Nokia 2005 Annual Report Download - page 42

data and evolving technologies. We believe companies like Nokia with a strong IPR position,
cumulative know-how and IPR expertise can have a competitive advantage in the converging
industry, and on the increasingly competitive marketplace.
In many aspects, the business models for mobile services have not yet been established. The lack
of availability of licenses for copyrighted content, delayed negotiations, or restrictive copyright
licensing terms may have an adverse effect on the cost or timing of content related services by us,
operators or third party service providers, and may also indirectly affect the sales of our mobile
devices.
From time to time we are subject to patent infringement claims from third parties. We believe
that, based on industry practice and applicable legal obligations, any necessary licenses or rights
under patents that we may require can be obtained on terms that would not have a material
adverse effect on our business, results of operations or financial condition. Nevertheless, in some
situations, necessary licenses may not be available on acceptable commercial terms, if at all. The
inability to obtain necessary licenses or other rights, or the need to engage in litigation, could
have a material adverse effect on our business, results of operations and financial condition. See
‘‘Item 3.D Risk Factors—We must develop or otherwise acquire complex, evolving technologies to
use in our business. If we fail to develop or otherwise acquire these complex technologies as
required by the market, with full rights needed to use in our business, or to successfully
commercialize such technologies as new advanced products and solutions that meet customer
demand, or fail to do so on a timely basis, this may have a material adverse effect on our
business, our ability to meet our targets and our results of operations.’’ See also ‘‘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 rights related to the technologies we
use or 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
In the United States, our products are subject to government regulations that have a direct and
substantial impact on our business. It is in our interest for the Federal Communications
Commission, or FCC, to maintain a regulatory environment for mobile device and network
products that ensures the continued robust growth of the wireless sector. Most of our products
must meet specified radio frequency emission and other standards. The FCC and other US agencies
also regulate the spectrum available for wireless products and solutions, and it is important for us
that these agencies make sufficient and suitable spectrum available to meet the demands of
advanced wireless products and services.
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 rules that harmonizes the EU Member States’ regulatory
framework for electronic communication networks and services, and aims to encourage
competition in the internal electronic communications markets. Also, other regulatory measures
have been taken in recent years in order 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.
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