ARMHY 12/31/05 20-F Annual Report
posted on
Aug 26, 2006 05:37PM
LEGAL PROCEEDINGS
Nazomi. In May 2002, Nazomi Communications, Inc. (``Nazomi``) filed suit
against ARM alleging willful infringement of Nazomi`s US Patent No. 6,332,215.
ARM answered Nazomi`s complaint in July 2002 denying infringement. ARM moved
for summary judgment and a ruling that the technology does not infringe
Nazomi`s patent. The United States District Court for the Northern District of
California granted ARM`s motion, and Nazomi appealed the District Court`s
ruling. On September 7, 2004, the Court of Appeals for the Federal Circuit
heard the appeal and issued its decision on April 11, 2005. Because, in the
opinion of the Court of Appeals for the Federal Circuit, the District Court did
not construe the disputed claim term in sufficient detail for appellate review,
the Court of Appeals for the Federal Circuit remanded the dispute back to the
District Court for further analysis. A supplementary ``Markman`` hearing to
assist in a more detailed claim construction analysis was held on October 11,
2005 and we are presently awaiting the ruling of the District Court. Based on
legal advice received to date, ARM has no cause to believe that the effect of
the original ruling by the District Court will not be upheld.
ARM`s license agreements with its licensees often include provisions
which, subject to the satisfaction of certain conditions, require ARM to
indemnify its licensees if the licensed technology infringes the intellectual
property rights of a third party. The following proceedings, in which products
incorporating ARM`s processor designs have been accused of patent infringement,
are subject to such indemnification provisions.
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Motorola/Freescale. STMicroelectronics, Inc. had accused Motorola, Inc.
(``Motorola``) (STMicroelectronics, Inc v. Motorola, Inc., United States District
Court, Eastern District of Texas, Sherman Division, Civil Action No. 4:03CV276)
of infringing several of its patents. Motorola counterclaimed with allegations
that STMicroelectronics, Inc. and STMicroelectronics N.V. infringe several
Motorola patents, including Motorola`s US Patent No. 5,084,814 (the ``814
Patent``). Motorola alleged that products based on ARM`s processor designs
infringe the 814 Patent. ARM has been closely involved in the defense of this
litigation to the extent that it concerns the 814 Patent and is confident that
the subject technology does not infringe the 814 patent. ARM has been informed
that the parties to the litigation have agreed upon the final terms of
settlement of this litigation. The terms of the settlement are not known to
ARM. ARM believes that it has now fully satisfied its indemnification
obligations with respect to this litigation. Motorola also accused Analog
Devices, Inc. (Motorola, Inc. v. Analog Devices, Inc., United States District
Court, Eastern District of Texas, Beaumont Division, Civil Action No.
1:03-CV-0131) of infringing several of its patents including Motorola`s 814
Patent. Motorola alleged that products based on ARM`s processor designs
infringe the 814 Patent. ARM has been informed by Motorola that this litigation
between Analog Devices, Inc. and Motorola has been settled. The terms of the
settlement have not been disclosed to ARM.
On November 4, 2004, ARM entered into an agreement with Freescale
Semiconductor, Inc. (``Freescale``) which, subject to certain exceptions and
conditions, will permit ARM to license a broad range of ARM developed
technology on the understanding that Freescale will not assert any of the
patents in its substantial patent portfolio (which includes the 814 Patent)
against such technology. Freescale was formed by a spin-off from Motorola and
comprised business activities relating to microprocessors previouly conducted
by Motorola. In consideration for the substantial benefit to ARM and its
licensees of this agreement, ARM will pay Freescale $13.3 million in four
equal, semi-annual installments over the next two years.
Technology Properties Limited, Inc. On October 24, 2005 Technology
Properties Limited, Inc. (``TPL``) filed suit against Fujitsu Limited et al.
(including ARM`s licensees Fujitsu, Matsushita, NEC and Toshiba) (Technology
Properties Limited, Inc., v. Fujitsu Limited et al, No.2:05-cv-00494) in the
Eastern District of Texas alleging willful infringement of TPL`s US patents
6,598,148, 5,809,336 and 5,784,584. It was reported on March 2, 2006, that
Fujitsu had entered into a settlement agreement with TPL but the proceedings
continue with respect to the other defendants. Following a detailed analysis of
the relevant patent claims ARM does not believe that any of the claims are
infringed by any ARM technology.