HTC 2012 Annual Report Download - page 97

27. PLEDGED ASSETS
To protect the rights and interests of its employees, the Company placed an accrued employee bonus of NT$3,645,820
thousand (US$125,161 thousand) in a trust account in September 2012. The trust account, which is under restricted assets -
current, amounted to NT$3,645,820 thousand (US$125,161 thousand) as of December 31, 2012.
As of December 31, 2011 the Company had provided time deposits of NT$63,900 thousand to the National Tax
Administration of Northern Taiwan Province as part of the requirements for the Company to get a certificate stating that it
had no pending income tax.
28. COMMITMENTS AND CONTINGENCIES
As of December 31, 2012, unused letters of credit amounted to US$60 thousand and EUR107 thousand.
29. SIGNIFICANT CONTRACTS
Patent Agreements
The Company specializes in the research, design, manufacture and sale of smart handheld devices. To enhance the quality
of its products and manufacturing technologies, the Company has patent agreements, as follows:
Contractor Contract Term Description
Apple, Inc. November 11, 2012 - November 10, 2022
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.
Microsoft February 1, 2009 - March 31, 2015 Authorization to use an embedded operating
system; 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.
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.
Authorization to use CDMA technology to
manufacture and sell units; royalty payment based
on agreement.
Telefonaktiebolaget LM Ericsson December 15, 2008 - December 14, 2013 Authorization to use platform patent license;
royalty payment based on agreement.
Nokia Corporation January 1, 2003 - December 31, 2016 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 in the agreement.
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 stated in the agreement.
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 stated in the
agreement.
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.
Contractor Contract Term Description
Siemens Aktiengesellschaft July 2004 to the expiry dates of these
patents stated in the agreement.
Authorization to use GSM, GPRS or EDGE patent
license or technology; royalty payment based on
agreement.
IV International Licensing Netherlands, B.V November 2010 - June 2020 Authorization to use wireless technology; royalty
payment based on agreement.
(Concluded)
30. OTHER EVENTS
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, HTC America, Inc. and Exedea, Inc. ("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
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