBV filed an Opposition with the EPO seeking to invalidate the one utility patent asserted against UEBV and Telenet by Ruwido. The hearing on this opposition was held in July 2017. During this hearing the panel requested additional information. We submitted this additional information and the EPO held a second hearing on January 29 and 30, 2019 and revoked Ruwido's patent as originally filed. The EPO, however, maintained the patent in an amended form with a much narrower claim. On August 23, 2019, the EPO issued its written opinion. Both UEBV and Ruwido have appealed the EPO's decision and briefing is due by May 13, 2020. Thereafter, we expect the EPO to set a date for an additional hearing, after which the EPO will render its decision. The Netherlands Lawsuit In September 2017, FMH and Ruwido filed a lawsuit on the merits in the Court of the Hague against UEBV and Telenet, in which they are also claiming that the products UEBV supplied to Telenet violates the same patents as claimed in the Belgium actions. In early 2019, oral hearings took place during which the Court ordered the parties to submit statements relating to the consequences of the EPO decision to the Dutch proceedings. Ruwido has recently submitted its statement and we have until May 13, 2020 to submit our response. Roku Matters 2018 Lawsuit On September 5, 2018, we filed a lawsuit against Roku, Inc. (“Roku”) in the United States District Court, Central District of California, alleging that Roku is willfully infringing nine of our patents that are in four patent families related to remote control set-up and touchscreen remotes. On December 5, 2018, we amended our complaint to add additional details supporting our infringement and willfulness allegations. We have alleged that this complaint relates to multiple Roku streaming players and components therefore and certain universal control devices, including but not limited to the Roku App, Roku TV, Roku Express, Roku Streaming Stick, Roku Ultra, Roku Premiere, Roku 4, Roku 3, Roku 2, Roku Enhanced Remote and any other Roku product that provides for the remote control of an external device such as a TV, audiovisual receiver, sound bar or Roku TV Wireless Speakers. In October 2019, the Court stayed this lawsuit pending action by the Patent Trial and Appeals Board with respect to Roku’s Inter Party Review requests (see discussion below). Inter Party Reviews In September and October, 2019, Roku filed Inter Party Review (“IPR”) requests with the Patent Trial and Appeals Board (the “PTAB”) on the nine patents at issue in the 2018 Lawsuit. Presently, the PTAB denied Roku’s request with respect to three of the nine patents and granted Roku’s request with respect to four of the nine patents. We expect the PTAB’s decision on the remaining two IPR requests by May 14, 2020. As for those IPRs for which the PTAB granted Roku’s request for review, we will vigorously defend our patents. International Trade Commission Investigation of Roku, TCL, Hisense and Funai On April 16, 2020, we filed a complaint with the International Trade Commisssion (the “ITC”) against Roku, TCL Electronics Holding Limited and related entities (collectively, “TCL”), Hisense Co., Ltd. and related entities (collectively, “Hisense”), and Funai Electric Company, Ltd. and related entities (collectively, “Funai”) claiming that certain of their televisions, set-top boxes, remote control devices, human interface devices, streaming devices, and sound bars infringe certain of our patents. We are asking the ITC to issue a permanent limited exclusion order prohibiting the importation of these infringing products into the United States and a cease and desist order to stop these parties from continuing their infringing activities. We expect the ITC to accept our complaint by the end of May 2020 and commence its investigation. Federal District Court Actions against each of Roku, TCL, Hisense, and Funai related to the ITC Matter On April 9, 2020, we filed separate actions against each of Roku, TCL, Hisense, and Funai in the United States District Court, Central District of California, alleging that each of the parties is willfully infringing eight of our patents by incorporating our patented technology into certain of their televisions, set-top boxes, remote control devices, human interface devices, streaming devices, and sound bars. Each of the parties have accepted service and have not yet answered our complaint. There are no other material pending legal proceedings to which we or any of our subsidiaries is a party or of which our respective property is the subject. However, as is typical in our industry and to the nature and kind of business in which we are engaged, from time to time, various claims, charges and litigation are asserted or commenced by third parties against us or by us against third parties arising from or related to product liability, infringement of patent or other intellectual property rights, breach of warranty, contractual relations, or employee relations. The amounts claimed may be substantial but may not bear any reasonable relationship to the merits of the claims or the extent of any real risk of court awards assessed against us or in our favor. However, no assurances can be made as to the outcome of any of these matters, nor can we estimate the range of potential losses to us. In our opinion, final judgments, if any, which might be rendered against us in potential or pending litigation would not have a material adverse effect on our consolidated financial condition, results of operations, or cash flows. Moreover, we believe that our products do not infringe any third parties' patents or other intellectual property rights. We maintain directors' and officers' liability insurance which insures our individual directors and officers against certain claims, as well as attorney's fees and related expenses incurred in connection with the defense of such claims.

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