Steelcase Inc.
Notes to Consolidated Financial Statements

Note 11

Patent Litigation Expense

In November 1985, a suit was filed against the Company alleging infringement of two patents covering powered panels used in furniture systems sold since 1978. The trial court ruled for the Company. The plaintiff subsequently appealed to the U.S. Court of Appeals for the Federal Circuit, which reversed the trial court’s decision in January 1989, and held that the Company infringed. Upon remand for determination of damages, the parties consented to the appointment of a Special Master to oversee further proceedings, including the binding, non-appealable determination of damages for the established infringement and resolution of related issues. The proceedings concluded in December 1996 resulting in a lump sum payment by the Company to the plaintiff in the amount of $211.5 million, representing $96.8 million in damages and $114.7 million in interest which accrued over the 17 years covered by the litigation. The charges reflected in the accompanying consolidated statement of income for 1997 are net of reserve estimates provided during 1994, which represented management’s best estimate of the outcome of the proceedings at that time.