Nokia 2005 Annual Report Download - page 116

8.A.7 Litigation Nokia and several other mobile device manufacturers, distributors and network
operators were named as defendants in a series of class action suits filed in various US
jurisdictions. The cases were consolidated before a US federal district court in Baltimore, Maryland,
United States. The actions were brought on behalf of a purported class of persons in the United
States as a whole consisting of all individuals that purchased mobile phones without a headset. In
general, the complaints allege that the defendants should have included a headset with every
hand-held mobile telephone as a means of reducing any potential health risk associated with the
telephone’s use, and assert causes of action based on negligence, fraud and misrepresentation. The
relief sought by the complaint included unspecified amounts of compensation for phone and
headset costs, and attorneys’ fees. All of the cases were dismissed by the Federal Court on March 5,
2003, on the theory that the issues raised are primarily within the jurisdiction of the Federal
Communications Commission, not the courts. The US Fourth Circuit Court of Appeals reversed the
dismissal and remanded the cases back to the courts of origin. The individual courts are now
establishing scheduling orders that will determine how each case proceeds. Nokia does not believe
the cases have merit and will vigorously defend them.
Nokia has also been named as a defendant along with other mobile device manufacturers and
network operators in five lawsuits by individual plaintiffs who allege that the radio emissions
from mobile phones caused or contributed to each plaintiff’s brain tumor. The cases are now
before the courts in the District of Columbia. The cases are in the initial stages and motions to
dismiss are being filed. Nokia does not believe that any of these cases has merit and will
vigorously defend them.
We believe that the allegations described above are without merit, and intend to defend these
actions vigorously. Other courts that have reviewed similar matters to date have found that there
is no reliable scientific basis for the plaintiffs’ claims.
One of our customers in Turkey, Telsim Mobil Telekomuniksyon Hiz. A.S., has defaulted on its
obligations under a financing arrangement secured by us. In February 2004, the Arbitral Tribunal
in Z ¨ urich rendered an award fully approving the claim against Telsim, which was owned and
controlled by the Uzan family and their affiliates. In June 2004, the Swiss Federal Supreme Court
dismissed Telsim’s appeal which rendered the award final and enforceable. In addition, in
conjunction with co-plaintiff Motorola Credit Corporation, we have been successful in a US lawsuit
against individual members of the Uzan family and certain Uzan-controlled corporations. The
lawsuit alleges that the defendants fraudulently induced us and Motorola, through a pattern of
misleading and illegal conduct, to provide financing to Telsim. In July 2003, the trial judge held
that Nokia was entitled to a USD 1.7 billion judgment. That judgment has now been affirmed by
an appeals court. In August 2005, we reached a settlement with Telsim and Turkish Savings and
Deposit Insurance Fund (TMSF), which currently controls and manages Telsim’s assets. In
December 2005, the Turkish government completed an auction of Telsim’s assets to Vodafone.
Nokia’s settlement payment will be 7.5% of the purchase price, which is expected to be received
during the first quarter of 2006 in connection with the closing of the sale. On the basis of the US
judgment, we, however, vigorously continue the pursuit to recover all amounts due to us from the
Uzan family. We wrote off our total financing exposure to Telsim by the end of 2002.
Nokia is also involved in a number of lawsuits with Basari Elektronik Sanayi ve Ticaret A.S.
(‘‘Basari Elektronik’’) and Basari Teknik regarding claims associated with the expiration of a
product distribution agreement and the termination of a product service agreement. Those suits
are currently before various courts in Turkey. Basari Elektronik claims that it is entitled to
compensation for goodwill it generated on behalf of Nokia during the term of the distribution
agreement. Basari Teknik has filed several suits related to alleged unpaid invoices and a suit that
claims that the product service agreement between the parties was improperly terminated. Nokia
is vigorously defending all these claims.
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