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Commitments And Contingencies
12 Months Ended
Dec. 31, 2011
Commitments And Contingencies [Abstract]  
Commitments And Contingencies

Note 23 Commitments and Contingencies

     On November 21, 2011, the Company entered into a stock purchase agreement to purchase all the outstanding capital stock of Z Corporation, a Massachusetts corporation ("Z Corp"), and Vidar Systems Corporation, a Virginia corporation ("Vidar"), from Contex Group A.S. for up to $137,000 in cash. This purchase price was subject to certain adjustments provided for in the stock purchase agreement, which included a provision that the seller would be entitled to retain any cash held by Z Corp and Vidar at the time of the closing except for an agreed upon amount to be included in no less than $6,600 of working capital of Z Corp and Vidar to be delivered to the Company at the closing of the acquisition. Completion of this transaction was subject to certain conditions set forth in the stock purchase agreement, and that agreement contained certain covenants, representations and warranties among the parties. The Company completed the closing under the stock purchase agreement on January 3, 2012 and paid the $135,488 purchase price in cash at that time, net of cash received and subject to final closing adjustments. At the date of this Form 10-K, those final closing adjustments have not yet been completed.

     The Company leases office space and certain furniture and fixtures under various non-cancelable operating leases. Rent expense under operating leases was $2,738, $1,977 and $1,707 for 2011, 2010 and 2009, respectively.

     As of December 31, 2011, the Company has supply commitments with third party assemblers for printer assembly for the first quarter of 2012 that total $10,940 compared to $9,317 at December 31, 2010.

     For certain of the recent acquisitions, we are obligated to pay deferred purchase price totaling $1,420, due in 2012 and 2013, based upon the exchange rate at the date of acquisition. In addition, certain of the agreements contain earnout provisions under which the sellers of the acquired businesses can earn additional amounts. The total liabilities recorded for these earnouts as of December 31, 2011 was $1,862 compared to $3,297 at December 31, 2010. See Note 3 for details of acquisitions and related commitments.

Indemnification

     In the normal course of business the Company periodically enters into agreements to indemnify customers or suppliers against claims of intellectual property infringement made by third parties arising from the use of the Company's products. Historically, costs related to these indemnification provisions have not been significant and we are unable to estimate the maximum potential impact of these indemnification provisions on our future results of operations.

     To the extent permitted under Delaware law, the Company indemnifies directors and officers for certain events or occurrences while the director or officer is, or was serving, at the Company's request in such capacity, subject to limited exceptions. The maximum potential amount of future payments we could be required to make under these indemnification obligations is unlimited; however, the Company has directors and officers insurance coverage that may enable the Company to recover future amounts paid, subject to a deductible and the policy limits. There is no assurance that the policy limits will be sufficient to cover all damages, if any.

Litigation

     In 2008, DSM Desotech Inc. filed a complaint, which it has subsequently amended, in an action titled DSM Desotech Inc. v. 3D Systems Corporation and 3D Systems, Inc. in the United States District Court for the Northern District of Illinois (Eastern Division) asserting that the Company engaged in anticompetitive behavior with respect to resins used in certain of its stereolithography machines. The complaint further asserted that the Company is infringing upon two of DSM Desotech's patents relating to stereolithography machines.

 

 

     The Company filed answers to DSM Desotech's complaint in which, among other things, the Company denied the material allegations of DSM Desotech's complaint. In 2010, the Court issued a decision relating to the construction of the claims of the patents-in-suit following a Markman hearing held in 2009. In that decision, the Court generally adopted the claim constructions that the Company proposed.

     Fact discovery, including expert discovery, regarding the claims pending in this case concluded in 2011. The Company filed motions for summary judgment in December 2011 that seek rulings in its favor on all of DSM Desotech's claims in the litigation. As of the date of this Form 10-K, the Court has not yet ruled on those motions.

     The Company understands that DSM Desotech estimates the damages associated with its claims to be in excess of $40,000. The Company intends to continue to vigorously contest all the claims asserted by DSM Desotech.

     The Company has been pursuing patent infringement litigation against EnvisionTEC, Inc. and certain of its related companies since 2005. In this litigation, the Company asserted that EnvisionTEC infringed the Company's patents covering various three-dimensional solid imaging products and methods for creating physical three-dimensional models of an object and has sought injunctive relief and damages. EnvisionTEC's Perfactory machine and Vanquish machine (the Vanquish is now marketed as the PerfactoryXede and PerfactoryXtreme) are the two products accused of patent infringement.

     In 2008 the Court issued Markman claim constructions that generally adopted the claim constructions the Company proposed. Following a subsequent jury trial and certain other proceedings, the Court issued a judgment, as amended through 2011, to the effect that EnvisionTEC's Perfactory and Vanquish machines infringe certain claims of one of our patents and its Vanquish machines infringe certain claims of another of our patents.

     On October 13, 2011, EnvisionTEC's motion to stay damages discovery was denied by the Court, and damages discovery is underway. The Company intends to pursue its claims for damages against EnvisionTEC.

     On October 17, 2011, EnvisionTEC filed a Notice of Appeal with the United States Court of Appeals for the Federal Circuit seeking judicial review of the Court's judgment, and the Company filed a motion to dismiss that appeal on December 12, 2011. As of the date of this Form 10-K, the Court of Appeals has not yet ruled.

     In 2010, MSK K.K., a Japanese company, filed a complaint against the Company's Japanese subsidiary in the Tokyo District Court asserting, among other things, various contract claims associated with two laser sintering machines purchased from the Company's Japanese subsidiary in 2007.

     The plaintiff is seeking damages in excess of the Japanese Yen equivalent of $2,101. Several hearings have been held in the Tokyo District Court with respect to these claims. The Company's Japanese subsidiary is vigorously contesting all of the claims asserted by the plaintiff.

     The Company is also involved in various other legal matters incidental to its business. The Company believes, after consulting with counsel, that the disposition of these other legal matters will not have a material effect on our consolidated results of operations or consolidated financial position.