Blackberry 2014 Annual Report Download - page 30

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The Company’s R&D efforts are focused primarily on the following areas:
• developing productivity focused devices for current and emerging wireless network technologies and market
segments;
• revolutionizing smartphones through the further development of BlackBerry 10 OS;
• developing core technology and platforms for next generation air interfaces and networks, including evolution
of 3G and 4G wireless networks;
• evolving the functionality, security and performance of its BlackBerry wireless solution and BlackBerry
smartphones;
• building device software including operating systems, radio code, graphics and media frameworks, application
runtimes, networking technologies, and BlackBerry applications;
• developing server and desktop software for enterprise and consumer environments;
• developing infrastructure systems to provide the underlying support for wireless network and Internet
connectivity;
• providing a platform and tools for third party software developers and enterprises to write and wirelessly enable
applications;
• improving manufacturing and testing technologies; and
• developing accessories to be used with BlackBerry smartphones.
The Company also engages in longer term fundamental research both directly and by selective funding of university research
projects.
The Company endeavors to take advantage of specific government and academic financial assistance programs
to support its research activities where available.
The Company dedicates a major portion of its R&D investments to software for the BlackBerry wireless solution. This includes
device and platform software as well as device applications, server software and infrastructure with an emphasis on satisfying
the needs of both corporate IT departments and individual customers.
The Company has previously entered into two project development agreements with Technology Partnerships Canada (“TPC”),
which provided partial funding for certain research and development projects. Funding received by the Company from TPC for
the first agreement (TPC-1) totaled $3.9 million and was repayable in the form of royalties of 2.2% on gross product revenues
resulting from the project. The Company was obligated to pay royalties on all project revenues up to a maximum of $6.1
million. The Company has fully repaid its obligations with respect to TPC-1. The second agreement with TPC is for a
development project (TPC-2) under which total contributions from TPC have been $23.3 million. The Company had fulfilled
all prerequisite funding conditions and recorded all of the contributions as at February 28, 2004. This contribution is repayable
to TPC in the form of a royalty of 2.2% on gross business revenues, subject to the Company maintaining a minimum number of
Canadian employees and to certain annual maximum amounts through fiscal 2015, not exceeding $45 million. The Company
has recorded $4.9 million (CAD) on account of TPC royalty repayment expense with respect to TPC-2 obligation during fiscal
2014.
The Company also qualifies for investment tax credits (“ITC”) on eligible expenditures on account of Canadian scientific
research and experimental development. In fiscal 2014, the Company recognized the benefits of its ITC in its consolidated
statements of operations as a reduction in income tax expense.
Intellectual Property
The policy of the Company is to apply for patents, acquire and/or seek other appropriate proprietary or statutory protection
when it develops valuable new or improved technology. The Company believes that the rapid pace of technological change in
the communications industry makes patent and trade secret protection important, and that this protection must be supported by
other means including the ability to attract and retain qualified personnel, new product introductions and frequent product
enhancements.
The Company protects its technology through a combination of patents, designs, copyrights, trade secrets, confidentiality
procedures and contractual arrangements. The Company seeks to patent key concepts, components, protocols, processes and
other inventions that it considers to have commercial value or that will likely give the Company a technological advantage.
Although the Company applies for patent protection primarily in Canada, Europe and the United States, the Company has filed,
and will continue to file, patent applications in other countries where there exists a strategic technological or business reason to
do so. To broadly protect the Company’s inventions, the Company has a team of in-house patent attorneys and also consults
with outside patent attorneys who interact with employees, review invention disclosures and prepare patent applications on a
broad array of core technologies and competencies. As a result, the Company owns rights to an array of patented and patent
pending technologies relating to wireless communication technology.
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