Nokia 2012 Annual Report Download - page 38

or ETSI, often apply on a global basis, the enforcement of those rules may involve national courts,
which means that there may be a risk of different interpretation of those rules.
From time to time, some existing patent licenses may expire or otherwise become subject to
renegotiation. The inability to renew or finalize such arrangements or new licenses with acceptable
commercial terms may result in costly and time-consuming litigation, and any adverse result in any
such litigation may lead to restrictions on our ability to sell certain products and could result in
payments that potentially could have a material adverse effect on our operating results and financial
condition. These legal proceedings may continue to be expensive and time-consuming and divert the
efforts of our management and technical personnel from our business, and, if decided against us,
could result in restrictions on our ability to sell our products, require us to pay increased licensing fees,
substantial judgments, settlements or other penalties and incur expenses.
Our patent license agreements may not cover all the future businesses that we may enter; our existing
businesses may not necessarily be covered by our patent license agreements if there are changes in
our corporate structure or in companies under our control; or our newly-acquired businesses may
already have patent license agreements with terms that differ from similar terms in our patent license
agreements. This may result in increased costs, restrictions to use certain technologies or time-
consuming and costly disputes whenever there are changes in our corporate structure or in companies
under our control, or whenever we enter new businesses or acquire new businesses.
Nokia Siemens Networks has access to certain licenses through cross-licensing arrangements with its
current shareholders, Nokia and Siemens. If there are changes to Nokia Siemens Networks’ corporate
structure which lead to a deconsolidation of Nokia Siemens Networks from Nokia, Nokia Siemens
Networks may be unable to rely on some of its existing licenses. There can be no assurance that such
licenses could be replaced on terms that are commercially acceptable.
We make accruals and provisions to cover our estimated total direct IPR costs for our products. The
total direct IPR cost consists of actual payments to licensors, accrued expenses under existing
agreements and provisions for potential liabilities. We believe that our accruals and provisions are
appropriate for all technologies owned by others. The ultimate outcome, however, may differ from the
provided level which could have a positive or negative impact on our results of operations and financial
condition.
Any restrictions on our ability to sell our products due to expected or alleged infringements of third-
party intellectual property rights and any intellectual property rights claims, regardless of merit, could
result in material loss of profits, costly litigation, the payment of damages and other compensation, the
diversion of the attention of our personnel, product shipment delays or the need for us to develop non-
infringing technology or to enter into a licensing agreement. If licensing agreements were not available
or are not available on commercially acceptable terms, we could be precluded from making and selling
the affected products, or could face increased licensing costs. As new features are added to our
products, we may need to acquire further licenses, including from new and sometimes unidentified
owners of intellectual property. The cumulative costs of obtaining any necessary licenses are difficult to
predict and may over time have a negative effect on our operating results. See Item 4B. “Business
Overview—Devices & Services and Location & Commerce—Patents and Licenses” and “—Nokia
Siemens Networks—Patents and Licenses” for a more detailed discussion of our intellectual property
activities.
Our sales derived from, and manufacturing facilities and assets located in, emerging market
countries may be materially adversely affected by economic, regulatory, political or other
developments in those countries or by other countries imposing regulations against imports to
such countries.
We generate sales from and have manufacturing facilities located in various emerging market
countries. Sales from those countries represent a significant portion of our total sales and those
countries represent a significant portion of any expected industry growth. Most of our mobile products
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