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Research In Motion Limited • Incorporated Under the Laws of Ontario (In thousands of United States dollars, except per share data, and except as otherwise indicated)
Annual Report 2006 27
For the years ended March 4, 2006, February 26, 2005 and February 28, 2004
For the year ended February 28, 2004, the Company recorded charges with respect to the NTP matter
totaling $35.2 million to fully provide for enhanced compensatory damages, current and estimated future
costs with respect to ongoing legal and professional fees, prejudgment interest, and postjudgment interest
for the period August 6, 2003 to February 28, 2004. The $36.3 million attributable to enhanced
compensatory damages and postjudgment interest was classied as
Restricted cash
on the Consolidated
Balance Sheets as at February 28, 2004.
On March 16, 2005, the parties jointly announced the signing of a binding Term Sheet to resolve all current
litigation between them. The parties announced that RIM would pay NTP $450 million in nal and full
resolution of all claims to date against RIM, as well as a fully-paid up license going forward. During scal
2005, the Company recorded an incremental expense of $352.6 million to adjust the total NTP provision to
the resolution amount plus current and estimated legal, professional and other fees, less the previous
cumulative quarterly provisions for enhanced compensatory damages, prejudgment interest, plaintiff’s
attorney fees, estimated postjudgment interest and current and estimated future costs with respect to
legal and other professional fees, and the acquisition of a $20 million intangible asset. The $76.2 million
attributable to enhanced compensatory damages and postjudgment interest with respect to scal 2005
was classied as
Restricted cash
on the Consolidated Balance Sheets as at February 26, 2005.
On June 9, 2005, RIM announced that, due to an impasse in the process of nalizing a denitive licensing
and settlement agreement, RIM would take court action to enforce the Term Sheet. Further court
proceedings followed. On November 30, 2005, the District Court ruled that the March 2005 settlement was
not enforceable. During the third quarter of scal 2006, the Company recorded an expense of $26.2 million
to account for incremental current and estimated future legal and professional fees in the amount of
$7.9 million as well as an accrual in the amount of $18.3 million to write-off the intangible asset following
the November 30, 2005 ruling.
On December 16, 2005, the District Court issued a scheduling order which requested initial briefs by both
parties on these matters by January 17, 2006 with responses by both parties and the U.S. federal
government due by February 1, 2006 on the question of damages and an injunction in light of the CAFC’s
August 2005 ruling. A hearing was convened on February 24, 2006 at the District Court.
On March 3, 2006, the Company and NTP signed denitive licensing and settlement agreements. All terms
of the agreement were nalized and the litigation against the Company was dismissed by a court order on
March 3, 2006. The agreement eliminated the need for any further court proceedings or decisions relating
to damages or injunctive relief. On March 3, 2006, the Company paid NTP $612.5 million in full and nal
settlement of all claims against the Company, as well as for a perpetual, fully-paid up license going forward.
This amount included money already escrowed by the Company as of March 3, 2006.
The licensing and settlement agreement relates to all patents owned and controlled by NTP and covers all
of the Company’s products, services and technologies. NTP granted the Company an unfettered right to
continue its business, including its BlackBerry related business. The resolution permits the Company and
its partners to sell the Company’s products and services completely free and clear of any claim by NTP,
including any claims that NTP may have against wireless carriers, channel partners, suppliers or customers
in relation to the Company’s products or services, (including BlackBerry Connect and Built-In technology),
or in relation to third party products and services, to the extent they are used in connection with the
Company’s products and services.