What changed in this filing

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Item 1. Business

2022-02-17 compared with 2021-02-18 · 153 added, 116 removed, 150 unchanged (64% of the section changed)

InterDigital, Inc.

("InterDigital") is a research and development company that licenses its innovations to the global wireless and consumer electronics industries.

("InterDigital") is a global research and development company focused primarily on wireless, visual and related technologies.

We design and develop advanced technologies that enable connected, immersive experiences in a broad range of communications and entertainment products and services.

Since our founding in 1972, our engineers have designed and developed a wide range of innovations that are used in wireless products and networks, from the earliest digital cellular systems to 5G and, today, solutions that we believe will shape the world beyond 5G.

With the acquisition of the patent licensing business of visual technology industry leader Technicolor SA ("Technicolor") in 2018 (the "Technicolor Patent Acquisition"), followed by the acquisition of their Research & Innovation unit in 2019 (the "R&I Acquisition" and, together with the Technicolor Patent Acquisition, the "Technicolor Acquisitions"), we are now a leader in video processing, encoding/decoding, and display technology, with a significant Artificial Intelligence ("AI") research effort that intersects with both wireless and visual technologies.

InterDigital is one of the largest pure research & development and licensing companies in the world, with one of the most significant patent portfolios in the wireless and video industries.

We license our innovations worldwide to companies in a variety of industries, including wireless communications, consumer electronics, personal computer, and automotive.

Since our founding in 1972, our engineers have designed and developed a wide range of innovations that are used in wireless products and networks, from the earliest digital cellular systems to 5G.

With the acquisitions of the patent licensing business (the "Technicolor Patent Acquisition") and research and innovation unit of visual technology industry leader Technicolor SA ("Technicolor") (together, the "Technicolor Acquisitions"), we are a leader in video processing, encoding/decoding, and display technology, with a significant Artificial Intelligence ("AI") research effort that intersects with both wireless and visual technologies.

InterDigital is one of the largest pure research and development and licensing companies in the world, with one of the most significant patent portfolios of fundamental wireless and video technologies.

As of December 31, 2021, InterDigital's wholly owned subsidiaries held a portfolio of approximately 27,500 patents and patent applications related to wireless communications, video coding, display technology, and other areas relevant to the wireless and consumer electronics industries.

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Our wireless portfolio has largely been built through internal development, supplemented by joint development projects with other companies, and select acquisitions of patents and companies.

Products incorporating our patented inventions in wireless include:

Our video technology portfolio combines patents and applications that InterDigital obtained through the Technicolor Acquisitions and patents and applications created by internal development.

Our patented wireless inventions, our patented video inventions, or both have been implemented in a wide variety of products.

Products incorporating our patented inventions include:

mobile devices, such as cellular phones, tablets, notebook computers and wireless personal digital assistants;

televisions, gaming consoles, set-top boxes, streaming devices and other consumer electronics;

wireless infrastructure equipment, such as base stations;

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and Internet of Things ("IoT") devices and software platforms.

Our video technology portfolio largely represents patents and applications that InterDigital obtained through the Technicolor Patent Acquisition, supplemented by internal development.

Our patented inventions in video are incorporated in a range of products and services, including cellular phones, notebook computers, televisions, gaming consoles, set-top boxes, streaming devices and other consumer electronics.

InterDigital derives revenues primarily from patent licensing, with contributions from patent sales, product sales, technology solutions licensing and sales and engineering services.

In 2020, our total revenues were $359.0 million, including recurring revenues of $336.8 million, which consisted of current patent royalties and current technology solutions revenue.

In 2019, our total revenues were $318.9 million, which consisted of recurring revenues of $298.2 million.

Additional information about our revenues, profits and assets, as well as additional financial data, is provided in the Selected Financial Data in Part II, Item 6, and in the Consolidated Financial Statements and accompanying Notes in Part II, Item 8, of this Form 10-K.

Our objective is to continue to be a leading innovator, designer and developer of technology solutions for the wireless and consumer electronics industries and to monetize those solutions and innovations primarily through licensing.

InterDigital derives revenues primarily from patent licensing.

In 2021 and 2020, our total revenues were $425.4 million and $359.0 million, respectively.

Additional information about our revenues, profits and assets, as well as additional financial data, is provided in the Consolidated Financial Statements and accompanying Notes in Part II, Item 8, of this Form 10-K.

Our strategy is to continue to be a leading innovator, designer and developer of wireless, visual and related technology solutions and to monetize those solutions and innovations primarily through licensing to companies providing products and services that utilize our innovations.

To execute our strategy, we intend to:

• Continue to invest in advanced research and development.

We intend to build upon our leading position in advanced wireless technology, video coding, IoT, AI, and other related technology areas by growing our investment in our industry-leading research and development organization, actively participating in SDOs and other industry consortia, and partnering with leading inventors and industry players to source and develop new technologies and grow our worldwide patent portfolio.

We intend to grow our worldwide patent portfolio in advanced wireless technology, video coding, AI, and other related technology areas by growing our investment in our industry-leading research and development organization, actively participating in SDOs and other industry consortia, and partnering with leading inventors and industry players to source and develop new technologies.

• Grow our patent-based revenue.

We intend to grow our licensing revenue base by adding licensees and leveraging the size of the overall mobile technology market, expanding our licensing revenue in the consumer electronics market, and expanding into adjacent and new technology areas that align with our intellectual property position.

These licensing efforts may be direct or executed in conjunction with licensing partnerships, trusts and other efforts, and may require the enforcement and defense of our intellectual property through litigation and other means.

We intend to grow our licensing revenue base by adding licensees in the wireless communications, consumer electronics, personal computer and automotive industries, and by expanding our licensing activities into additional product and services markets that utilize our innovations in wireless, visual and other technologies, in alignment with our intellectual property position.

These licensing efforts may be direct or executed in conjunction with licensing partnerships and other efforts, and may require the enforcement and defense of our intellectual property through litigation and other means.

• Maintain a collaborative relationship with key industry players and worldwide standards bodies.

We intend to continue contributing to the ongoing process of defining wireless, video and other standards and other industry-wide efforts and incorporating our inventions into those technology areas.

Those efforts, and the knowledge gained through them, support internal development efforts and help guide technology and intellectual property sourcing through partners and other external sources.

• Pursue commercial opportunities for our advanced platforms and solutions.

As part of our ongoing research and development efforts, InterDigital often creates entire functioning platforms in various technology areas that incorporate our proprietary innovations.

We also believe that our advanced capabilities in visual technologies will continue to result in developing solutions that can be implemented in adjacent industries, such as content production, gaming, and other areas.

We will seek to bring those technologies, as well as other technologies we may develop or acquire, to market through various methods including technology licensing, stand-alone commercial initiatives, joint ventures and partnerships.

Those efforts, and the knowledge gained through them, provide direction for internal development efforts and help guide technology and intellectual property sourcing through partners and other external sources.

• Pursue strategic partnerships with other technology companies.

We have in the past and we expect to continue to pursue partnerships to jointly develop technology with other companies in our industries.

In addition, as part of our ongoing research and development efforts, InterDigital develops proprietary solutions that may be most valuable when incorporated into commercial products or services.

As an example, we believe that our advanced capabilities in visual technologies will continue to result in developing solutions that can be implemented in adjacent industries, such as content production, gaming, and other areas.

We will seek to bring those technologies, as well as other technologies we may develop or acquire, to market through various methods including technology licensing, joint ventures and partnerships.

Technology Research and Development

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InterDigital operates a diversified research and development operation, InterDigital Research & Innovation ("InterDigital R&I").

InterDigital R&I was created through the combination of InterDigital’s research team with Technicolor's R&I team that was acquired in the R&I Acquisition.

InterDigital R&I was created through the combination of InterDigital’s research team with Technicolor's R&I team, which InterDigital acquired in 2019.

As an early and ongoing participant in the digital wireless market, InterDigital developed pioneering solutions for the primary cellular air interface technologies in use today.

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With the completion of the Technicolor Acquisitions, InterDigital R&I is a leader in key video technologies, including emerging technologies such as immersive video and AI-based video coding.

In connection with the Technicolor Acquisitions, Technicolor agreed to fund certain of InterDigital R&I's research projects, but this agreement was terminated effective July 1, 2021.

Our current research efforts are focused on a variety of areas related to future technology and devices, including cellular wireless technology, advanced video coding and transmission, and AI.

Our capabilities in the development of advanced technologies are based on the efforts of a highly specialized engineering team, leveraging leading-edge equipment and software platforms.

As of December 31, 2020, InterDigital employed approximately 300 engineers, approximately 89% of whom hold advanced degrees (including 108 doctorate degrees).

Over the last three years, investment in development has ranged from $74.9 million to $89.4 million, and the largest portion of this expense has been personnel costs.

Additional information about our development expenses is provided in the results of operations, under the heading " Operating Expenses ," in Part II, Item 7, of this Form 10-K.

Additional information about our development expenses is provided under the heading " Operating Expenses ," in Part II, Item 7, of this Form 10-K.

Wireless Technology

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An important and growing segment of wireless traffic is devoted to video streaming.

InterDigital has been active for a number of years in developing advanced technologies that address the challenges of video as it relates to mobile, and we further enhanced our capabilities in this area with the completion of the R&I Acquisition.

Specifically, in the area of video research and standards, we have been actively engaged in video standards development work in the ISO/IEC Moving Picture Expert Group (MPEG), the ITU-T Video Coding Expert Group (VCEG), the Joint Collaborative Team on Video Coding (JCT-VC) and the Joint Video Expert Team (JVET).

Those efforts have focused on H.265/HEVC versions 1 to 4 and MPEG DASH, as well as development of the FVC/H.266 and the MPEG Immersive (MPEG-I) standards suite for the future.

Beyond standards, InterDigital R&I is conducting research in groundbreaking areas such as immersive video, augmented and mixed reality, and other emerging technologies.

Those efforts have focused on H.265/HEVC versions 1 to 4 and MPEG DASH, as well as development of the VCC/H.266 and the MPEG Immersive (MPEG-I) standards suite for the future.

Beyond video standards, InterDigital R&I is conducting research in groundbreaking areas in visual technologies such as immersive video and AI based video coding.

Artificial Intelligence

In addition to our historical work in major wireless standards that integrate some AI capabilities, the R&I Acquisition brought an advanced AI lab to InterDigital that is researching a variety of aspects of AI that intersect with video and wireless technology.

In addition to our historical work in major wireless standards that integrate some AI capabilities, the acquisition of Technicolor's R&I team brought additional advanced AI talent to InterDigital that is researching a variety of aspects of AI that can be applied to complex problems in video and wireless technologies.

Those areas of research include:

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Our issued patents expire at differing times ranging from 2022 through 2041.

We currently operate seven research and development facilities in five countries:

Berlin, Germany;

We currently operate six research and development facilities in four countries:

Conshohocken, Pennsylvania, USA;

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New York, New York, USA;

Palo Alto, California, USA;

Los Altos, California, USA;

and Rennes, France.

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("LG"), Samsung Electronics Co., Ltd.

("Samsung"), Sony Corporation of America ("Sony"), and ZTE Corporation ("ZTE"), among others.

We have striven to be recognized within the licensing industry for the transparency of our business, fairness and flexibility of our approach, and our willingness to work with licensees.

In furtherance of this objective, in January 2020, we made publicly available our rates, portfolio data and licensing policies with regard to mobile handsets, potentially setting a new industry standard for transparency in licensing.

Most of our patent license agreements are structured on a variable royalty basis, while others are structured on a fixed-fee basis or a combination thereof.

("Samsung"), Sony Corporation of America ("Sony"), Xiaomi Corporation ("Xiaomi"), and ZTE Corporation ("ZTE"), among others.

The majority of our patent license agreements are structured on a fixed-fee basis, while others are structured on a variable royalty basis.

Upon entering into a new patent license agreement, the licensee typically agrees to pay consideration for sales made prior to the effective date of the license agreement (i.e., past patent royalties) and also agrees to pay royalties or license fees on licensed products sold during the term of the agreement.

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Almost all of our patent license agreements provide for the payment of royalties based on sales of licensed products designed to operate in accordance with particular standards (convenience-based licenses), as opposed to the payment of royalties if the manufacture, sale or use of the licensed product infringes one of our patents (infringement-based licenses).

Some of our patent licenses are fixed-fee agreements, requiring no additional payments relating to designated sales under agreed upon conditions.

Those conditions can include paid-up licenses for a period of time, for a class of products, for a number of products sold, under certain patents or patent claims, for sales in certain countries or a combination thereof.

Licenses become paid-up based on the payment of fixed amounts or after the payment of royalties for a term.

Some of our patent license agreements provide for the non-refundable prepayment of royalties that are usually made in exchange for prepayment discounts.

As the licensee reports sales of covered products, the royalties are calculated and either applied against any prepayment or become payable in cash or other consideration.

Additionally, royalties on sales of licensed products under the license agreement become payable or applied against prepayments based on the royalty formula applicable to the particular license agreement.

These formulas include flat dollar rates per unit, a percentage of sales, a percentage of sales with a per-unit cap and other similar measures.

The formulas can also vary by other factors, including territory, covered standards, quantity and dates sold.

Our license agreements typically contain provisions that give us the right to audit our licensees' books and records to ensure compliance with the licensees' reporting and payment obligations under those agreements.

Our variable royalty license agreements typically contain provisions that give us the right to audit our licensees' books and records to ensure compliance with the licensees' reporting and payment obligations under those agreements.

From time to time, these audits reveal underreporting or underpayments under the applicable agreements.

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Licensing Through Platforms

As part of the Technicolor Patent Acquisition, we assumed Technicolor's rights and obligations under a joint licensing program with Sony relating to digital televisions ("DTVs") and standalone computer display monitors ("CDMs") (such program, the "Madison Arrangement"), including Technicolor's role as sole licensing agent.

Under the Madison Arrangement, Technicolor and Sony combined portions of their respective DTV and CDM patent portfolios and created a combined licensing opportunity to DTV and CDM manufacturers.

Under the Madison Arrangement, Technicolor and Sony combined portions of their respective DTV and CDM patent portfolios and created a combined licensing opportunity for DTV and CDM manufacturers.

As licensing agent for the Madison Arrangement, we are responsible for making decisions regarding the prosecution and maintenance of the combined patent portfolio and the licensing and enforcement of the combined patent portfolio in the field of use of DTVs and CDMs.

Refer to Note 5, " Business Combinations and Other Transactions ," within the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for further information about the Madison Arrangement.

In third quarter 2016, InterDigital joined Avanci, the industry’s first marketplace for the licensing of cellular standards-essential technology for the IoT.

The licensing platform brings together some of InterDigital’s peers in standards-essential technology leadership, and makes 2G, 3G, 4G and 5G standards-essential patents available to IoT players in specific product segments with one flat-rate license.

Refer to Note 9, " Obligations ," within the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for further information about the Madison Arrangement.

In 2016, InterDigital joined Avanci, the industry’s first marketplace for the licensing of cellular standards-essential technology for the IoT.

The licensing platform brings together some of InterDigital’s peers in standards-essential technology leadership, and makes 2G, 3G, and 4G standards-essential patents available to IoT players in specific product segments with one flat-rate license.

The Avanci licensing programs in specific product segments for the IoT industry will provide access to the entire applicable standards-essential wireless patent portfolios held by all of the platform participants, as well as any additions to their portfolios during the term of the license.

Since December 2017, Avanci has announced signed patent license agreements with BMW Group, Audi and Porsche, the Volkswagen Group Companies and Volvo Cars.

During first quarter 2020, Sisvel International N.A.

announced that it had launched a licensing program covering VP9 and AV1 video coding formats, which we have agreed to join as a licensor.

Since December 2017, Avanci has signed patent license agreements with BMW Group, Audi, Porsche, Volkswagen, and Volvo Cars, among others.

In 2020, Sisvel International N.A.

announced that it had launched a licensing program covering VP9 and AV1 video coding formats, which we have joined as a licensor.

We also pursue, on occasion, targeted sales of portions of our patent portfolio.

This strategy is based on the expectation that our portfolio and continued research efforts extend well beyond the requirements for a successful licensing program.

In addition, the strategy leverages the desire from new entrants in the mobile technology space to build strong intellectual property positions to support their businesses.

Other Potential Revenue Opportunities

Our strong technology expertise and research and development team also form the basis for other potential revenue opportunities, focused around areas such as engineering services, research joint ventures and the continued development, commercialization and licensing of research and development projects that have progressed to a pre-commercial or commercial phase.

We also currently recognize revenue from the licensing of technology that has been developed by our engineering teams and is integrated into other companies’ technology products.

We also currently recognize revenue from the licensing of technology that has been developed by our engineering teams and is integrated into other companies’ products.

In all of its technology areas, InterDigital works to incubate and commercialize market-ready technologies.

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In 2012, we formed a joint venture with Sony called Convida Wireless.

The joint venture combined InterDigital's advanced M2M research capabilities with Sony's consumer electronics expertise with the purpose of driving new research in IoT communications and other connectivity areas.

This joint venture was renewed in 2015 with its focus expanded to include advanced research and development into 5G and future wireless technologies, and further renewed in 2018 and is scheduled to expire at the end of 2021.

As of December 31, 2020, Convida Wireless owned 2,100 patents and patent applications worldwide, which expire at different times ranging from 2021 through 2040.

Overview of Wireless Communications and Consumer Electronics Industries

The wireless communications industry continues to be one of the most impactful worldwide, and the number of devices and device types entering the market is growing.

For example, despite the temporary impact on market rollout due to COVID-19, the introduction of 5G wireless networks is expected to drive a significant upgrade cycle for mobile phones, and 5G technology is expected to be implemented in an expanding range of products.

In particular, IoT is an important new market that is expected to result in a significant increase in the number of connected devices worldwide and unlock new business capabilities.

According to Transforma Research, at the end of 2019, there were 7.7 billion active IoT devices, a figure which will grow to 25.4 billion in 2030, a compound annual growth rate (CAGR) of 11%.

Public networks, which are dominated by cellular networks, will grow from 1.2 billion connections to 6.0 billion in 2030, growing market share from 16% to 23%.

In addition to connectivity technology, demand remains robust for devices in the broader consumer electronics industry, including TV displays, computer displays, set-top boxes, gaming consoles, wireless assistants, headphones, wearables, smart home devices, and other types of consumer electronic devices that implement video, wireless technology, or a combination of both.

The consumer electronics industry is also experiencing significant change, as technology-enabled services such as video streaming and 4K UHD video are being adopted globally.

To achieve economies of scale and support interoperability among different participants, products for the wireless industry have typically been designed to operate in accordance with certain standards.

Industry standards are formal guidelines for engineers, designers, manufacturers and service providers that regulate and define the use of the radio frequency spectrum in conjunction with providing detailed specifications for wireless communications products.

A primary goal of the standards is to ensure interoperability of products marketed by multiple companies.

A large number of international and regional wireless SDOs, including the ITU, ETSI, TIA (USA), IEEE, ATIS (USA), TTA (Korea), ARIB (Japan) and ANSI, have responsibility for the development and administration of wireless communications standards.

New standards are typically adopted with each new generation of products, are often compatible with previous generations and are defined to ensure equipment interoperability and regulatory compliance.

The consumer electronics industry also implements many of the same standards, including standards related to Wi-Fi and increasingly, cellular technologies, as well as a broad range of video coding standards that are governed by regional and global SDOs.

SDOs typically ask participating companies to declare formally whether they believe they hold patents or patent applications essential to a particular standard and whether they are willing to license those patents on either a royalty-bearing basis on fair, reasonable and nondiscriminatory terms or on a royalty-free basis.

The joint venture combined InterDigital's advanced M2M research capabilities with Sony's consumer electronics expertise for the purpose of driving new research in IoT communications and other connectivity areas.

As of December 31, 2021, Convida Wireless owned approximately 2,500 patents and patent applications worldwide, which expire at different times ranging from 2022 through 2041.

Overview of Smartphone and Consumer Electronics Industries

The primary markets for our wireless and video technologies are the smartphone and consumer electronics markets.

The smartphone market, with approximately 1.4 billion units shipped worldwide in 2021, is driven by several large, global brands.

The market saw a decline in 2020 mostly due to the COVID pandemic but rebounded in 2021, growing for the first time year over year since 2017 despite continued COVID impacts and global component shortages.

Growth is expected to continue in the near-term due to the global uptake of 5G smartphones as well as the migration from feature phones to smartphones in emerging regions.

In addition to smartphones there is a large universe of other consumer electronic devices and ecosystems, with a mix of mature and emerging as well as consolidated and fragmented device segments.

After smartphones, televisions remain one of the largest markets with more than 200 million units shipped globally.

Other key device categories include tablets and personal computers, set-top-boxes and streaming media players, gaming consoles, wearables and smart home products.

Automobiles represent another large and important market for connectivity technologies, with approximately 40 million connected vehicles shipped in 2021, which is expected to grow significantly in the future.

IoT is an important and relatively new market that is expected to result in a significant increase in the number of connected devices worldwide and unlock new business capabilities.

Total global cellular IoT connections (including automotive) are estimated to grow from approximately 1.8 billion in 2021 to 3 billion in 2027.

Overview of Standardization

To achieve economies of scale and support interoperability among different participants, many wireless and consumer electronics products have been designed to operate in accordance with certain industry standards.

Wireless industry standards are formal guidelines for engineers, designers, manufacturers and service providers that regulate and define the use of the radio frequency spectrum in conjunction with providing detailed specifications for wireless communications products.

New wireless standards are typically adopted with each new generation of products, are often compatible with previous generations and are defined to ensure equipment interoperability and regulatory compliance.

SDOs, which facilitate and govern the development of standards, typically ask participating companies to declare formally whether they believe they hold patents or patent applications essential or potentially essential to a particular standard and whether they are willing to license those patents on either a royalty-bearing basis on fair, reasonable and nondiscriminatory terms or on a royalty-free basis.

To manufacture, have made, sell, offer to sell or use such products on a non-infringing basis, a manufacturer or other entity doing so must first obtain a license from the holder of essential patent rights.

The SDOs do not have enforcement authority against entities that fail to obtain required licenses, nor do they have the ability to protect the intellectual property rights of holders of essential patents.

InterDigital often publicly characterizes aspects of its business, including license agreements and development projects, as pertaining to industry standardized technologies such as, for example, 3G, 4G, 5G, Wi-Fi and HEVC.

The SDOs neither have enforcement authority against entities that fail to obtain required licenses, nor do they have the ability to protect the intellectual property rights of holders of essential patents.

In doing this, we generally rely on the positions of the applicable SDOs in defining the relevant standards.

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2021 Patent Licensing Activity

During 2021, we entered into thirteen patent license agreements, including agreements with Xiaomi, Sony, and a top ten TV manufacturer discussed below.

We estimate these agreements will result in revenues exceeding $390 million over their respective lives.

Direct Licenses

During first quarter 2020, we entered into a multi-year, worldwide, non-exclusive, royalty bearing patent license agreement with Fairphone B.V.

(“Fairphone”).

The agreement covers Fairphone’s sale of its 3G and 4G handsets.

Also during first quarter 2020, we entered into a multi-year, worldwide, non-exclusive, royalty bearing patent license agreement with Humax Co., Ltd.

The agreement covers Humax’s use of our HEVC technology in their digital set-top boxes.

During second quarter 2020, we entered into a multi-year, worldwide, non-exclusive, royalty-bearing patent license (the “Huawei PLA”) with Huawei.

In addition to agreement on terms for dismissal of the litigations and other proceedings between the parties, the agreement covers the sale of certain of Huawei’s 3G, 4G, and 5G terminal unit products, including the use of Wi-Fi and HEVC in those products.

During fourth quarter 2020, we entered into a multi-year, worldwide, non-exclusive, royalty-bearing patent license with a mobile handset company covering 3G and 4G handsets, as well as 802.11 and HEVC technologies incorporated into such products.

Also during fourth quarter 2020, we entered into a multi-year, worldwide, non-exclusive, royalty-bearing, patent license agreement with Blu Products, Inc.

The agreement covers Blu’s sale of its 3G, 4G and 5G handsets, including the use of Wi-Fi and HEVC in those products.

During third quarter 2021, we entered into a multi-year, worldwide, non-exclusive, royalty bearing license with Xiaomi.

The license covers Xiaomi’s cellular-enabled mobile devices under our standard essential patents related to 3G, 4G, 5G, WiFi and HEVC video technology.

As part of the agreement, we and Xiaomi agreed to dismiss all pending patent litigation and other proceedings between the companies.

During fourth quarter 2021, we renewed our multi-year, worldwide, non-exclusive patent license agreement with Sony.

In addition, we renewed our joint venture with Sony, Convida Wireless.

Licenses Through Platforms

During third quarter 2020, as part of the Madison Arrangement, we entered into a non-exclusive, royalty-bearing patent license agreement with a manufacturer covering certain of the licensee’s sales of digital televisions in the U.S., Mexico, and Canada.

During 2013, we announced the establishment of the Signal Trust for Wireless Innovation (the “Trust”), the goal of which was to monetize a patent portfolio primarily related to 3G cellular infrastructure.

In response to a request from Signal Trust, in first quarter 2021, we provided our consent, as major beneficiary, to dissolve Signal Trust.”

During third quarter 2021, as part of the Madison Arrangement, we entered into a non-exclusive, per-unit royalty-bearing patent license agreement with a top ten global TV manufacturer, covering certain of the licensee’s sales of digital televisions.

Customers Generating Revenues Exceeding 10% of Total 2021 Revenues

Apple, Samsung and Huawei comprised approximately 31 %, 22 % and 15 % of our total 2020 revenues, respectively.

A small number of customers historically have accounted for a significant portion of our consolidated revenues.

In fiscal 2021, revenues (in descending order) from Apple, Samsung, Xiaomi, and Huawei each comprised 10% or more of our consolidated revenues.

Additional information regarding revenue concentrations is provided in this Annual Report in Note 4, " Geographic/Customer Concentration " in the Notes to Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K.

In 2016, we entered into a multi-year, royalty-bearing, worldwide and non-exclusive patent license agreement with Apple (the “Apple PLA”).

The agreement sets forth terms covering the sale by Apple of its products and services, including, but not limited to, its 3G, 4G and future generation cellular and wireless-enabled products.

The Apple PLA provided Apple the right to terminate certain rights and obligations under the license for the period after September 30, 2021, but has the potential to provide a license to Apple for a total of up to six years.

The Apple PLA provided Apple the right to terminate certain rights and obligations under the license for the period after September 30, 2021 but had the potential to provide a license to Apple for a total of up to six years.

Apple did not elect to terminate such rights and obligations, and the period for such election has expired.

Accordingly, the term of the Apple PLA ends on September 30, 2022.

During 2020, we recognized a total of $111.7 million of revenue associated with the Apple PLA under ASC 606.

In 2014, we entered into a patent license agreement with Samsung (the “Samsung PLA”).

The royalty-bearing license agreement sets forth terms covering the sale by Samsung of 3G, 4G and certain future generation wireless products.

The Samsung PLA provided Samsung the right to terminate certain rights and obligations under the license for the period after 2017 but had the potential to provide a license to Samsung for a total of ten years, including 2013.

Samsung did not elect to terminate such rights and obligations, and the period for such election has expired.

Samsung did not elect to terminate such rights and obligations, and the period for such election expired.

Accordingly, the term of the Samsung PLA ends on December 31, 2022.

During 2020, we recognized a total of $78.3 million of revenue associated with the Samsung PLA under ASC 606.

During second quarter 2020, we signed the Huawei PLA.

During 2020, we signed the Huawei PLA.

The Huawei PLA covers the sale of certain of Huawei’s 3G, 4G and 5G terminal unit products, including the use of Wi-Fi and HEVC in those products, and extends through December 31, 2023.

During 2020, we recognized a total of $52.1 million of revenue associated with the Huawei PLA under ASC 606, which included $19.2 million of past sales.

In 2021, we entered into a multi-year, worldwide, non-exclusive, royalty bearing license with Xiaomi.

The license covers Xiaomi’s cellular-enabled mobile devices under our standard essential patents related to 3G, 4G, 5G, WiFi and HEVC video technology.

As part of the agreement, we and Xiaomi agreed to dismiss all pending patent litigation and other proceedings between the companies.

Patent Infringement and Declaratory Judgment Proceedings

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Enforcing our intellectual property through this mechanism is an important alternative to bilateral negotiations with respect to licensees who engage in the pernicious practice of "holdout".

More recently, courts in various jurisdictions have started to address “holdout” behavior by granting injunctions against unwilling licensees who would then no longer benefit from a right to a FRAND license.

We welcome this development as it incentivizes potential licensees to negotiate in a timely and reasonable fashion or risk losing their right to a FRAND royalty.

Enforcement through this mechanism has typically taken the form of a patent infringement lawsuit or an administrative proceeding, such as a Section 337 proceeding before the U.S.

Enforcement of our patent portfolio has typically taken the form of a patent infringement lawsuit or an administrative proceeding, such as a Section 337 proceeding before the U.S.

International Trade Commission ("USITC" or the "Commission").

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Parties may also allege that our efforts to enter into a license with that party do not comply with any obligations we may have in connection with our participation in standards-setting organizations, and therefore that we are not entitled to the relief that we seek.

For example, a party may allege that we have not complied with an obligation to offer (or be prepared to offer) a license to that party for patents that are or may become standards-essential patents ("SEPs") on fair, reasonable and non-discriminatory ("FRAND") terms and conditions, and may also file antitrust claims or regulatory complaints on that or other bases, and may seek damages or other relief based on such claims.

For example, a party may allege that we have not complied with an obligation to offer (or be prepared to offer) a license to that party for patents that are or may become standards-essential patents ("SEPs") on FRAND terms and conditions, and may also file antitrust claims or regulatory complaints on that or other bases, and may seek damages or other relief based on such claims.

In addition, a party might file a declaratory judgment action to seek a court's declaration that our patents are invalid, unenforceable, not infringed by the other party's products or are not SEPs.

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Binding arbitration to resolve the terms and conditions of a worldwide FRAND license to our relevant portfolio of SEPs is an efficient and cost-effective mechanism, as it allows the parties to avoid piecemeal litigation in multiple jurisdictions and ensures that an enforceable patent license agreement that is consistent with FRAND commitments will be in place at the end of the arbitration process.

With respect to our technology development activities and resulting commercialization efforts, we face competition from companies, including in-house development teams at other wireless and consumer electronics device companies, semiconductor companies and wireless operators, developing other and similar technologies that are competitive with our products and solutions that we may market or set forth into the standards-setting arena.

With respect to our technology development activities and resulting commercialization efforts, we face competition from companies, including in-house development teams at other wireless and consumer electronics device companies, semiconductor companies and wireless operators, developing other and similar technologies that are competitive with our technologies that we may market or set forth into the standards-setting arena.

Due to the exclusionary nature of patent rights, we do not compete, in a traditional sense, with other patent holders for patent licensing relationships or sale transactions.

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Similarly, potential purchasers of our patents often amass patent portfolios for defensive and/or cross-licensing purposes and could choose to acquire patent assets within the same general technology space from other patent holders.

Environmental, Social and Governance ("ESG")

During 2020, we completed our first company-wide ESG materiality assessment, which represents an effort to strategically review and analyze our most significant opportunities and accomplishments under four pillars:

human capital, environmental impact, governance, and social impact.

As part of this assessment, we published our first Corporate Sustainability Report during 2021, which can be found on our corporate website.

This report is the introduction of our commitment to sustainability to our employees, customers, partners, and shareholders, as well as the communities in which we operate.

This report also provides an overview of our aspirational goals and a summary of our performance in 2020.

We plan to publish a 2022 Corporate Sustainability Report on our corporate website during the first half of 2022.

The information contained in our Corporate Sustainability Report is not incorporated by reference into this Form 10-K.

Our Board of Directors has oversight over environmental, social and other sustainability matters, including diversity initiatives, in conjunction with the committees of the Board.

In addition, our Chief Executive Officer oversees a committee of senior executives that steers the process of setting purpose, strategies, policies and goals related to economic, environmental and social topics.

We are committed to sustainable business principles, to thinking long-term, and to making strategic decisions that adhere to our mission and values.

Among other things, this means supporting the United Nations Global Compact and its underlying principles around the environment, the workforce, anti-corruption, and human rights.

We are committed to driving positive progress towards reducing the environmental footprint that the deployment of 5G, wireless networks, and other video technologies will bring.

While our research and business activities do not entail the same concerns related to manufacturing or raw materials sourcing and disposal, in 2021 we implemented a corporate sustainability strategy to address the following:

• Invest in best practices to track and reduce our carbon footprint, including environmental considerations, tracking, and reporting related to data center needs of energy and emissions efficiencies.

• Implement a sustainable workspace program that will drive energy efficiencies and reduction of disposable material use.

InterDigital ranks among the industry leaders for ETSI-disclosed patents and applications as potentially essential to 5G standards.

5G technology is designed to efficiently use energy throughout its ecosystem and will play a significant role in promoting and attaining sustainability goals.

Many research articles have discussed the environmental benefits of 5G, including lowering greenhouse gas emissions, better managing electricity use, and better monitoring and mitigation of air and water pollution.

According to a report published by Accenture plc, switching to the more efficient 5G network equipment can help reduce carbon emissions from mobile networks by 50% over the next 10 years.

Additionally, 5G technology has significant potential societal benefits, including promoting productivity-led economic growth, increasing medical diagnostic capabilities, creating more sustainable cities and communities, improving remote education and reducing inequalities in the education and income gaps.

We believe that the benefits to be derived from 5G are substantial and will be felt throughout society.

Human Capital

As of December 31, 2020, we had 514 employees worldwide, 271 of whom were based outside of the U.S.

None of our employees based in the United States are unionized or subject to collective bargaining agreements, however, our employees based in France are represented by works councils and subject to collective bargaining agreements.

None of our employees in other geographic locations are subject to collective bargaining agreements.

We consider our relations with our employees to be good.

The health and safety of our workforce is fundamental to the success of our business.

In order to protect the health and safety of our employees and their families, our entire worldwide workforce has worked remotely during the COVID-19 pandemic and will continue to do so well into 2021.

As a research, development and licensing company, our business activities have continued to operate with minimal interruption even as our employees worked remotely.

As a result, we learned that some work which we previously thought required face to face interaction, could progress remotely and going forward, we will be re-thinking the necessity of some travel.

However, we understand and value face-to-face interactions and do not expect to continue operating in a fully virtual environment indefinitely;

we are working on achieving a balance.

As our success, in part, depends upon our ability to attract, motivate and retain the best and brightest researchers, we believe we offer competitive compensation (including salary, incentive bonus, and equity) and benefits packages in each of our locations around the globe.

We invest in tools, resources and opportunities for impactful training and tailored development to provide all employees with an opportunity to develop and grow.

Throughout 2021, we will be focused on understanding our strengths and opportunities and developing a thoughtful diversity and inclusion strategy, given our commitment to promote and maintain a diverse and inclusive workplace.

We strive to make InterDigital a great place to work for all employees.

We are committed to creating a workplace where employees feel valued, respected and challenged, while fostering an environment that attracts and engages a talented workforce who contribute to the company’s growth and sustained success.

Our Compensation Committee is responsible for overseeing our policies and strategies related to culture and human capital, including diversity, equity and inclusion.

As of December 31, 2021, we had 510 employees worldwide, of whom, approximately 280 were based outside of the U.S, and nearly all of whom were full-time.

Our employees based in France are represented by works councils and subject to collective bargaining agreements.

None of our employees based in the United States or our other geographic locations are unionized or subject to collective bargaining agreements.

Management believes that its relations with our employees and works councils are good.

Health, Safety & Well-Being

In order to protect the health and safety of our employees and their families during the COVID-19 pandemic, our entire worldwide workforce has been provided the ability to work remotely.

We expanded our Employee Assistance Programs to all locations globally and offered well-being educational sessions, and our employees received a stipend to help cover additional costs incurred as a result of the extended remote work environment.

We believe that we created robust health and safety protocols to provide a safe working environment for those employees who voluntarily chose to work from an office.

We are actively preparing to formally welcome our employees safely back into our offices through a flexible work model that blends in-person and remote work.

Compensation & Benefits

We provide a total compensation package that is targeted to be competitive with the markets in which we compete for talent, while allowing individual pay to vary equitably based on performance, skills and experience.

Our total rewards plans include base salary, short- and long-term incentives, healthcare benefits, retirement savings plans, physical and mental well-being programs, flexible work schedules, monetary and social recognition in each of our locations around the globe.

In addition to comprehensive health benefits, depending on location, employees may also enjoy subsidized fitness programs, commuter benefits, wellness incentives, tuition reimbursement opportunities and professional development opportunities among other benefits.

We routinely review our total rewards programs to ensure they are competitive, allowing us to recruit and retain the diverse talent we need to be successful.

Talent and Culture

Research, learning and growth are fundamental to executing our promise to the world to invent the technologies that make life boundless.

In addition, consistently evaluating our talent promotes opportunities to provide actionable learning experiences for our employees to further their career development.

Our Leadership Essentials competency development model is available to all employees and provides a library of tools and resources for growth in the areas of thought leadership, results leadership, people leadership and self-leadership.

Through ongoing dialogue with leaders, employees are encouraged to plan for their development and leverage the tools available to create meaningful and actionable development plans that drive personal and company growth.

In addition, all employees are encouraged to continually seek out and attend external development opportunities that can provide the employee with new knowledge and skills while also bringing fresh perspectives to the Company.

We endeavor to ensure that our leaders of tomorrow are members of the Company today.

Leadership capability is critical in supporting our culture of innovation, inclusion and collaboration.

As such, leaders have access to various structured development and learning experiences.

These include our Learning for Leaders series which provides an interactive learning experience on topics germane to the realities of being a leader in today’s environment.

Recent sessions included Leading Through Change and Building Resilient Teams.

In addition, all leaders will have the opportunity to attend our Fundamentals of Leadership program that seeks to create a foundation of managerial skills such as coaching and providing feedback, empowering employees to succeed and promoting collaboration amongst teams.

We continue to invest in processes to help the organization assess and develop talent, including a formalized annual performance evaluation program, an annual critical skills and potential analysis, and succession planning for the organization’s most critical and senior roles.

We intend to conduct a culture survey in 2022 that will provide relevant insight and guidance into how we can continually align the preferences of our employees with the programs and investments we offer.

We believe that our workplace culture, values, and competitive employee compensation are critical to maintaining low levels of attrition, thereby enabling us to attract and retain talent.

For the year ended December 31, 2021, our voluntary attrition percentage was approximately 8%.

Diversity, Equity and Inclusion (DEI)

Maintaining a diverse, equitable and inclusive workforce is critical to our ability to succeed in the global marketplace for ideas that SDOs embody.

In recent years we have invested in our talent acquisition, talent development, and succession planning efforts as a means to diversify our workforce.

We have continually provided minority and female leaders the opportunity to attend targeted world-class external development programs that speak to the unique experiences these employees can face in the workplace while investing in their continued growth both personally and professionally.

In addition, core principles of our culture of inclusion are reflected in the all employee training programs we offer on our policies against harassment and discrimination of any kind.

With a workforce that is approximately 70% male employees and 30% female employees, and approximately 15% self-identified as diverse within the United States, we recognize that we are on a journey and there is more yet to be done.

As such, we are formalizing our DEI strategy throughout 2022 as part of our broader investment in culture and engagement.

Through partnerships with thought leaders in diversity, equity and inclusion, we intend to continue the journey we have started by hosting inclusion training events for all employees, providing forums for feedback and engagement on inclusion and continuing to build on our talent processes that enable change.

Geographic Concentrations

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and Rennes, France.

We are also a party to leases for several smaller research and/or office spaces, including in Berlin, Germany;

Brussels, Belgium;

We are also a party to leases for several smaller research and/or office spaces, including in Brussels, Belgium;

Espoo, Finland;

Hicksville, New York, USA;

Indianapolis, Indiana, USA;

Paris, France;

Princeton, New Jersey, USA;

and Shanghai, China.

and Paris, France.

In addition, we own a townhouse in Washington, District of Columbia, USA, that houses administrative office space.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business