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196 2 0 1 0 H T C A N N U A L R E P O R T 197
FINANCIAL INFORMATION
30. OTHER EVENTS
Lawsuit
a. 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. In February 2009, the court granted a ruling on
patent #100 (EP 186189B1) which granted IPCom's request for an injunction to prevent the Company from importing devices into
Germany, with the serving of this injunction pending IPCom's placement with the court of a security bond of €1 million. The
Company appealed this decision to the court of Appeal in Karlsruhe and requested a stay of the injunction pending the outcome
of this appeal. In May 2009, the court of Appeal in Karlsruhe issued a stay of the injunction and enforced this stay after the
Company submitted to the court a bank guarantee amounting to €7.5 million, the amount of the required security bond. Thus, the
Company has continued to ship products regularly to Germany.
In December 2009, the District Court of Mannheim ruled that it will stay the proceedings on patent #107 (EP 122782) because of the
Court's doubts about its validity. The case was therefore stayed pending the decision of the EPO opposition division on validity.
The EPO subsequently revoked the patent #107(EP 122782) for all designated states in June 2010. Also, in February 2010, the
District Court of Mannheim further ruled that the Company had not infringed IPCom's patent #173 (EP 1018849).
In October 2010, IPCom filed a new complaint against the Company alleging patent infringement of patent #114 (EP 1226692B1) in
District Court of Dusseldorf. The Company has previously filed patent invalidity action against patent #114(EP 1226692B1) in EPO
and patent #114 (EP 1226692B1) has already been revoked by EPO and IPCom is appealing EPO's decision. In December 2010,
the #100 (EP 186189B1) was upheld in the Federal Patents Court; however, the chances of IPCom proving infringement are very low
because the revised claim is very restricted. The risk of this newly asserted patent is very low. As of January 18, 2011, the date of the
accompanying independent auditors' report, there had been no further hearing nor had a court decision been made.
b. In March 2010, Apple Inc. (“Apple”) filed a lawsuit against the Company concurrently with the U.S. International Trade Commission
(“ITC”) and U.S. District Court in Delaware (“Delaware court”), alleging that the Company infringed its patents. Apple requested ITC
and Delaware court to prevent the Company from importing to and selling devices in the United States and damage compensation,
respectively. The Company, subsequently filed ITC investigation and filed counterclaim with Delaware court against Apple for patent
infringements. The Company requested ITC and Delaware court to prevent Apple from importing and selling devices in the United
States and damage compensation, respectively. The Company evaluated that there was indirect association between the patents
used by the Company‘s devices and those claimed by Apple. The Company believes the lawsuits have limited impact on its financial
results or sales activities. As of January 18, 2011, the date of the accompanying independent auditors' report, there had been no
further hearing nor had a court decision been made.
c. 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.
Construction for Taipei R&D Headquarters
In September 2009, the Company's board of directors resolved to build the Taipei R&D headquarters in Xindian City and the land was
bought from Yulon Motors Ltd. The estimated budget for the construction is NT$3,380,000 thousand for a total floor space of 92
thousand square meters. Construction is scheduled to be completed by August 31, 2011 (Note 14 has more information).
31. SIGNIFICANT CONTRACTS
Industry Type
The Company mainly manufactures and sells smart handheld devices.
Foreign Operations
Because sales to unaliated customers and identifiable assets of foreign segments were less than 10 percent of that of the Company,
the Company was exempt from disclosing information on foreign operations.
Export Revenues
Export revenues in 2009 and 2010 were as follows:
2009 2010
NT$ NT$ US$ (Note)
Asia $ 19,310,968 $ 28,126,618 $ 965,555
North America 69,711,852 141,027,352 4,841,310
Europe 44,021,684 90,115,532 3,093,564
Others 6,620,411 11,867,133 407,385
$ 139,664,915 $ 271,136,635 $ 9,307,814
Major Customers
Sales to major customers were as follows
2009 2010
Customer NT$ NT$ US$ (Note)
A$ 28,816,033 $ 51,646,672 $ 1,772,972
B8,110,798 47,500,397 1,630,635
C27,213,647 38,544,296 1,323,182
$ 64,140,478 $ 137,691,365 $ 4,726,789