HTC 2012 Annual Report Download - page 121

31. OTHER EVENT
(1) Lawsuit
a. In April 2008, IPCom GMBH & CO., KG ("IPCom") filed a multi-claim lawsuit against the Company with the District
Court of Mannheim, Germany, alleging that the Company infringed IPCom's patents. In November 2008, the
Company filed declaratory judgment action for non-infringement and invalidity against three of IPCom's patents with
the Washington Court, District of Columbia.
In October 2010, IPCom filed a new complaint against the Company alleging patent infringement of patent owned by
IPCom in District Court of Dusseldorf, Germany.
In June 2011, IPCom filed a new complaint against the Company alleging patent infringement of patent owned by
IPCom with the High Court in London, the United Kingdom. In September 2011, the Company filed declaratory
judgment action for non-infringement and invalidity in Milan, Italy. Legal proceedings in above-mentioned courts in
Germany and the United Kingdom are still ongoing. The Company evaluated the lawsuits and considered the risk of
patents-in-suits are low. Also, preliminary injunction and summary judgment against the Company are very unlikely.
In March 2012, Washington Court granted on the Company's summary judgment motion and ruled on non-
infringement of two of patents-in-suit, IPCom has filed motion for reconsideration on the two patents with the Appeal
court. In December 2012, the district court has granted a stay on case currently in the US pending appeal decision.
As of March 18, 2013, the date of the accompanying independent auditors' report, there had been no critical hearing
nor had a court decision been made, except for the above.
b. From March 2010 onwards, Apple Inc. ("Apple") and the Company have filed patent infringement actions against the
other respectively in the U.S. International Trade Commission ("ITC"), U.S. District Court for the District of Delaware,
German district courts, and English High Court. On November 11, 2012, the two companies have reached a global
settlement that includes the dismissal of all current lawsuits and a ten-year license agreement. The scope of this
license agreement covers both the current and future patents held by the parties as agreed upon and specifically set
forth in the agreement, with royalties payable as prescribed.
c. In January 2012, Eastman Kodak ("Kodak") filed a lawsuit against the Company concurrently with the ITC and U.S.
District Court of Western District of New York ("New York court"), alleging that the Company infringed its patents.
Kodak requested ITC and New York court to prevent the Company from exporting to and selling in United States
devices made using Kodak's patents and damage compensation, respectively. In January 2013, a U.S. bankruptcy
judge presently approved the sale of 1,100 Kodak digital image patents including the patents-in-suit to a third party.
All litigation procedures involving HTC have been stayed.
d. In May 2012, Nokia Corporation ("Nokia") filed a lawsuit against the Company concurrently with the ITC, Delaware
court and the District Courts of Mannheim, Munich and Dusseldorf in Germany ("German courts"), alleging that the
Company infringed its patents. Nokia requested ITC to prevent the Company from exporting to and selling in United
States devices made using Nokia's patents and requested Delaware court and German courts to grant damage
compensation upon Nokia. The Company subsequently filed revocation actions against Nokia's asserted patents in
London High Court. The Company evaluated that there is no direct relation between the associated technology used
in the Company's devices and patents claimed by Nokia. The Company believes the lawsuits have limited impact on
its financial results or sales activities.
As of March 18, 2013, the date of the accompanying independent auditors' report, there had been no critical hearing
nor had a court decision been made, except for the above.
e. The Company had shared lawsuit-related costs on the basis of common benefits and agreements between the
Company and its vendors and customers. For 2011 and 2012, companies that the Company shared lawsuit-related
costs with included VIA Technologies Inc. and its subsidiaries.
f. On the basis of its past experience and consultations with its legal counsel, the Company has evaluated the possible
effects of the contingent lawsuits on its business and financial condition, and recognized its estimable cost.
(2) The significant financial assets and liabilities denominated in foreign currencies were as follows:
December 31
2011 2012
Foreign Currencies Exchange Rate Foreign Currencies Exchange Rate
Financial assets
Monetary items
USD $3,143,462 30.28 $2,967,669 29.13
EUR 498,383 39.19 317,011 38.42
GBP 54,254 46.73 71,728 47.09
JPY 373,750 0.3906 10,626,742 0.3383
RMB 1,344,825 4.77 2,142,619 4.68
Non-monetary items
USD 89,493 30.28 123,781 29.13
Investments accounted for by the equity method
USD 2,500 30.28 193,639 29.13
Financial liabilities
Monetary items
USD 3,372,400 30.28 3,107,166 29.13
EUR 583,741 39.19 297,681 38.42
GBP 53,624 46.73 53,183 47.09
JPY 678,211 0.3906 17,276,121 0.3383
RMB 1,463,205 4.77 2,310,079 4.68
32. OPERATING SEGMENT
Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment
performance focuses on types of goods or services delivered or provided. Under SFAS No. 41 - "Operating Segments," the
Company is organized and managed as a single reportable business segment. The Company's operations are mainly the research,
design, manufacture and sale of smart handheld devices, and the operating revenue is more than 90 percent of the total revenue.
Operating segment financial information is as follows:
(1) Geographical Areas
The Company's non-current assets (other than financial instruments, deferred income tax assets and post-employment
benefit assets) located in Taiwan and in a foreign country as of December 31, 2011 and 2012 and revenues from Taiwan
and from a foreign country that were 10 percent or more of consolidated total revenues for the years ended December
31, 2011 and 2012 were as follows:
Non-current Assets Revenues
December 31 Year Ended December 31
2011 2012 2011 2012
NT$ NT$ US$ (Note 3) NT$ NT$ US$ (Note 3)
Taiwan $24,807,110 $30,030,135 $1,030,936 $20,140,051 $20,403,572 $700,456
Country Y 10,271,855 1,249,807 42,906 215,842,904 68,200,497 2,341,326
Country Z 5,240,612 5,080,203 174,404 21,866,615 53,557,704 1,838,639
Others 13,046,109 11,215,773 385,038 207,945,203 146,858,402 5,041,656
$53,365,686 $47,575,918 $1,633,284 $465,794,773 $289,020,175 $9,922,077
2
3
8
8
FINANCIAL INFORMATION
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3
9
8
FINANCIAL INFORMATION