HTC 2009 Annual Report Download - page 80


29. OTHER EVENTS
a.Lawsuit
In April 2008, IPCom GMBH & CO., KG (“IPCom”) filed a multi-claim
lawsuit against the Company with the District Court of Mannheim in
Germany, alleging that the Company infringed IPCom’s patents.
IPCom requested the court to issue an injunction to prevent the
Company from exporting to and selling in Germany devices made
using IPCom’s patents. In March 2009, the Company was served
with the court decision that was in favor of some of IPCom’s claims.
The court also granted IPCom’s request for an injunction, with the
serving of this injunction pending IPCom’s placement with the court
of a security bond of ɖ1 million. The Company appealed this
decision to the German Federal Patents Court in Munich and
requested a stay of the injunction pending the outcome of this
appeal. In May 2009, the court of appeals issued a stay of the
injunction and enforced this stay after the Company submitted to
the court a bank guarantee amounting to ɖ7.5 million, the amount
of the required security bond. Thus, the Company has continued
to ship products regularly to Germany.
On December 18, 2009, the District Court of Mannheim further ruled
that it will stay the proceedings on one of IPCom’s claims of breach
of patents because of the Court’s doubts about its validity. The
case will remain suspended pending the end of the claim invalidity
proceedings at the European Patent Office and the German Federal
Patents Court. As of January 18, 2010, the date of the
accompanying independent auditors’ report, there had been no
further hearing nor had a court decision been made.

On other lawsuits, the Company had examined their circumstances
and related information, including past experiences, expert opinions,
results of the evaluation of contingencies and estimation of the
degree of actual occurrence, and concluded that the amounts of
contingent assets or liabilities were appropriately accounted.
b.Construction for Taipei R&D headquarter

In September 2009, the Company’s board of directors resolved
was bought from Yulon Motors Ltd. The estimated budget for the
construction is NT$3,380,000 thousand (US$105,658 thousand) for
a total floor space of 92 thousand square meters. Construction is
scheduled to be completed by August 31, 2011 (Note 15 has more
information).

30. SEGMENT INFORMATION

Industry Type

The Company mainly manufactures and sells smart handheld
devices.

Foreign Operations

The Company does not have any foreign operations.

Export Sales

Export sales in 2008 and 2009 were as follows:
2008 2009
NT$ NT$ US$(Note 3)
Asia $ 22,520,501 $ 19,291,108 $ 603,036
North
America 54,981,628 70,729,422 2,210,985
Europe 60,022,831 44,000,227 1,375,437
Others 11,401,069 6,218,621 194,393
$ 148,926,029 $ 140,239,378 $ 4,383,851
Major Customers
Sales to major customers were as follows:
2008 2009
NT$ NT$ US$(Note 3)
A $ 21,631,630 $ 28,815,938 $ 900,779
B $ 21,371,515 $ 27,213,647 850,692
C $ 26,866,585 $ 12,662,556 395,829
$ 69,869,730 $ 68,692,141 $ 2,147,300



)LQDQFLDO,QIRUPDWLRQ

28. SIGNIFICANT CONTRACTS

Patent Agreements

To enhance the quality of its products and manufacturing technologies, the Company has patent agreements as follows:
Contractor Contract Term Description
Microsoft February 1, 2009 - January 31, 2011 Authorization to use embedded operating system;
royalty payment based on agreement.
Texas Instruments France January 14, 2000 - January 13, 2010 Authorization to use GSM system software; royalty
payment based on agreement.
Qualcomm Incorporated December 20, 2000 to the following dates:
a. If the Company materially breaches any covenant and fails
to take remedial action within 30 days after Qualcomm
¶ s
issuance of a written notice, the Company will be prohibited
from using Qualcomm
¶ s property or patents.
Authorization to use CDMA technology to manufacture
and sell units; royalty payment based on agreement.
b. Any time when the Company is not using any of
Qualcomm
¶ s intellectual property, the Company may
terminate this agreement upon 60 days
¶ prior written
notice to Qualcomm.
Ericsson Mobile Platform AB April 2003 - March 2011 Authorization to use EDGE reference design license
and support agreement; royalty payment based on
agreement.
Telefonaktiebolaget LM Ericsson December 15, 2008 - December 14, 2013 Authorization to use platform patent license
agreement; royalty payment based on agreement.
Nokia Corporation January 1, 2003 to the expiry dates of these patents. Authorization to use wireless technology, like GSM;
royalty payment based on agreement.
InterDigital Technology Corporation. December 31, 2003 to the expiry dates of these patents. Authorization to use TDMA and CDMA technology;
royalty payment based on agreement.
KONINKLIJKE PHILIPS ELECTRONICS N.V. January 5, 2004 to the expiry dates of these patents GSM/DCS 1800/1900 Patent License; royalty payment
based on agreement.
Motorola, Inc. December 23, 2003 to the latest of the following dates:
a. Expiry dates of patents
b. Any time when the Company is not using any of Motorola’s
intellectual property,
TDMA, NARROWBAND CDMA, WIDEBAND CDMA or
TD/CDMA Standards patent license or technology;
royalty payment based on agreement.
ALCATEL LUCENT November 2009 - November 2012 Authorization to use 2G (GSM/GPRS/EDGE/CDMA), 3G
(CDMA2000/WCDMA), HTML, MPEG, AMR patent
license or technology; royalty payment based on
agreement.
Siemens Aktiengesellschaft July 1, 2004 to the expiry dates of these patents. Authorization to use GSM, GPRS or EDGE patent
license or technology; royalty payment based on
agreement.


)LQDQFLDO,QIRUPDWLRQ