Qualcomm 2011 Annual Report Download - page 22

From time to time, companies have asserted, and may again assert, patent, copyright and other intellectual property rights against our
products or products using our technologies or other technologies used in our industry. These claims have resulted and may again result in our
involvement in litigation. We may not prevail in such litigation given the complex technical issues and inherent uncertainties in intellectual
property litigation. If any of our products were found to infringe on another company’s intellectual property rights, we could be subject to an
injunction or required to redesign our products, which could be costly, or to license such rights and/or pay damages or other compensation to
such other company. If we were unable to redesign our products, license such intellectual property rights used in our products or otherwise
distribute our products through a licensed supplier, we could be prohibited from making and selling such products. In any potential dispute
involving other companies’ patents or other intellectual property, our chipset foundries, semiconductor assembly and test providers and
customers could also become the targets of litigation. We are contingently liable under certain product sales, services, license and other
agreements to indemnify certain customers against certain types of liability and/or damages arising from qualifying claims of patent
infringement by products or services sold or provided by us. Reimbursements under indemnification arrangements could have an adverse effect
on our results of operations. Furthermore, any such litigation could severely disrupt the supply of our products and the businesses of our chipset
customers and their wireless operator customers, which in turn could hurt our relationships with them and could result in a decline in our chipset
sales and/or reductions in our licensees’ sales, causing a corresponding decline in our chipset and/or licensing revenues. Any claims, regardless
of their merit, could be time consuming to address, result in costly litigation, divert the efforts of our technical and management personnel or
cause product release or shipment delays, any of which could have an adverse effect upon our operating results.
We expect that we may continue to be involved in litigation and may have to appear in front of administrative bodies (such as the U.S.
International Trade Commission) to defend against patent assertions against our products by companies, some of whom are attempting to gain
competitive advantage or leverage in licensing negotiations. We may not be successful in such proceedings, and if we are not, the range of
possible outcomes includes everything from royalty payment to an injunction on the sale of certain of our chipsets (and on the sale of our
customers’ devices using our chipsets). Any imposition of royalty payments might make purchases of our chipsets less economical for our
customers. A negative outcome in any such proceeding could severely disrupt the business of our chipset customers and their wireless operator
customers, which in turn could harm our relationships with them and could result in a decline in our share of worldwide chipset sales and/or a
reduction in our licensees’ sales to wireless operators, causing corresponding declines in our chipset and/or licensing revenues.
A number of other companies have claimed to own patents essential to various CDMA standards, GSM standards and OFDMA standards or
implementations of systems based on such standards. If we or other product manufacturers are required to obtain additional licenses and/or pay
royalties to one or more of such other patent holders, this could have an adverse effect on the commercial implementation of our CDMA, GSM,
OFDMA or multimode products and technologies, demand for our licensees’ products and our results of operations.
Our earnings and stock price are subject to substantial quarterly and annual fluctuations and to market downturns.
The market price of our common stock has fluctuated in the past and is likely to fluctuate in the future as well. Factors that may have a
significant impact on the market price of our stock include, among others:
In the past, securities class action litigation often has been brought against a company following periods of volatility in the market price of
its securities. Due to changes in the potential volatility of our stock price, we may be the target of securities litigation in the future. Securities
litigation could result in substantial uninsured costs and divert management’s attention and resources.
Changes in financial market volatility and liquidity may result in declines in the value and performance of our significant
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• volatility of the stock market in general and technology-based companies in particular that is often unrelated to the operating
performance of any specific public company;
• announcements concerning us or our competitors, including the selection of wireless communications technology by wireless operators
and the timing of the roll-out of those systems;
• international developments, such as technology mandates, political developments or changes in economic policies;
• changes in recommendations of securities analysts;
• proprietary rights or product or patent litigation against us or against our customers or licensees;
• strategic transactions, such as spin-offs, acquisitions and divestitures;
• unexpected and/or significant changes in the average selling price of our licensees’ products and our products;
• unresolved disputes with licensees that result in non-payment and/or non-recognition of royalty revenues that may be owed to us; or
• rumors or allegations regarding our financial disclosures or practices.