InterDigital, Inc.

Current report

Artificial intelligence may adversely affect our ability to develop, protect, license and enforce our intellectual property.

Current report

The increasing development and use of artificial intelligence may affect our ability to invent, obtain patent protection for our inventions, contribute to industry standards and license or enforce our patents. Because the development of our patent portfolios and licensing programs can occur over periods of ten years or more, changes caused by AI may affect the value of research investments and patent assets long after those investments are made. Patent laws and practice concerning inventions developed with the assistance of AI continue to evolve. If our use of AI in research were to impact patentability, we could be unable to obtain patents on certain inventions or patents we obtain could later be challenged or invalidated. In addition, AI may substantially increase the volume and speed at which technical information, patent applications and other potentially relevant prior art are generated, which could make it more difficult or costly to obtain patents with commercially meaningful scope. Use of third-party AI tools in research, patent prosecution or other areas also could create risks relating to confidentiality, data security, contractual rights or ownership.

Current report

AI could also affect our ability to license and enforce our patent rights. Prospective licensees may use AI tools to challenge our intellectual property or design around patents more rapidly and at lower cost. At the same time, increasing use of AI in cloud-based, software-based or dynamically changing systems may make infringement more difficult to assert. AI is also likely to increase the pace of technological advancement and the ability of other industry participants to develop competing technologies or identify alternatives to patented technologies. These developments could reduce the likelihood that our technologies are incorporated into industry standards, shorten the period during which our patented technologies remain commercially significant, or reduce the value or essentiality of our patents.

Current report

Although we are investing in AI-related research, there can be no assurance that such research will result in commercially valuable patents, that such patents will become essential to widely adopted standards, or that we will be able to establish successful licensing programs around AI-enabled technologies. Even if we are successful at developing AI-related technologies, our relative standing within the AI industry may not be as high as we have historically been in wireless and video. Any of these factors could materially and adversely affect our financial results, competitive position and long-term results of operations.

Current report

Scrutiny by antitrust authorities may affect our strategies for patent prosecution, licensing and enforcement and may increase our costs of doing business and/or lead to monetary fines, penalties or other remedies or sanctions.

Current report

Domestic and foreign antitrust authorities regularly review their policies with respect to the use of SEPs, including the enforcement of such patents against competitors and others. Such scrutiny has in the past resulted in enforcement actions against Qualcomm and other licensing companies, and could lead to investigations of, or enforcement actions against, us. For example, the Korean Fair Trade Commission recently advised us that it was opening an investigation into our licensing practices at the request of TCL. Additionally, potential licensees may initiate antitrust complaints against us, such as the complaint that Disney filed against us. Such investigations, inquiries and/or enforcement actions could impact the availability of injunctive and monetary relief, which may adversely affect our strategies for patent prosecution, licensing and enforcement and increase our costs of operation. They could also result in reputational harm, monetary fines, penalties or other remedies or sanctions that could adversely affect our business and financial condition. Even if we eventually prevail, regulatory inquiries or actions require significant attention and resources.

Current report

Our operating results may fluctuate from quarter to quarter as a result of a number of factors, many of which are outside of our control and may be difficult to predict. In particular, the timing of revenue recognition may cause our revenue and earnings to fluctuate, and, in accordance with GAAP, there is significant judgment in the application of our revenue recognition principles. In particular, the relevant accounting principles under ASC 606, Revenue From Contracts with Customers, sometimes require us to recognize revenue before the actual amount is certain, which could add to uncertainty in our revenue guidance. For example, in some cases, ASC 606 requires us to recognize revenue based on a conservative estimate when we reach an agreement to arbitrate the terms of a license agreement, which can occur months or years before a final award has been determined. When the final terms become known, we record an adjustment to revenue. If a final award is lower than our estimate, the adjustment would reduce our revenue in that period. To the extent we have multiple arbitrations that cover related technologies and products or services, the impact of any such downward adjustments could be amplified.

Current report

The variability and unpredictability of our results of operations or other operating metrics could result in our failure to meet our expectations or those of industry or financial analysts. If we fail to meet or exceed such expectations for these or any other reasons, the market price of our common stock could fall substantially.