What changed in this filing

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Item 1. Business

2023-02-15 compared with 2022-02-17 · 108 added, 136 removed, 167 unchanged (59% of the section changed)

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

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

We license or intend to license our innovations worldwide to companies providing such products and services, including wireless communications, consumer electronics, personal computer, and automotive, as well as cloud-based services such as video streaming.

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.

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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.

As of December 31, 2022, InterDigital's wholly owned subsidiaries held a portfolio of approximately 28,800 patents and patent applications related to wireless communications, video coding, display technology, and other areas relevant to communications and entertainment products and services.

Our portfolio includes numerous patents and patent applications that we believe are or may be essential or may become essential to standards established by many Standards Development Organizations ("SDOs"), including cellular and other wireless communications and video technology standards.

Those wireless standards include 3G, 4G and the IEEE 802 suite of standards, as well as patents and patent applications that we believe are or may become essential to 5G standards that currently exist and as they continue to develop.

Our video technology portfolio includes patents and applications relating to standards established by 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), among others.

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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;

components, dongles and modules for wireless devices;

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

InterDigital derives revenues primarily from patent licensing.

Our patented inventions have been implemented in a wide variety of products and services, including smartphones, other wireless communication devices and infrastructure equipment, such as tablets, and base stations, consumer electronics and Internet of Things ("IoT") products, such as televisions, laptops, gaming consoles, set-top boxes, streaming devices and connected automobiles.

InterDigital derives revenues primarily from licensing our patented innovations.

In 2022 and 2021, our total revenues were $457.8 million and $425.4 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.

Our strategy is to continue to be a leading innovator, designer and developer of fundamental, horizontal technologies and to monetize our patented innovations primarily through licensing the products and services that implement them across vertical markets.

To execute our strategy, we intend to:

• Continue to invest in advanced research and development.

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 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.

• Grow and enhance our patent portfolio through continued investment in advanced research and development.

We intend to grow and enhance 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.

We intend to protect our investment in this innovation by seeking patent coverage in countries around the world for the technologies we develop.

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

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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.

• Grow our patent-based revenue.

• 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.

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

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.

We will seek to bring such 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, 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.

As an early and ongoing participant in the digital wireless market, InterDigital developed pioneering solutions for the cellular and Wi-Fi technologies in use today.

That early involvement, and our continued development of advanced digital wireless technologies, have enabled us to create our significant worldwide portfolio of patents.

In addition, InterDigital was among the first companies to participate in standardization and platform development efforts related to Machine-to-Machine ("M2M") communications and IoT technology.

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.

InterDigital R&I is also a leader in key video technologies, including emerging technologies such as immersive video and AI-based video coding.

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.

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 under the heading " Operating Expenses ," in Part II, Item 7, of this Form 10-K.

Over the last three years, investment in research and portfolio development expense has ranged from $185.2 million to $204.4 million, and the largest portion of this expense has been personnel costs and amortization.

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

Wireless Technology

We have a long history of developing cellular technologies, including those related to CDMA and TDMA and, more recently, OFDM/OFDMA and MIMO.

We have a long history of developing cellular technologies, including those related to CDMA and TDMA and OFDM/OFDMA and MIMO.

Many of our inventions are being used in all 2G, 3G, 4G and 5G wireless networks and mobile terminal devices.

We also continue to be engaged in development efforts to build and enhance our 3GPP (as defined herein) technology portfolio in areas including 5G NR, Beyond 5G (B5G), Extended Reality (XR) over wireless, and cellular IoT.

Further, we continue to develop additional technologies in response to existing or perceived challenges of connected devices in the expanding terminal markets.

The technologies we develop are essential for a variety of connected devices such as automobiles, wearables, smart homes, drones and other connected consumer electronic products.

We are developing solutions that enable connectivity in both licensed and unlicensed spectrum, and across a large range of frequencies up to the terahertz (THz) wave bands.

Our wireless research and development activities focus on solutions that apply to cellular wireless standards, including 3G, 4G and 5G technologies (sometimes referred to as "3GPP") and other wireless market segments.

We continue to be engaged in development efforts to build and enhance our 3GPP (as defined herein) technology portfolio in the current and future generations including 5G, 5G Advanced and 6G.

The horizontal technologies we develop are essential to support a variety of uses cases across several vertical market segments that use connected devices such as automobiles, wearables, smart homes, drones and other connected consumer electronic products.

We are developing evolutionary and revolutionary solutions that enable connectivity in both licensed and unlicensed spectrum, terrestrial and non-terrestrial networks to provide ubiquitous coverage, and across a large range of frequencies up to the terahertz (THz) wave bands.

Segments outside of 3GPP primarily fall within the scope of the IEEE 802, IETF and ETSI standards.

We continue to grow a portfolio of technology related to Wi-Fi, Internet Standards, and Edge Computing, that includes, for example, improvements to the IEEE 802.11 PHY and MAC to increase peak data rates (802.11be - Extremely High Throughput), cloud gaming, and terminal mobility for edge and fog computing services.

Advanced Video Coding and Transmission Technology

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 acquisition of the Technicolor R&I team.

We have a rich history 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 acquisition of the Technicolor R&I team.

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 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.

Beyond video standards, InterDigital R&I is conducting research in groundbreaking 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 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.

The AI talent at InterDigital R&I 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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AI for dynamic wireless environments, focused on learning and optimizing wireless systems, particularly when channel characteristics are highly dynamic.

and explainable or interpretable AI, addressing weaknesses in neural networks in providing transparency and generating trust.

Patent Portfolio

R&D Facilities

As of December 31, 2022, our patent portfolio consisted of approximately 28,800 patents and patent applications worldwide.

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Our issued patents expire at differing times ranging from 2023 through 2043.

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

Conshohocken, Pennsylvania, USA;

London, United Kingdom;

Montreal, Canada;

New York, New York, USA;

Los Altos, California, USA;

and Rennes, France.

Our Revenue Sources

Patent-Based Revenue

Overview of Patent Licenses

We believe that companies making, importing, using or selling products compliant with the standards covered by our patent portfolio, including all manufacturers of mobile handsets, tablets and other devices, require a license under our patents and will require licenses under patents that may issue from our pending patent applications.

We have successfully entered into license agreements with many of the leading mobile communications companies globally, including Apple Inc.

Device-based Licensing Revenue

Companies making, importing, using or selling products compliant with the standards covered by our patent portfolio, including all manufacturers of mobile handsets, tablets and other devices, and many consumer electronics products, such as televisions, personal computers and other devices, require a license under our patents and will require licenses under patents that may issue from our pending patent applications.

We have successfully entered into patent license agreements with many of the leading mobile communications and consumer electronics companies globally, including Amazon Technologies, Inc.

("Amazon"), Apple Inc.

("Apple"), Huawei Investment & Holding Co., Ltd.

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

("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.

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

Other Revenue Opportunities

We also believe that companies providing certain video and other cloud-based services require a license under our patents and will require licenses under patents that may issue from our pending patent applications, and we intend to seek license agreements with such companies.

Overview of Patent Licenses

The majority of our revenue is generated from fixed-fee patent license agreements, with a smaller portion coming from variable royalty agreements.

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, to the extent the licensee was previously unlicensed (i.e., past patent royalties), and also agrees to pay royalties or license fees on licensed products sold during the term of the agreement.

We expect that, for the most part, new license agreements will follow this model.

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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 licensing platform brings together many 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 signed patent license agreements with BMW Group, Audi, Porsche, Volkswagen, and Volvo Cars, among others.

Since December 2017, Avanci has focused on the automotive market, and has signed patent license agreements with BMW Group, Audi, Porsche, Volkswagen, and Volvo Cars, among others, collectively representing over 80% of annual connected car shipments.

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.

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’ products.

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

These include technologies that were developed as part of our standards development efforts, as well as technologies developed outside the scope of those efforts.

Those commercial efforts sometimes include the establishment of a separate commercial initiative focused on the specific opportunity.

Although these initiatives are in their early stages, they are potential revenue opportunities for the Company.

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

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As of December 31, 2022, Convida Wireless owned approximately 1,400 patents and patent applications worldwide, which expire at different times ranging from 2023 through 2043.

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.

Convida Wireless intends to license its patented innovations to companies providing IoT products and services.

Overview of Smartphone, Consumer Electronics, and IoT Industries

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

The smartphone market, with approximately 1.2 billion units projected to have shipped worldwide in 2022, is driven by several large, global brands.

The market saw a decline in 2022 mostly due to the ongoing supply chain issues arising from the COVID pandemic, as well as a broad economic slowdown in China and economic challenges globally.

The market is expected to recover beginning in the second half of 2023 due to the continued 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.

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

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

IoT/Automotive 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 device shipments are expected to grow from approximately 500 million in 2022 to almost 700 million by 2027.

Automobiles represent a significant opportunity within the IoT market, with approximately 40 million connected vehicles shipped in 2022, which is expected to grow significantly in the future.

Overview of Standardization

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2022 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.

During 2022, we entered an agreement with Samsung for binding arbitration to take a new license and eight direct patent license agreements, including agreements with Apple, Amazon, Panasonic, Zebra, and LG as discussed below.

We agreed to renew our patent license agreement with Samsung and enter into binding arbitration to determine the final terms of the license, including the amount payable by Samsung under the new agreement.

Direct Licenses

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 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.

During second quarter 2022, we entered into a multi-year, worldwide, non-exclusive, fee bearing patent license agreement with Amazon Technologies, Inc., covering a range of Amazon's consumer electronic devices.

We also entered into a multi-year, worldwide, non-exclusive, royalty bearing license with Zebra Technologies Corporation, under the Company’s standard essential patents related to 4G, 5G and Wi-Fi.

During third quarter 2022, we renewed a patent license agreement with Apple.

The Company expects to recognize approximately $133.7 million in revenue each year over the seven-year term of the license, which commenced on October 1, 2022.

During fourth quarter 2022, the Company entered into four licenses covering digital television and/or video patents, including with Panasonic Entertainment & Communication Co., Ltd.

and LG Electronics.

Customers Generating Revenues Exceeding 10% of Total 2022 Revenues

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.

In fiscal 2022, revenues (in descendin g order) from Apple, Samsung, and Xiaomi eac h 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”).

During third quarter 2022, we renewed 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 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.

The term of the Apple PLA extends through September 30, 2029.

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, beginning in 2013.

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 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.

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

The Samsung PLA expired on December 31, 2022.

On December 30, 2022, we agreed to have a panel of arbitrators establish the royalties to be paid by Samsung Electronics for a worldwide license to certain of the Company’s patents, as well as any other terms to a patent license agreement on which the parties are not able to agree.

The determination by the panel will be in the form of a patent license agreement that will be final, binding, and non-appealable, subject to certain limited exceptions.

The Company expects the arbitration to conclude within approximately 18 months.

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.

The license covers Xiaomi’s cellular-enabled mobile devices under our standard essential patents related to 3G, 4G, 5G, WiFi and HEVC video technology and extends through December 31, 2025.

Patent Infringement and Declaratory Judgment Proceedings

From time to time, if we believe a party is required to license our patents in order to manufacture, use and/or sell certain products and such party refuses to do so, we may agree with such party to have royalty rates, or other terms, set by third party adjudicators (such as arbitrators) or, in certain circumstances, we may institute legal action against them.

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 fair, reasonable and non-discriminatory ("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.

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

In recent years, courts in various jurisdictions have addressed “holdout” behavior, recognizing that FRAND obligations are bilateral and failure of implementers to act in a FRAND manner can result in certain penalties.

We welcome this development as it incentivizes potential licensees to negotiate in a timely and reasonable fashion as well as providing a necessary balance to FRAND negotiations.

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.

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For example, we could have a disagreement with a licensee as to the amount of reported sales and royalties.

Our patent license agreements typically provide for audit rights as well as private confidential arbitration as the mechanism for resolving disputes, and we may attempt to resolve such disputes in arbitration.

Our patent license agreements typically provide for private confidential arbitration as the mechanism for resolving disputes with our licensees.

In arbitration, licensees may seek to assert various claims, defenses, or counterclaims, such as claims based on waiver, promissory estoppel, breach of contract, fraudulent inducement to contract, antitrust, and unfair competition.

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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 technologies 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, wireless operators, and other technology providers, 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.

Other patent holders do not have the same rights to the inventions and technologies encompassed by our patent portfolio.

In any device or piece of equipment that contains intellectual property, the manufacturer may need to obtain licenses from multiple holders of intellectual property.

In licensing our patent portfolio, we compete with other patent holders for a share of the royalties that certain licensees may argue to be the total royalty that is supported by a certain product or products, which may face practical limitations.

We believe that licenses under a number of our patents are required to manufacture and sell 3G, 4G, 5G and other wireless products, as well as other consumer electronics devices.

However, numerous companies also claim that they hold patents that are or may be essential or may become essential to standards-based technology deployed on wireless products and other consumer electronics devices.

To the extent that multiple parties all seek royalties on the same product, the manufacturers could claim to have difficulty in meeting the financial requirements of each patent holder.

In any device, piece of equipment, or service that contains intellectual property, the manufacturer or implementer may need to obtain licenses from multiple holders of intellectual property.

In licensing our patent portfolio, we compete with other patent holders for a share of the royalties that certain licensees may argue to be the total royalty that is supported by certain products or services, which they may argue face practical limitations.

We believe that licenses under a number of our patents are required to manufacture and sell 3G, 4G, 5G and other wireless products, as well as other consumer electronics devices, and to implement certain technology services.

However, numerous companies also claim that they hold patents that are or may be essential or may become essential to standards-based technology deployed on wireless products, other consumer electronics devices or services.

To the extent that multiple parties all seek royalties on the same product or service, the manufacturers could claim to have difficulty in meeting the financial requirements of each patent holder.

In the past, certain manufacturers have sought antitrust exemptions to act collectively on a voluntary basis.

In addition, certain manufacturers have sought to limit aggregate licensing fees or rates for SEPs.

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:

In 2020, we began our ongoing company-wide ESG materiality assessments, which represent 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.

In 2021, we began publishing an annual Corporate Sustainability Report on our corporate website which provides a summary of our related performance and goals for the future.

We plan to publish our next report the during second quarter of 2023.

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.

In addition, our Chief Financial 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.

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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.

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

• investing 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;

• establishing a goal of achieving carbon neutrality within the next four years;

• building environmental stewardship into our operations by encouraging vendors to match or exceed our commitment to the environment.

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.

Last year we published white papers exploring how 5G and the emerging IoT ecosystem might shape sustainability efforts for the ICT industry.

While the proliferation of connected devices can drive increases in energy consumption, innovative solutions can mitigate these outcomes to help lower our carbon footprint and engage more sustainably.

In fact, one of our reports found that by 2030, IoT deployment and its subsequent disruption of various industries is projected to save more than eight times the energy it consumes – which could help to save up to 230 billion cubic meters of water and eliminate up to one gigaton of CO2 emissions.

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

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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.

As of December 31, 2022, we had approximately 425 employees worldwide, of whom approximately 220 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.

None of our employees based in the United States or Canada 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.

In order to protect the health and safety of our employees and their families during the COVID-19 pandemic, we enacted safety measures including remote work, social distancing protocols, and suspending non-essential travel.

As COVID-19 conditions improved, we implemented a phased reopening approach with a priority on health and safety.

By creating robust health and safety protocols to provide a safe working environment for those employees who voluntarily chose to work from an office.

As the year progressed, we shifted our support to helping our employees thrive in the new hybrid work environment.

Compensation & Benefits

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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.

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.

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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.

Recent sessions included Leading Distributed Teams and R&I specific Delegate and Empower with Respect and Trust manager training.

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.

All employees receive an annual performance review.

We conducted a culture survey in 2022 that provided 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.

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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.

Maintaining a diverse, equitable and inclusive workforce is critical to our ability to succeed in the global marketplace.

In 2022, we launched our DE&I Taskforce, an employee-led team focused on supporting the execution of InterDigital’s DE&I strategy.

We plan to continue the journey in 2023 by hosting inclusion training events for all employees, providing forums for feedback and increasing engagement on inclusion while continuing to build on our talent processes that enable change by further expanding investment 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.

In 2022, we hosted a Fireside Chat:

Women in the Workplace, where female executives and a renowned expert on gender equality led a discussion on women in the workplace.

In addition, core principles of our culture of inclusion are reflected in the mandatory 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 37% 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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Espoo, Finland;

Hicksville, New York, USA;

Princeton, New Jersey, USA;

Indianapolis, Indiana, USA;

and Paris, France.

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

Our Internet address is www.interdigital.com , where, in the "Investors" section , we make available, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, certain other reports and filings required to be filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and all amendments to those reports or filings as soon as reasonably practicable after such material is electronically filed with or furnished to the United States Securities and Exchange Commission.

The information contained on or connected to our website is not incorporated by reference into this Form 10-K.

In addition, we own an administrative office space in Washington, District of Columbia, USA.

The information contained on or connected to our website or any other website referenced herein is not incorporated by reference into this Form 10-K.

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