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Item 3. Legal Proceedings

2021-02-26 compared with 2020-03-02 · 16 added, 44 removed, 23 unchanged (72% of the section changed)

Legal Proceedings

On April 30, 2015 and March 28, 2016, Telesign Corporation (“Telesign”) filed lawsuits (which were subsequently consolidated) against us in the United States District Court, Central District of California (“Telesign I/II”).

Telesign alleges in Telesign I/II that we are infringing four U.S.

patents that it holds:

7,945,034 (“034”), U.S.

8,462,920 (“920”), U.S.

8,687,038 (“038”) and U.S.

9,300,792 (“792”).

The consolidated Telesign I/II actions have been transferred to the United States District Court, Northern District.

The patent infringement allegations in the lawsuit relate to our two‑factor authentication use case , Authy, and an API tool to find information about a phone number.

Telesign seeks, among other things, to enjoin us from allegedly infringing the patents, along with damages for lost profits and damages based on a reasonable royalty.

On March 8, 2017, in response to a petition by us, the U.S.

Patent and Trademark Officer (“PTO”) issued an order instituting an inter partes review for the ‘792 patent.

On March 6, 2018, the PTO found all claims challenged by us in the inter partes review unpatentable.

On April 30, 2015 and March 28, 2016, Telesign Corporation (“Telesign”) filed lawsuits (which were subsequently consolidated) against us alleging that certain of our products infringed four patents owned by Telesign.

We challenged the validity of one of the patents at issue in an inter partes review at the U.S.

Patent and Trademark Office ("PTO"), and the PTO found all claims challenged by us in the inter partes review unpatentable.

Telesign did not appeal the PTO's decision and it is final.

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On November 8, 2018, Telesign appealed the judgment to the United States Court of Appeals for the Federal Circuit.

On January 9, 2020, the Federal Circuit Court affirmed the district court’s judgment.

Telesign has not indicated whether it will seek a further appeal of the judgment.

Based on, among other things, the district court’s judgment being affirmed on appeal in our favor, we do not believe a loss is probable or estimable.

On December 1, 2016, we filed a patent infringement lawsuit against Telesign in the United States District Court, Northern District of California (“Telesign III”), alleging infringement of United States Patent No.

On January 9, 2020, the Federal Circuit Court affirmed the district court’s judgment, and the matter is now concluded.

On December 1, 2016, we filed a patent infringement lawsuit against Telesign in the United States District Court, Northern District of California, alleging infringement of United States Patent No.

8,306,021 (“021”), United States Patent No.

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PTO”) for inter partes review of the ‘021, ‘465, and ‘376 patents.

On March 9, 2018, the PTO denied Telesign’s petition for inter partes review of the ‘021 patent and granted Telesign’s petitions for inter

partes review of the ‘465 and ‘376 patents.

On March 6, 2019, the PTO found all claims challenged by Telesign in the inter partes review unpatentable.

We have appealed the decisions to the United States Court of Appeals for the Federal Circuit.

Telesign III is currently stayed pending resolution of the inter partes reviews (and appeals from them) of the ‘465 and ‘376 patents.

We are seeking a judgment of infringement, a judgment of willful infringement, monetary and injunctive relief, enhanced damages, and an award of costs and expenses against Telesign.

On February 18, 2016, a putative class action complaint was filed in the Alameda County Superior Court in California, entitled Angela Flowers v.

The complaint alleges that our products permit the interception, recording and disclosure of communications at a customer’s request and are in violation of the California Invasion of Privacy Act.

The complaint seeks injunctive relief as well as monetary damages.

On January 2, 2018, the court issued an order granting in part and denying in part the plaintiff’s class certification motion.

The court certified two classes of individuals who, during specified time periods, allegedly sent or received certain communications involving the accounts of three of our customers that were recorded.

Following mediation, on January 7, 2019, the parties signed a long form settlement agreement, providing for a payment of $10.0 million into a common fund and injunctive relief involving certain updates to Twilio’s Acceptable Use Policy and customer documentation.

On January 15, 2019, the court entered an order granting preliminary approval of the settlement, and the parties signed an amended settlement agreement to conform to the court’s order.

The court entered a final order and judgment approving the settlement on June 17, 2019.

On August 30, 2019, we made a payment of $1.7 million to fund the settlement.

A compliance hearing has been scheduled for May 19, 2020.

Any additional loss related to this matter is neither probable nor reasonably possible.

On September 1, 2015, we were named as a defendant in a First Amended Complaint in a putative class action captioned Jeremy Bauman v.

David Saxe, et al.

pending in the United States District Court, District of Nevada relating to the alleged sending of unsolicited text messages to the plaintiffs and putative class members.

We filed a motion to dismiss, which was granted, and on September 20, 2016 the plaintiff filed a Second Amended Complaint with additional allegations that we violated the Telephone Consumer Protection Act (“TCPA”), and the Nevada Deceptive Trade Practices Act (“NDTPA”), NRS 41.600(2)(e).

On January 10, 2019, the court granted Plaintiffs’ motion for class certification under the TCPA and denied plaintiff’s request to certify a class under the NDTPA.

On February 13, 2019, the court issued an order denying our motion to dismiss as to Plaintiffs’ TCPA claim and granting dismissal as to Plaintiffs’ NDTPA claim.

On February 22, 2019, the court stayed the case and directed all parties to mediation, which was conducted on May 15, 2019.

On May 17, 2019, we and the original defendants (the “Saxe Defendants”) entered an agreement, which among other things, obligates the Saxe Defendants to fully fund all monetary and non-monetary aspects of the settlement of the matter and to obtain the dismissal of the plaintiffs’ and the class’s claims against us with prejudice.

On October 7, 2019, the plaintiffs filed an unopposed motion for settlement and an unopposed motion to dismiss us from the action without prejudice.

Based on, among other things, the dismissal motion and our agreement with the Saxe Defendants, we do not believe a loss is reasonably possible or estimable.

On March 9, 2018, the U.S PTO denied Telesign’s petition for inter partes review of the ‘021 patent and granted Telesign’s petitions for inter partes review of the ‘465 and ‘376 patents.

On March 6, 2019, the U.S.

PTO found all challenged claims of the '465 and '376 patents unpatentable.

We appealed the decisions to the United States Court of Appeals for the Federal Circuit who, on June 10, 2020, affirmed the U.S.

PTO's rulings.

The district court litigation had been stayed pending resolution of the inter partes reviews (and appeals from them).

After the appeals were concluded, the district court reopened the case and set trial on the ’021 Patent for July 2021.

We sought a judgment of infringement, a judgment of willful infringement, monetary and injunctive relief, enhanced damages, and an award of costs and expenses against Telesign.

A settlement agreement was executed on November 25, 2020, settling all claims.

On December 2, 2020, a joint stipulation of dismissal was filed and the Court entered an order dismissing the case with prejudice.

This matter is now concluded.

In addition to the litigation discussed above, from time to time, we may be subject to legal actions and claims in the ordinary course of business.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings