QUALCOMM & Nokia IPR Litigation
From page 19 (page 20 of the PDF) of the 20-F ...
>> From time to time, some existing patent licenses may expire, or otherwise may become subject to renegotiation. The inability to renew or finalize such arrangements with acceptable commercial terms may result in costly and timeconsuming litigation, and any adverse result in any such litigation may lead to restrictions on our ability to sell certain products or solutions, and could result in payments that potentially could have a material adverse impact on our operating results. Nokia is currently in negotiation regarding the applicable license fees for a subset of Qualcomm Incorporated’s (‘‘Qualcomm’’ including its affiliates) patents and access for Qualcomm to a subset of Nokia patents due to an expiration in part of the current license agreement between the parties on April 9, 2007. Our general experience is that these kind of negotiations eventually are successfully concluded, however, there is a risk that litigation will create uncertainty regarding the license fees. During the time period from expiration of the payment obligations until we reach an agreement on new license fees, we would accrue for and expense an appropriate royalty. However, from a cash flow perspective, the cash payments to Qualcomm would most likely decrease or cease until we reach an agreement. The ultimate outcome may differ from the provided level which could have a positive or negative impact on our operating results. In addition, there is a risk that once the ultimate outcome is available, it may have a negative impact on our cash flow. ###
From Page 112 (113 of the PDF)
>> In November 2005, Qualcomm Incorporated (‘‘Qualcomm’’) and its wholly owned subsidiary Snap Track, Inc. filed a patent infringement suit against Nokia Corporation and Nokia Inc. in the Federal District Court for the Southern District of California. The lawsuit involves twelve patents that Qualcomm apparently contends apply to the manufacture and sale of unidentified GSM products. On December 20, 2005, Nokia moved to stay the lawsuit pending resolution of a confidential arbitration pending between Nokia and Qualcomm. That lawsuit remains stayed in light of the arbitration. A hearing in the confidential arbitration is currently set for March 2007. Nokia will continue to vigorously defend its rights in these actions.
In May 2006, Qualcomm additionally filed a patent infringement lawsuit against Nokia in the United Kingdom. This lawsuit involves two European patents (United Kingdom) that Qualcomm apparently contends apply to the manufacture and sale of GPRS phones capable of operating in accordance with the GPRS and/or EDGE standards and not having a capability to operate with CDMA technology. Trial on infringement, validity and essentiality of the patents in suit is currently set for July 2007. Trial on relief and other issues, if appropriate, will be held some time thereafter. Nokia will vigorously defend itself against these claims.
In June 2006, Qualcomm also filed a complaint against Nokia in the International Trade Commission (the ‘‘ITC’’) seeking an order forbidding the importation of Nokia’s GSM handsets into the United States. The ITC initiated a proceeding in July 2006. In November 2006, Nokia filed a motion to terminate the investigation as to the 3 patents remaining in the action on the grounds that the ITC lacks jurisdiction to hear the claims and that Qualcomm had waived its rights to seek injunctive relief. The ITC denied Nokia’s motion in December 2006, and Nokia has sought leave to appeal this decision. The initial hearing in this action is currently scheduled for March 2007, with a final determination by September 2007. Nokia is seeking to stay the proceedings in light of the confidential arbitration referenced above. Nokia will vigorously defend itself against these claims.
In August 2006, Qualcomm filed a patent infringement lawsuit against Nokia in Germany. This lawsuit involves two European patents (DE) that Qualcomm apparently contends apply to the manufacture and sale of certain GPRS phones. Nokia is currently set to file a defense in February 2007. Nokia will vigorously defend itself against these claims.
In August 2006, Nokia initiated an action in Delaware Chancery Court seeking a declaration that Qualcomm had breached its licensing obligations concerning declared essential GSM/GPRS/EDGE and WCDMA patents by failing to offer fair, reasonable and nondiscriminatory (‘‘FRAND’’) terms and asked the Court to declare that injunctions are unavailable for patents that Qualcomm has voluntarily declared essential to the ETSI standard setting organization. Nokia has also asked the Delaware Court to enjoin Qualcomm from requesting injunctive relief in the actions Qualcomm has filed outside the United States involving patents it voluntarily declared essential to ETSI. In addition, Nokia has requested the Court to specify the proper framework for determining the FRAND terms and to order specific performance requiring Qualcomm to negotiate in good faith based on the FRAND framework as determined by the Court. Qualcomm has moved to dismiss this action on multiple bases, which Nokia has refuted, and the parties are currently waiting for the Court to issue its ruling. Trial is scheduled for July or August 2007. Nokia will continue to vigorously defend its rights in this action.
In October 2006, Qualcomm filed a patent infringement lawsuit against Nokia in France. This lawsuit involves two European patents (FR) that Qualcomm apparently contends apply to the manufacture and sale of certain GPRS phones. Nokia is currently set to file a defense in March 2007. Nokia will vigorously defend itself against these claims. In addition, in October 2006, Qualcomm filed a patent infringement lawsuit against Nokia in Italy. This lawsuit involves two European patents (IT) that Qualcomm apparently contends apply to the manufacture and sale of certain GPRS phones. Nokia’s defense and counterclaims were filed in December 2006. Nokia will vigorously defend itself against these claims. ###
Provisions at December 31, 2006 for IPR Infringements are €284 (PDF page 185 F-50) ...
>> The IPR provision is based on estimated future settlements for asserted and unasserted past IPR infringements. Final resolution of IPR claims generally occurs over several periods. This results in varying usage of the provision year to year. In 2006, usage of the provision includes an amount of EUR 208 million that was released against the settlement to InterDigital Communications Corporation. ###
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