Commitments and Contingencies

Product Warranties

Changes in the liability for product warranty claim costs were as follows:



(In thousands)	Nine Months Ended September 30,
(In thousands)	2015			2014
Balance at beginning of period	$	353		$	41
Accruals for warranties issued during the period	12			933
Settlements (in cash or in kind) during the period	(329		)	(41		)
Balance at end of period	$	36		$	933

Litigation

On March 2, 2012, we filed a lawsuit against Universal Remote Control, Inc. ("URC") in the United States District Court, Central District of California (Universal Electronics Inc. v. Universal Remote Control, Inc., SACV12-0039 AG (JPRx)) alleging that URC was infringing, directly and indirectly, four of our patents related to remote control technology. After prolonged discovery proceedings during 2013 and the first part of 2014 and then trial in May 2014, the jury returned a verdict that URC did not infringe our patents, and found for URC on patent validity and several equitable defenses in the lawsuit. Although the jury's verdict on the equitable defenses was advisory in nature, on January 27, 2015, final judgment was entered by the Court accepting the jury's verdict pertaining to invalidity, non-infringement, marking, and the equitable defense of laches and ordered us to pay URC's costs of litigation, exclusive of attorney's fees. On March 10, 2015, after full briefing and a hearing, the Court granted URC's motion for a portion of its attorneys' fees and expenses. URC sought an award of attorneys' fees, expenses and costs in excess of $6.0 million. On September 4, 2015, the Court issued its order awarding URC $4.6 million in fees, expenses and costs. We are vigorously appealing this order and all other orders adverse to us. URC is likewise appealing all orders adverse to it. On October 13, 2015, the Federal Circuit Court of Appeals issued its order, which among other things consolidated all appeals in this matter and ordered URC to file its opening brief no later than November 13, 2015. As a result of the lower court's order, we have accrued $4.6 million within selling, general and administrative expenses for the three and nine months ended September 30, 2015. Additionally, as described in Note 2, we placed $4.6 million into a surety bond as collateral for this court order.

On June 28, 2013, we filed a second lawsuit against URC, also in the United States District Court, Central District of California (Universal Electronics Inc. v. Universal Remote Control, Inc., SACV13-00987 JAK (SHx)). In mid-November 2013, we filed a motion to add affiliated URC suppliers, Ohsung Electronics Co, Ltd., a South Korean entity, and Ohsung Electronics USA, Inc., a California entity, (collectively "Ohsung"), to the lawsuit. In late June and early July of 2014, URC and Ohsung requested inter partes review ("IPR") with the US Patent and Trademark Office ("Patent Office" or "USPTO") for each of the ten patents pending in the second URC lawsuit. During December 2014 and January 2015, the Patent Office issued its decisions on URC's petitions and accepted for review all claims at issue with respect to five of the patents, certain claims at issue with respect to two of the patents and denied in full the request to review the other three patents at issue. We are presently defending those patents in front of the USPTO. During the Patent Office’s review, this second lawsuit has been stayed by the Court with the parties agreeing that the stay continue while the Patent Office decides the IPRs. The Patent Office’s decisions are expected in late January 2016.

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 supplies Telenet violates two design patents and one utility patent owned by FMH and/or Ruwido. By this summons, FMH and Ruwido are seeking to enjoin Telenet and UEBV from continued distribution and use of the products at issue. After fully briefing and a hearing, on September 29, 2015, 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 in this ruling. UEBV and Telenet intend to vigorously defend against Ruwido's appeal.

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 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.