7.	Commitments and Contingencies

Litigation

From time-to-time, j2 Global is involved in litigation and other disputes or regulatory inquiries that arise in the ordinary course of its business. Many of these actions involve or are filed in response to patent actions filed by j2 Global against others. The number and significance of these disputes and inquiries has increased as our business has expanded and j2 Global has grown. Any claims or regulatory actions against j2 Global, whether meritorious or not, could be time-consuming, result in costly litigation, require significant management time and result in diversion of significant operational resources.

As part of the Company's continuing effort to prevent the unauthorized use of its intellectual property, j2 Global has initiated litigation against several companies for infringing its patents relating to Internet fax and other messaging technologies, including Open Text Corporation and its Captaris business ("Open Text"), EasyLink Services International Corporation ("EasyLink") and RingCentral, Inc. ("RingCentral"). Three of the patents at issue in some of these lawsuits have been reaffirmed through reexamination proceedings with the United States Patent and Trademark Office (the "USPTO").

Open Text and EasyLink have each filed counterclaims against the Company, including seeking declaratory judgments of non-infringement, invalidity and unenforceability of j2 Global's patents. Open Text also asserted counterclaims purporting to allege antitrust violations of Section 2 of the Sherman Act and California's Business and Professions Code §§ 16720 and 17200, but on September 14, 2011, Open Text dismissed its antitrust counterclaims. Open Text is seeking dismissal of j2 Global's patent infringement claims, damages, including treble and punitive damages, injunctions against further violations and attorneys' fees and costs. These cases are being litigated in the United States District Court for the Central District of California before the same judge, who has indicated that the cases will be handled in a coordinated fashion. Discovery in the cases is underway. The Court completed Part One of a Markman hearing in these cases on October 15, 2010, and issued a related Markman Order on March 4, 2011. Open Text filed a motion for reconsideration of certain portions of the Markman Order, which motion the Court denied in July 2011. The Court completed Part Two of the Markman Hearing on July 29, 2011 and issued a related Markman Order on October 20, 2011, in which the Court adopted j2 Global's proposed construction of every disputed claim term of U.S. Patent Nos. 6,597,688 and 7,020,132. Trial is currently scheduled to begin on May 1, 2012.

On June 1, 2011, j2 Global and one of its affiliates filed suit against RingCentral in the United States District Court for the Central District of California. The complaint alleges infringement of U.S. Patent Numbers 6,208,638, 6,350,066 and 7,020,132. j2 Global and its affiliate are seeking a permanent injunction against continued infringement, a finding of willfulness, compensatory and treble damages, attorneys' fees, interest and costs. On October 11, 2011, RingCentral filed an answer and counterclaims, alleging infringement of U.S. Patent Number 7,702,699 and unfair competition in violation of California's Business & Professions Code § 17200 et. seq.; and seeking declaratory judgment of non-infringement and invalidity and requesting damages, injunctive relief, interest and attorneys' fees and costs. .

On December 24, 2009, COA Network, Inc. ("COA") filed a complaint in the United States District Court for the District of New Jersey, seeking declaratory judgment of non-infringement, invalidity and unenforceability of several of j2 Global's patents. On March 3, 2010, the Company filed an answer to the complaint and counterclaims asserting that COA infringes two of the Company's patents. Also on March 3, 2010, j2 Global moved to transfer the case to the United States District Court for the Central District of California, or in the alternative to stay the case. On June 17, 2010 the Court granted the Company's motion, transferring the case to the Central District of California. The case is currently in discovery.

On September 15, 2006, one of the Company's affiliates filed a patent infringement suit against Integrated Global Concepts, Inc. ("IGC") in the United States District Court for the Northern District of Georgia. On May 13, 2008, IGC filed counterclaims alleging violations of Section 2 of the Sherman Act and breach of contract. IGC is seeking damages, including treble and punitive damages, an injunction against further violations, divestiture of certain assets, attorneys' fees and costs. On June 13, 2008, the Company moved to dismiss the amended counterclaims. On February 18, 2009, the Court granted j2 Global's motion to stay the case pending the conclusion of the Company's appeal of a summary judgment ruling of non-infringement in another case which involved the same patents and issues as this action. On January 22, 2010, the Federal Circuit affirmed the District Court's non-infringement ruling in the other case. On June 7, 2010 the Court lifted the stay. On July 16, 2010, the Company renewed its motion to dismiss IGC's amended counterclaims. The Company's motion was heard on February 15, 2011. Subsequently, the case was transferred to a new judge, who conducted a second hearing on the motion. The court ruled on the motion on September 2, dismissing IGC's breach of contract counterclaim and one portion of IGC's antitrust counterclaim.

On May 9, 2007, Bear Creek Technologies, Inc. ("Bear Creek") filed suit against j2 Global in the United States District Court for the Eastern District of Texas, alleging infringement of U.S. Patent Number 6,985,494 (the "'494 patent"). Bear Creek is seeking damages in at least the amount of a reasonable royalty, a permanent injunction against continued infringement, treble damages, attorneys' fees, interest and costs. On June 29, 2007, the Company filed an answer to the complaint denying liability, asserting affirmative defenses and asserting counterclaims of non-infringement and invalidity. On September 21, 2007, Bear Creek filed its reply to the Company's counterclaims, denying each one. On February 11, 2008, j2 Global filed a request for reexamination of the '494 patent with the USPTO. On February 28, 2008, the Court stayed the case during the pendency of the reexamination proceedings. On February 12, 2009, the USPTO finally rejected the reexamined claims and Bear Creek failed to file a response within the prescribed timeframe. On June 16, 2009, the USPTO issued a right to appeal the Examiner's rejection. Bear Creek filed its appeal on September 16, 2009. j2 Global filed its response to Bear Creek's appeal on October 14, 2009. The Examiner provided an answer on June 18, 2010, agreeing with the great majority of the Company's positions. Bear Creek's reply brief was filed July 19, 2010. The USPTO affirmed the Examiner's original rejection of the reexamined claims on September 29, 2011. On September 10, 2009, the Court "Administratively Closed" the case pending resolution of the reexamination proceeding.

In December 2008, AGV Sports Group, Inc. and other co-plaintiffs (collectively, "AGV") filed suit in the United States District Court for the District of Maryland against the Company's newly acquired subsidiary Protus IP Solutions, Inc. ("Protus"), three of Protus' employees and other co-defendants for allegedly sending at least 974 unsolicited fax advertisements to AGV in violation of the federal Telephone Consumer Protection Act of 1991 (the "TCPA") and the Maryland Telephone Consumer Protection Act ("MD-TCPA"). AGV seeks judgment against Protus and the individual defendants for $500 for each alleged violation of the TCPA, trebled for willfulness pursuant to the TCPA and $500 for each violation of the MD-TCPA. Protus filed a successful motion to dismiss for lack of personal jurisdiction on behalf of its three employees named as individual defendants. The case has been settled with two of the plaintiffs, representing approximately half of the faxes at issue in the case, and their claims have been dismissed with prejudice. Discovery in the case has closed, except with respect to certain information that was the subject of a motion to compel by Protus. Trial is currently scheduled for January 2012.

On February 17, 2011, Emmanuel Pantelakis ("Pantelakis") filed suit against Protus in the Ontario Supreme Court of Justice alleging that Protus breached a contract with Pantelakis in connection with Protus' e-mail marketing services. Pantelakis is seeking damages, attorneys' fees, interest and costs. Protus filed a responsive pleading on March 23, 2011. Discovery has not yet commenced.

On March 7, 2011, Xpedite Systems, LLC, a subsidiary of Easylink ("Xpedite"), filed suit against j2 Global in the United States District Court for the Northern District of Georgia, Atlanta Division. The complaint alleges infringement of U.S. Patent Numbers 5,872,640 (the "'640 patent") and 7,804,823 (the "'823 patent"). Xpedite is seeking a permanent injunction against continued infringement, damages, treble damages, an accounting of sales and profits, and interest and costs. j2 Global filed a responsive pleading in this matter in May 2011. In early July 2011, j2 Global submitted requests to put both patents at issue into reexamination proceedings. On September 8, 2011, the Examiner granted j2 Global's reexamination request with respect to the '823 patent, then on September 9, closed the prosecution and affirmed all the claims in the patent. j2 Global intends to appeal this decision with the Board of Patent Appeals and Interferences. On October 1, 2011, the USPTO granted the reexamination request with respect to the '640 patent. On October 14, 2011, j2 Global filed a motion to stay the case in chief while the '640 reexamination proceeding is pending. Discovery has commenced and is ongoing.

On May 10, 2011, Klausner Technologies, Inc. ("Klausner") filed suit against 24 defendants, including j2 Global, in the United States District Court for the Eastern District of Texas, Tyler Division. The complaint alleges infringement of U.S. Patent Numbers 5,572,576 and 5,283,818. Klausner is seeking a permanent injunction against continued infringement, compensatory damages, attorneys' fees, interest and costs. j2 Global filed an answer to the complaint on September 2, 2011. Discovery has not yet commenced.

j2 Global does not believe, based on current knowledge, that any of the foregoing legal proceedings or claims, after giving effect to existing reserves, is likely to have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows. However, depending on the amount and the timing, an unfavorable resolution of some or all of these matters could materially affect j2 Global's consolidated financial position, results of operations or cash flows in a particular period. The Company has not accrued for a loss contingency relating to certain of these legal proceedings because unfavorable outcomes are not considered by management to be probable or reasonably estimable.