Qualcomm 2011 Annual Report Download - page 30

Icera Complaint to the European Commission
: On June 7, 2010, the European Commission (the Commission) notified and provided us with
a redacted copy of a complaint filed with the Commission by Icera, Inc. alleging that we have engaged in anticompetitive activity. We have been
asked by the Commission to submit a preliminary response to the portions of the complaint disclosed to us, and we submitted our response in
July 2010. On October 19, 2011, the Commission notified us that we should provide to the Commission additional documents and information.
We continue to cooperate fully with the Commission’s preliminary investigation.
Korea Fair Trade Commission (KFTC) Complaint: On January 4, 2010, the KFTC issued a written decision, finding that we violated South
Korean law by offering certain discounts and rebates for purchases of its CDMA chips and for including in certain agreements language
requiring the continued payment of royalties after all licensed patents have expired. The KFTC levied a fine, which we paid in the second quarter
of fiscal 2010. We are appealing that decision in the Korean courts.
Japan Fair Trade Commission (JFTC) Complaint : The JFTC received unspecified complaints alleging that our business practices are, in
some way, a violation of Japanese law. On September 29, 2009, the JFTC issued a cease and desist order concluding that our Japanese licensees
were forced to cross-license patents to us on a royalty-
free basis and were forced to accept a provision under which they agreed not to assert their
essential patents against our other licensees who made a similar commitment in their license agreements with us. The cease and desist order
seeks to require us to modify our existing license agreements with Japanese companies to eliminate these provisions while preserving the license
of our patents to those companies. We disagree with the conclusions that we forced our Japanese licensees to agree to any provision in the
parties’ agreements and that those provisions violate the Japanese Antimonopoly Act. We have invoked our right under Japanese law to an
administrative hearing before the JFTC. In February 2010, the Tokyo High Court granted our motion and issued a stay of the cease and desist
order pending the administrative hearing before the JFTC. The JFTC has had ten hearing days to date, with an additional hearing day scheduled
on December 15, 2011 and additional hearing days yet to be scheduled.
Formal Order of Private Investigation: On September 8, 2010, we were notified by the Securities and Exchange Commission’s (SEC) Los
Angeles Regional office of a formal order of private investigation. We understand that the investigation arose from a “whistleblower’s”
allegations made in December 2009 to the audit committee of our Board of Directors and to the SEC. The audit committee completed an internal
review with the assistance of independent counsel and independent forensic accountants. This internal review into the allegations and related
accounting practices did not identify any errors in our financial statements. We continue to cooperate with the SEC’s ongoing investigation.
Other: We have been named, along with many other manufacturers of wireless phones, wireless operators and industry-
related organizations,
as a defendant in purported class action lawsuits, and individually filed actions pending in federal court in Pennsylvania and Washington D.C.
superior court, seeking monetary damages arising out of our sale of cellular phones. The federal class action has been dismissed, leaving only the
individually filed actions in Washington D.C. active.
While there can be no assurance of favorable outcomes, we believe the claims made by other parties in the foregoing matters are without
merit and will vigorously defend the actions. We have not recorded any accrual at September 25, 2011 for contingent liabilities or recognized
any asset impairment charges during fiscal 2011 associated with the legal proceedings described above based on our belief that liabilities, while
possible, are not probable. Further, any possible range of loss cannot be reasonably estimated at this time. We are engaged in numerous other
legal actions not described above arising in the ordinary course of our business and, while there can be no assurance, we believe that the ultimate
outcome of these actions will not have a material adverse effect on our operating results, liquidity or financial position.
Item 4. (Removed and Reserved)
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