InterDigital has reached agreement with Nokia resolving the dispute regarding Nokia’s royalty obligations for its sales of 2G TDMA-based products

April 27, 2006

2 Min Read

KING OF PRUSSIA, Pa. -- InterDigital Communications Corporation (Nasdaq: IDCC) announced today that the company and its wholly-owned subsidiary InterDigital Technology Corporation have reached agreement with Nokia Corporation resolving the dispute regarding Nokia’s royalty obligations for its sales of 2G TDMA-based products and related litigation matters. Under the agreement, Nokia is obligated to pay InterDigital a total of $253 million on or before April 28, 2006. Upon payment, Nokia will have a paid-up patent license covering sales of 2G TDMA-based products, which consist mainly of GSM/GPRS/EDGE terminal units and infrastructure. Also, InterDigital will release Nokia from infringement liability for its worldwide sales of 3G terminal units and infrastructure through April 26, 2006. The parties have agreed to terminate their 1999 patent license agreement originally scheduled to terminate at the end of 2006. As a result, Nokia’s sales of 3G products after April 26, 2006 will be unlicensed. InterDigital expects to continue negotiations with Nokia on this issue.

“Throughout this process, we were confident that we would be paid the amounts owed under the Arbitration Award by agreement or by court order,” commented William J. Merritt, President and Chief Executive Officer of InterDigital. “Nokia’s payment for its sales of 2G-TDMA based products falls within the range of our prior disclosures and is consistent with the royalty rates stated in the Award.”

Regarding future 3G sales, Mr. Merritt added, “We remain hopeful that we can reach an amicable resolution on this issue on terms acceptable to both parties. By terminating the current license agreement, the parties have a clean slate from which to work and resolve 3G issues.”

As part of the agreement, Nokia has agreed to dismiss its appeal filed in the United States Court of Appeals for the Second Circuit regarding the Arbitration Award and InterDigital has agreed to withdraw its arbitration demand recently filed with the International Chamber of Commerce dealing with the payment of royalties due under the Award. In addition, Nokia has agreed to withdraw its challenge before the High Court of Justice of England and Wales, Chancery Division, Patents Court as to three InterDigital TDMA-related patents. In exchange for its agreement to withdraw its challenge to these patents, InterDigital has agreed not to assert the three patents (and related non-U.K counterparts) involved in that case against Nokia and to grant Nokia a worldwide paid-up license for single-mode TIA/EIA-95 products.

Based upon its preliminary review of the accounting treatment for this matter, InterDigital believes that the entire $253 million payment will be recognized in its 2006 income statement. The company will provide additional detailed disclosure upon the completion of its analysis.

InterDigital Inc. (Nasdaq: IDCC)

Nokia Corp. (NYSE: NOK)

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