Nokia 2004 Annual Report Download - page 43

engage in litigation could have a material adverse effect on our business, results of operations and
financial condition. See ‘‘Item 3.D Risk Factors—Our products and solutions include increasingly
complex technology involving numerous new Nokia patented and other proprietary technologies,
as well as some developed or licensed to us by certain third parties. As a consequence, evaluating
the protection of the technologies we intend to use is more and more challenging, and we expect
increasingly to face claims that we have infringed third parties’ intellectual property rights. The
use of increasingly complex technology may also result in increased licensing costs for us,
restrictions on our ability to use certain technologies in our products and solution offerings,
and/or costly and time-consuming litigation. Third parties may also commence actions seeking to
establish the invalidity of intellectual property rights on which we depend.’’
Government Regulation
Our products are subject to various Federal Communications Commission, or FCC, regulations in
the United States. FCC regulation of the commercial mobile radio service industry has a direct and
substantial impact on our business. It is in our interest that the FCC maintains a regulatory
environment that ensures the continued robust growth of the wireless sector in the United States.
FCC type acceptance regulations require that our products meet specified radio frequency emission
standards and not cause unallowable interference with other services. It is very important to our
business that the FCC, along with other US government agencies, take actions to ensure that
sufficient spectrum is made available to meet the demand for advanced wireless products and
solutions. In addition, a continued deregulatory and pro-competitive approach by the FCC and
other agencies toward the Internet and the delivery of advanced mobile services should allow us
to expand our business operations by offering businesses and consumers new and innovative
mobile communications products and solutions.
EU regulation has in many areas a direct effect on the business of Nokia and our customers within
the single market of the European Union. For example, in the telecommunications sector the
Council of Ministers has adopted a set of directives which after their national implementation
harmonize EU Member States’ regulatory framework for all types of electronic communication
networks and services. Also other regulatory measures have been taken in the recent years in
order to open telecommunications competition in the internal markets and to address consumer
protection and environmental policy issues relating to the sector. We are in a continuous dialogue
with the EU institutions through our experts, industry associations and our office in Brussels.
Our business is subject to direct and indirect regulation, interpretations of regulations and the
possibility for enforcement actions by the FCC and other regulatory bodies in each of the countries
in which we or our customers do business. As a result, changes in various types of regulation and
their interpretation could affect our business adversely. For example, it is in our interest that the
Federal Communications Commission maintain a regulatory environment that ensures the
continued growth and healthy development of the wireless sector in the United States. In addition,
changes in regulation affecting the construction of base stations and other network infrastructure
could adversely affect the timing and costs of new network construction or expansion and the
commercial launch and ultimate commercial success of these networks.
Moreover, the implementation of new technological or legal requirements could impact our
products and solutions, manufacturing or distribution processes, and could affect the timing of
product introductions, the cost of our production or products as well as their commercial success.
Finally, export control, tariff, environmental, safety and other regulation that adversely affect the
pricing or costs of our products and solutions as well as new services related to our products
could affect our net sales and operating results. The impact of these changes in regulation could
affect our business adversely even though the specific regulations do not always apply to us or
our products and solutions directly.
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