10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2009

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number 1-11152

INTERDIGITAL, INC.

(Exact Name of Registrant as Specified in Its Charter)

PENNSYLVANIA	23-1882087
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

781 Third Avenue, King of Prussia, PA 19406-1409
(Address of Principal Executive Offices and Zip Code)

(610) 878-7800
(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, par value $0.01 per share	43,125,495
Title of Class	Outstanding at July 27, 2009

INTERDIGITAL, INC. AND SUBSIDIARIES
INDEX

	PAGES
Part I — Financial Information:
Item 1 Condensed Consolidated Financial Statements (unaudited):		2
Condensed Consolidated Balance Sheets — June 30, 2009 and December 31, 2008		2
Condensed Consolidated Statements of Income — Three and Six Months Ended June 30, 2009 and 2008		3
Condensed Consolidated Statements of Cash Flows — Six Months Ended June 30, 2009 and 2008		4
Notes to Condensed Consolidated Financial Statements		5
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3 Quantitative and Qualitative Disclosures About Market Risk		21
Item 4 Controls and Procedures		21
Part II — Other Information:
Item 1 Legal Proceedings		22
Item 1A Risk Factors		22
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds		22
Item 4. Submission of Matters to a Vote of Security Holders		22
Item 6 Exhibits		23
SIGNATURES		24
EXHIBIT INDEX		25

InterDigital® is a registered trademark and SlimChip^TM is a trademark of InterDigital, Inc. All other trademarks, service marks and/or trade names appearing in this Form 10-Q are the property of their respective holders.

INTERDIGITAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION

Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

INTERDIGITAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)

(unaudited)

	JUNE 30,		DECEMBER 31,
	2009		2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	119,862	$	100,144
Short-term investments		96,778		41,516
Accounts receivable, less allowances of $2,000 and $3,000		244,510		33,892
Deferred tax assets		69,297		49,002
Prepaid and other current assets		13,068		16,467
Total current assets		543,515		241,021
PROPERTY AND EQUIPMENT, NET		10,749		20,974
PATENTS, NET		109,240		102,808
INTANGIBLE ASSETS, NET		—		22,731
DEFERRED TAX ASSETS		30,959		7,724
OTHER NON-CURRENT ASSETS		8,622		10,510
		159,570		164,747
TOTAL ASSETS	$	703,085	$	405,768
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$	580	$	1,608
Accounts payable		7,799		9,127
Accrued compensation and related expenses		7,758		33,038
Deferred revenue		177,296		78,646
Taxes payable		33,000		—
Other accrued expenses		9,365		4,118
Total current liabilities		235,798		126,537
LONG-TERM DEBT		886		1,321
LONG-TERM DEFERRED REVENUE		356,394		181,056
OTHER LONG-TERM LIABILITIES		11,489		9,194
TOTAL LIABILITIES		604,567		318,108
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Preferred Stock, $0.10 par value, 14,399 shares authorized 0 shares issued and outstanding		—		—
Common Stock, $0.01 par value, 100,000 shares authorized, 66,389 and 65,883 shares issued and 43,260 and 43,324 shares outstanding		664		659
Additional paid-in capital		479,165		471,468
Retained Earnings		177,274		159,515
Accumulated other comprehensive income		365		245
		657,468		631,887
Treasury stock, 23,129 and 22,559 shares of common held at cost		558,950		544,227
Total shareholders’ equity		98,518		87,660
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	703,085	$	405,768

The accompanying notes are an integral part of these statements.

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INTERDIGITAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)

(unaudited)

	FOR THE THREE MONTHS						FOR THE SIX MONTHS
	ENDED JUNE 30,						ENDED JUNE 30,
	2009			2008			2009			2008
REVENUES	$	74,928		$	58,706		$	145,489		$	114,733
OPERATING EXPENSES:
Selling, general and administrative		5,987			7,202			14,241			14,692
Patent administration and licensing		15,580			21,442			27,717			37,525
Development		13,226			22,223			40,096			44,966
Repositioning		(93	)		—			36,970			—
Arbitration and litigation contingencies		—			—			—			(1,200	)
		34,700			50,867			119,024			95,983
Income from operations		40,228			7,839			26,465			18,750
OTHER INCOME:
Interest and investment income, net		625			1,231			1,454			1,669
Income before income taxes		40,853			9,070			27,919			20,419
INCOME TAX PROVISION		(14,408	)		(3,218	)		(10,160	)		(7,250	)
NET INCOME	$	26,445		$	5,852		$	17,759		$	13,169
NET INCOME PER COMMON SHARE — BASIC	$	0.60		$	0.13		$	0.40		$	0.28
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC		43,479			45,358			43,490			45,892
NET INCOME PER COMMON SHARE — DILUTED	$	0.59		$	0.13		$	0.39		$	0.28
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED		44,313			46,264			44,387			46,733

The accompanying notes are an integral part of these statements.

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INTERDIGITAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

	FOR THE SIX MONTHS
	ENDED JUNE 30,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	17,759		$	13,169
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		12,874			13,698
Deferred revenue recognized		(111,026	)		(58,625	)
Increase in deferred revenue		385,014			82,464
Deferred income taxes		(43,530	)		—
Share-based compensation		5,225			2,885
Non-cash repositioning charges		30,568			—
Impairment of long-term investment		—			745
Other		(181	)		(248	)
(Increase) decrease in assets:
Receivables		(210,618	)		95,165
Deferred charges		3,095			117
Other current assets		1,028			7,643
(Decrease) increase in liabilities:
Accounts payable		(764	)		(22,590	)
Accrued compensation		(24,401	)		(1,968	)
Accrued taxes payable		33,000			(15,675	)
Other accrued expenses		5,247			723
Net cash provided by operating activities		103,290			117,503
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments		(106,199	)		(102,049	)
Sales of short-term investments		50,991			81,452
Purchases of property and equipment		(1,872	)		(3,063	)
Capitalized patent costs		(13,806	)		(15,608	)
Capitalized technology license costs		(1,115	)		(1,220	)
Long-term investments		—			(651	)
Net cash used by investing activities		(72,001	)		(41,139	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from exercise of stock options		3,241			956
Payments on long-term debt, including capital lease obligations		(1,463	)		(1,179	)
Repurchase of Common stock		(14,001	)		(36,580	)
Tax benefit from share-based compensation		652			498
Net cash used by financing activities		(11,571	)		(36,305	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		19,718			40,059
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		100,144			92,018
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	119,862		$	132,077

The accompanying notes are an integral part of these statements.

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INTERDIGITAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2009
(unaudited)

1. BASIS OF PRESENTATION:

     In the opinion of management, the accompanying unaudited, condensed, consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the financial position of InterDigital, Inc. (collectively with its subsidiaries referred to as “InterDigital,” the “Company,” “we,” “us” or “our”) as of June 30, 2009, and the results of our operations for the three and six months ended June 30, 2009 and 2008 and our cash flows for the six months ended June 30, 2009 and 2008. The accompanying unaudited, condensed, consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and, accordingly, do not include all of the detailed schedules, information and notes necessary to state fairly the financial condition, results of operations and cash flows in conformity with generally accepted accounting principles. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. Therefore, these financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s latest Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (“2008 Form 10-K”) as filed with the Securities and Exchange Commission (“SEC”) on March 2, 2009. The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year. We have one reportable segment.

     The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

     For the quarterly period ended June 30, 2009, the Company has considered subsequent events through July 30, 2009, which is the date its Condensed Consolidated Financial Statements were filed with the Securities and Exchange Commission on Form 10-Q.

Reclassifications

     Due to our March 30, 2009 repositioning, we reclassified our income statement presentation in order to align our operating expense classifications with our ongoing activities. We eliminated the General and administrative and Sales and marketing classifications within Operating Expenses and created the Selling, general and administrative classification. All costs previously reported under General and administrative have been reclassified to Selling, general and administrative, while Sales and marketing costs have been reclassified between Selling, general and administrative and Patent administration and licensing. Additionally, we have reclassified portions of our Development costs to Patent administration and licensing. The table below displays the as previously reported and as reclassified operating expenses.

			Three Months			Three Months		Six Months						Nine Months								Three Months
	Full Year		Ended			Ended		Ended			Three Months Ended			Ended			Three Months Ended		Full Year			Ended
	2007		March 31, 2008			June 30, 2008		June 30, 2008			September 30, 2008			September 30, 2008			December 31, 2008		2008			March 31, 2009
As previously reported:
Sales and marketing	$	7,828	$	2,388		$	2,049	$	4,437		$	1,855		$	6,292		$	2,869	$	9,161		$	2,310
General and administrative		24,210		5,675			5,705		11,380			5,498			16,878			9,698		26,576			6,553
Patent administration and licensing		67,587		15,051			20,436		35,487			13,310			48,797			10,088		58,885			10,844
Development		87,141		23,202			22,677		45,879			24,088			69,967			31,287		101,254			27,554
Arbitration and litigation contingencies		24,412		(1,200	)		—		(1,200	)		(2,740	)		(3,940	)		—		(3,940	)		—
Repositioning		—		—			—		—			—			—			—		—			37,063
Total operating expense	$	211,178	$	45,116		$	50,867	$	95,983		$	42,011		$	137,994		$	53,942	$	191,936		$	84,324
As reclassified:
Selling, general and administrative	$	30,052	$	7,490		$	7,202	$	14,692		$	6,878		$	21,570		$	11,882	$	33,452		$	8,254
Patent administration and licensing		71,475		16,083			21,442		37,525			14,329			51,854			11,638		63,492			12,137
Development		85,239		22,743			22,223		44,966			23,544			68,510			30,422		98,932			26,870
Arbitration and litigation contingencies		24,412		(1,200	)		—		(1,200	)		(2,740	)		(3,940	)				(3,940	)		—
Repositioning		—		—			—		—			—			—			—		—			37,063
Total operating expense	$	211,178	$	45,116		$	50,867	$	95,983		$	42,011		$	137,994		$	53,942	$	191,936		$	84,324

     There have been no material changes in our existing accounting policies from the disclosures included in our 2008 Form 10-K, except as discussed below.

New Accounting Pronouncements

          SFAS No. 141-R

     In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 141-R, Business Combinations (“SFAS No. 141-R”), which revised SFAS No. 141, Business Combinations. SFAS No. 141-R is effective for us beginning January 1, 2009. Under SFAS No. 141, organizations utilized the announcement date as the measurement date for the purchase price of the acquired entity. SFAS No. 141-R requires measurement at the date the acquirer obtains control of the acquiree, generally referred to as the acquisition date. SFAS No. 141-R will have a significant impact on the accounting for transaction costs and restructuring costs, as well as the initial recognition of contingent assets and liabilities assumed during a business combination. Under SFAS No. 141-R, adjustments to the acquired entity’s deferred tax assets and uncertain tax position balances occurring outside the measurement period are recorded as a component of the income tax expense, rather than goodwill. We adopted this statement on January 1, 2009. SFAS No. 141-R’s impact on accounting for business combinations is dependent upon acquisitions, if any, made on or after that time.

     FSP No. EITF 03-6-1

     In June 2008, the FASB issued Staff Position (“FSP”) No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities (“FSP EITF 03-6-1”), which addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in earnings allocation in computing earnings per share under the two-class method as described in SFAS No. 128, Earnings Per Share. Under the guidance in FSP EITF 03-6-1, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two class method. We adopted

5

FSP EITF 03-6-1 on January 1, 2009 and, in accordance with the FSP, have retrospectively adjusted prior-period earnings per share data. The table below displays the as previously reported and adjusted basic and diluted earnings per share for all prior periods affected by this new pronouncement.

			Three Months		Three Months		Six Months		Three Months		Nine Months
	Full Year		Ended		Ended		Ended		Ended		Ended		Full Year
	2007		March 31, 2008		June 30, 2008		June 30, 2008		September 30, 2008		September 30, 2008		2008
As previously reported:
Net Income per share — basic	$	0.42	$	0.16	$	0.13	$	0.29	$	0.21	$	0.49	$	0.58
Net Income per share — diluted	$	0.40	$	0.15	$	0.13	$	0.28	$	0.20	$	0.48	$	0.57
Adjusted:
Net Income per share — basic	$	0.41	$	0.16	$	0.13	$	0.28	$	0.20	$	0.49	$	0.58
Net Income per share — diluted	$	0.40	$	0.15	$	0.13	$	0.28	$	0.20	$	0.48	$	0.57

     SFAS No. 157

     In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”) and expands disclosures about fair value measurements. SFAS No. 157 does not require any new fair value measurements but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. For financial assets and liabilities, SFAS No. 157 was effective for us beginning January 1, 2008. In February 2008, the FASB issued FASB Staff Position FSP No. FAS 157-1, Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13 and FSP No. FAS 157-2, Effective Date of FASB Statement No. 157. FSP 157-1 amends SFAS No. 157 to remove certain leasing transactions from its scope. FSP 157-2 delayed the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008 for all non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) and was adopted by the Company beginning first quarter 2009. In October 2008, the FASB issued FSP No. FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active, to clarify the application of SFAS 157 in inactive markets for financial assets. FSP 157-3 became effective upon issuance and SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. In April 2009, the FASB issued FSP No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (“FSP 157-4”), to provide additional guidance and expand on the factors that should be considered in estimating fair value when there has been a significant decrease in market activity for a financial asset. FSP 157-4 became effective for interim and annual periods ending after June 15, 2009. The adoption of SFAS No. 157 for both financial and non-financial assets and liabilities did not have a material effect on the Company’s financial condition or results of operations.

     FSP 107-1

     In April 2009, the FASB issued FSP No. FAS 107-1 and Accounting Principles Board (APB) 28-1, Interim Disclosures about Fair Value of Financial Instruments (“FSP 107-1”), which requires disclosure about fair value of financial instruments in interim and annual financial statements. We adopted FSP 107-1 in second quarter 2009, and the adoption had no financial impact on the Company’s Condensed Consolidated Financial Statements.

     FSP 115-2

     In April 2009, the FASB issued FSP FAS No. 115-2 and FAS No. 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (“FSP 115-2”), which provides operational guidance for determining other-than-temporary impairments for debt securities. We adopted FSP 115-2 in second quarter 2009, and the adoption did not have a material effect on the Company’s Condensed Consolidated Financial Statements.

     SFAS No. 165

     In May 2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS No. 165”). SFAS No. 165 establishes standards for accounting for and disclosing subsequent events (events which occur after the balance sheet date but before financial statements are issued or are available to be issued). SFAS No. 165 requires an entity to disclose the date subsequent events were evaluated and whether that evaluation took place on the date financial statements were issued or were available to be issued. This standard is effective for interim and annual periods ending after June 15, 2009. The adoption of SFAS No. 165 did not have a material impact on the Company’s financial condition or results of operations.

     SFAS No. 168

     In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (“SFAS No. 168”). SFAS No. 168 replaces FASB Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles, and establishes the FASB Accounting Standards Codification ^TM (the Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. SFAS No. 168 is effective for interim and annual periods ending after September 15, 2009. We will begin to use the new Codification when referring to GAAP in our quarterly filing on Form 10-Q for the period ending September 30, 2009. This will not have an impact on the consolidated results of the Company.

2. REPOSITIONING:

     On March 30, 2009, we announced a repositioning plan that includes the expansion of the technology development and licensing business, the cessation of further product development of the SlimChip modem technology, and efforts to monetize the SlimChip technology investment through IP licensing and technology sales. In connection with the repositioning, the Company incurred a charge of $37.0 million during first half 2009. Of this amount, approximately $30.6 million represents non-cash asset impairments that relate to assets used in the product and product development, including $21.2 million of acquired intangible assets and $9.4 million of property, equipment and other assets. During second quarter 2009, the repositioning charge was reduced by $0.1 million primarily due to a change in estimate for contract termination costs.

     In addition, the repositioning resulted in a reduction in force of approximately 100 employees across the Company’s three locations, the majority of which were terminated effective April 3, 2009. Approximately $6.4 million of the repositioning charge represents cash obligations associated with severance and contract termination costs. Substantially all of the severance and related costs are scheduled to be paid within twelve months of the balance sheet date.

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     We currently estimate that we will incur additional repositioning costs of approximately $1.0 million to $2.0 million in second half 2009, but the timing and amount of the additional charge will be dependent upon our process to wind down activities related to our SlimChip product development.

     The following table provides information related to our first half 2009 repositioning charge and the related accrued liability for repositioning costs, which is included on our balance sheet within Other accrued expenses (in thousands):

	Asset		Severance and			Contract
	Impairments		Related Costs			Termination Costs			Total
Expected repositioning charge	$	30,568	$	4,840		$	3,538		$	38,946
Repositioning Charge Recognized
Repositioning charge recognized during first quarter 2009	$	30,568	$	3,863		$	2,632		$	37,063
Adjustments recognized during second quarter 2009		—		—			(93	)		(93	)
Repositioning charge recognized during first half 2009	$	30,568	$	3,863		$	2,539		$	36,970
Accrued Liability for Repositioning Costs:
Amounts accrued during first quarter 2009	$	—	$	3,863		$	2,632		$	6,495
Payments		—		(68	)		(601	)		(669	)
March 31, 2009		—		3,795			2,031			5,826
Payments		—		(2,560	)		(1,235	)		(3,795	)
Adjustments		—		—			(93	)		(93	)
June 30, 2009	$	—	$	1,235		$	703		$	1,938

3. INCOME TAXES:

     In first half 2009, our effective tax rate was approximately 36.4% based on the statutory federal tax rate net of discrete state and foreign taxes. During first half 2008, our effective tax rate was 35.5% based on the statutory federal tax rate net of permanent differences.

     During first half 2009 and 2008, we paid approximately $16.5 million and $15.9 million, respectively, of foreign withholding tax. We established a corresponding deferred tax asset related to foreign tax credits that we expect to utilize to offset future U.S. federal income taxes.

     Our future book tax expense may also be affected by charges associated with any share-based tax shortfalls that may occur under SFAS No. 123(R), Share-Based Payment. However, we cannot predict if, when or to what extent this will affect our future tax expense. If, in the course of future tax planning, we identify tax saving opportunities that entail amending prior year returns in order to avail ourselves fully of credits that we previously considered unavailable to us, we will recognize the benefit of the credits in the period in which they are both identified and quantified, thereby reducing the book tax expense in that period.

4. NET INCOME PER SHARE:

     The following table sets forth a reconciliation of the shares used in the basic and diluted net income per share computations (in thousands, except per share data):

	For the Three Months Ended June 30,
	2009						2008
	Basic			Diluted			Basic			Diluted
Numerator:
Net Income	$	26,445		$	26,445		$	5,852		$	5,852
Less: Income applicable to participating securities		(405	)		(397	)		(49	)		(48	)
Net Income applicable to common shareholders	$	26,040		$	26,048		$	5,803		$	5,804
Denominator:
Weighted Average Shares Outstanding: Basic		43,479			43,479			45,358			45,358
Dilutive effect of stock options					834						906
Weighted Average Shares Outstanding: Diluted					44,313						46,264
Earnings Per Share:
Net Income: Basic	$	0.60		$	0.60		$	0.13		$	0.13
Dilutive effect of stock options					(0.01	)					—
Net Income: Diluted				$	0.59					$	0.13

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	For the Six Months Ended June 30,
	2009						2008
	Basic			Diluted			Basic			Diluted
Numerator:
Net Income	$	17,759		$	17,759		$	13,169		$	13,169
Less: Income applicable to participating securities		(281	)		(275	)		(118	)		(116	)
Net Income applicable to common shareholders	$	17,478		$	17,484		$	13,051		$	13,053
Denominator:
Weighted Average Shares Outstanding: Basic		43,490			43,490			45,892			45,892
Dilutive effect of stock options					897						841
Weighted Average Shares Outstanding: Diluted					44,387						46,733
Earnings Per Share:
Net Income: Basic	$	0.40		$	0.40		$	0.28		$	0.28
Dilutive effect of stock options					(0.01	)					—
Net Income: Diluted				$	0.39					$	0.28

     For both the three and six months ended June 30, 2009, options to purchase approximately 0.5 million shares of common stock were excluded from the computation of diluted earnings per share because the exercise prices of these options were greater than the weighted-average market price of our common stock during this period and, therefore, their effect would have been anti-dilutive.

     For the three and six months ended June 30, 2008, options to purchase approximately 0.8 million shares and 0.9 million shares of common stock, respectively, were excluded from the computation of diluted earnings per share because the exercise prices of these options were greater than the weighted-average market price of our common stock during this period and, therefore, their effect would have been anti-dilutive.

5. LITIGATION AND LEGAL PROCEEDINGS:

Nokia Litigation

          Nokia USITC Proceeding and Related Delaware District Court and Southern District of New York Proceedings

     In August 2007, InterDigital filed a USITC Complaint against Nokia Corporation and Nokia, Inc. (collectively, “Nokia”) alleging that Nokia engaged in an unfair trade practice by selling for importation into the United States, importing into the United States, and selling after importation into the United States, certain 3G mobile handsets and components that infringe two of InterDigital’s patents. In November and December 2007, a third patent and fourth patent, respectively, were added to our Complaint against Nokia. The Complaint seeks an exclusion order barring from entry into the United States infringing 3G mobile handsets and components that are imported by or on behalf of Nokia. Our Complaint also seeks a cease-and-desist order to bar further sales of infringing Nokia products that have already been imported into the United States.

     In addition, on the same date as our filing of the USITC action referenced above, we also filed a Complaint in the Delaware District Court alleging that Nokia’s 3G mobile handsets and components infringe the same two InterDigital patents identified in the original USITC Complaint. This Delaware action was stayed on January 10, 2008, pursuant to the mandatory, statutory stay of parallel district court proceedings at the request of a respondent in a USITC investigation. Thus, this Delaware action is stayed until the USITC’s determination in this matter becomes final. The Delaware District Court permitted InterDigital to add to the stayed Delaware action the third and fourth patents InterDigital asserted against Nokia in the USITC action.

     Nokia, joined by Samsung Electronics Co., Ltd. (“Samsung”), moved to consolidate the Nokia USITC proceeding with an investigation we had earlier initiated against Samsung in the USITC. On October 24, 2007, the Honorable Paul J. Luckern, the Administrative Law Judge overseeing the two USITC proceedings against Samsung and Nokia, respectively, issued an Order to consolidate the two pending investigations. Pursuant to the Order, the schedules for both investigations were revised to consolidate proceedings and set a unified evidentiary hearing on April 21-28, 2008, the filing of a single initial determination by Judge Luckern by July 11, 2008, and a target date for the consolidated investigations of November 12, 2008, by which date the USITC would issue its final determination (the “Target Date”).

     On December 4, 2007, Nokia moved for an order terminating or, alternatively, staying the USITC investigation as to Nokia, on the ground that Nokia and InterDigital must first arbitrate a dispute as to whether Nokia is licensed under the patents asserted by InterDigital against Nokia in the USITC investigation. On January 8, 2008, Judge Luckern issued an order denying Nokia’s motion and holding that Nokia has waived its arbitration defense by instituting and participating in the investigation and other legal proceedings. On February 13, 2008, Nokia filed an action in the U.S. District Court for the Southern District of New York (the “Southern District Action”), seeking to preliminarily enjoin InterDigital from proceeding with the USITC investigation with respect to Nokia, in spite of Judge Luckern’s ruling denying Nokia’s motion to terminate the USITC investigation. Nokia raised in this preliminary injunction action the same arguments it

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raised in its motion to terminate the USITC investigation, namely that InterDigital allegedly must first arbitrate its alleged license dispute with Nokia and that Nokia has not waived arbitration of this defense. In the Southern District Action, Nokia also sought to compel InterDigital to arbitrate its alleged license dispute with Nokia and, in the alternative, sought a determination by the District Court that Nokia is licensed under the patents asserted by InterDigital against Nokia in the USITC investigation. On March 7, 2008, InterDigital filed a motion to dismiss Nokia’s claim in the alternative that Nokia is licensed under the patents asserted by InterDigital against Nokia in the USITC investigation.

     On February 8, 2008, Nokia filed a motion for summary determination in the USITC that InterDigital cannot show that a domestic industry exists in the United States as required to obtain relief. Samsung joined this motion. InterDigital opposed this motion. On February 14, 2008, InterDigital filed a motion for summary determination that InterDigital satisfies the domestic industry requirement based on its licensing activities. On February 26, 2008, InterDigital filed a motion for summary determination that it has separately satisfied the so-called “economic prong” for establishing that a domestic industry exists based on InterDigital’s chipset product that practices the asserted patents. Samsung and Nokia opposed these motions. On March 17, 2008, Samsung and Nokia filed a motion to strike any evidence concerning InterDigital’s product and to preclude InterDigital from introducing any such evidence in relation to domestic industry at the evidentiary hearing. On March 26, 2008, the Administrative Law Judge granted InterDigital’s motion for summary determination that it has satisfied the so-called “economic prong” for establishing that a domestic industry exists based on InterDigital’s chipset product that practices the asserted patents and denied Samsung’s motion to strike and preclude introduction of evidence concerning InterDigital’s domestic industry product.

     On March 17, 2008, Nokia and Samsung jointly moved for summary determination that U.S. Patent No. 6,693,579, which was asserted against both Samsung and Nokia, is invalid. InterDigital opposed this motion. On April 14, 2008, the Administrative Law Judge denied Nokia’s and Samsung’s joint motion for summary determination that the ‘579 patent is invalid.

     On March 20, 2008, the U.S. District Court for the Southern District of New York, ruling from the bench, decided that Nokia is likely to prevail on the issue of whether Nokia’s alleged entitlement to a license is arbitrable. The Court did not consider or rule on whether Nokia is entitled to such a license. As a result, the Court entered a preliminary injunction requiring InterDigital to participate in arbitration of the license issue and requiring InterDigital to cease participation in the USITC proceeding by April 11, 2008, but only with respect to Nokia. The Court further ordered Nokia to post a $500,000 bond by March 28, 2008, which Nokia did. InterDigital promptly filed a request for a stay of the preliminary injunction and for an expedited appeal with the U.S. Court of Appeals for the Federal Circuit, which transferred the appeal to the U.S. Court of Appeals for the Second Circuit. The preliminary injunction became effective on April 11, 2008, and, in accordance with the Court’s order, InterDigital filed a motion with the Administrative Law Judge to stay the USITC proceeding against Nokia pending InterDigital’s appeal of the District Court’s decision or, if that appeal were unsuccessful, pending the Nokia TDD Arbitration (described below). On April 14, 2008, the Administrative Law Judge ordered that the date for the commencement of the evidentiary hearing, originally scheduled for April 21, 2008, be suspended until further notice from the Administrative Law Judge. The Administrative Law Judge did not at that point change the scheduled date of July 11, 2008 for his initial determination in the investigation or the scheduled Target Date of November 12, 2008 for a decision by the USITC. InterDigital’s motion for a stay of the preliminary injunction and for an expedited appeal was considered by a panel of the Second Circuit on April 15, 2008. On April 16, 2008, the Second Circuit denied the motion for stay but set an expedited briefing schedule for resolving InterDigital’s appeal on the merits of whether the District Court’s order granting the preliminary injunction should be reversed.

     On April 17, 2008, InterDigital filed a motion with the USITC to separate the consolidated investigations against Nokia and Samsung in order for the investigation to continue against Samsung pending the expedited appeal or, if the appeal is unsuccessful, pending the Nokia TDD Arbitration. Samsung and Nokia opposed InterDigital’s motion. On May 16, 2008, the Administrative Law Judge deconsolidated the investigations against Samsung and Nokia and set an evidentiary hearing date in the investigation against Samsung (337-TA-601) to begin on July 8, 2008.

     On May 20, 2008, the Administrative Law Judge denied without prejudice all pending motions in the consolidated investigation (337-TA-613).

     On June 17, 2008, a panel of the U.S. Court of Appeals for the Second Circuit heard oral argument on InterDigital’s appeal from the Order of the U.S. District Court for the Southern District of New York preliminarily enjoining InterDigital from proceeding against Nokia in the consolidated investigation. On July 31, 2008, the Second Circuit reversed the preliminary injunction, finding that Nokia’s litigation conduct resulted in a waiver of any right to arbitrate its license dispute. InterDigital promptly notified the Administrative Law Judge in the Nokia investigation (337-TA-613) of the Second Circuit’s decision. On August 14, 2008, Nokia filed a petition for rehearing and petition for rehearing en banc of the Second Circuit’s decision, and on September 15, 2008, the Second Circuit denied Nokia’s petitions. The mandate from the Second Circuit issued to the Southern District of New York on September 22, 2008. Notwithstanding the Second Circuit’s decision, on October 17, 2008 Nokia filed a request for a status conference with the District Court to establish a procedural schedule for Nokia to pursue a permanent injunction requiring InterDigital to arbitrate Nokia’s alleged license defense, and arguing that the Second Circuit’s decision does not bar such an action. On October 23, 2008, InterDigital filed a response with the District Court asserting that the Second Circuit’s waiver finding was dispositive, and seeking the dismissal of Nokia’s complaint in its entirety. On March 5, 2009, the Court in the Southern District Action granted InterDigital’s request and dismissed all of Nokia’s claims in the Southern District Action, but delayed issuing a final judgment pending a request by InterDigital seeking to collect against the $500,000 preliminary injunction bond posted by Nokia. On April 3, 2009, InterDigital filed a motion to collect against the preliminary injunction

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bond, contending that InterDigital was damaged by at least $500,000 as a result of the wrongfully obtained preliminary injunction. Briefing on InterDigital’s motion has been completed, but the Court has not yet ruled on this motion.

     On September 24, 2008, InterDigital filed a motion to lift the stay of the Nokia investigation (337-TA-613) based on the issuance of the Second Circuit’s mandate reversing the preliminary injunction granted to Nokia. The Administrative Law Judge granted InterDigital’s motion on September 25, 2008 and lifted the stay. On October 7, 2008, the Administrative Law Judge issued an Order in the Nokia investigation setting the evidentiary hearing for May 26-29, 2009. On October 10, 2008, the Administrative Law Judge issued an Order resetting the Target Date for the USITC’s Final Determination in the Nokia investigation to December 14, 2009, and requiring a final Initial Determination by the Administrative Law Judge to be entered no later than August 14, 2009.

     On January 21, 2009, Nokia filed a motion to schedule a claim construction hearing in the USITC proceeding in early February 2009, and on January 29, 2009, InterDigital filed an opposition to the motion for a claim construction hearing. On February 9, 2009, the Administrative Law Judge denied Nokia’s motion for a claim construction hearing.

     On February 13, 2009, InterDigital filed a renewed motion for summary determination that InterDigital has satisfied the domestic industry requirement based on its licensing activities, and on February 27, 2009, Nokia filed an opposition to the motion. On March 10, 2009, the Administrative Law Judge granted InterDigital’s motion, finding that InterDigital has established, through its licensing activities, that a domestic industry exists in the United States as required to obtain relief before the USITC. On April 9, 2009, the Commission issued a notice that it would not review the Administrative Law Judge’s Order granting summary determination of a licensing-based domestic industry, thereby adopting the Administrative Law Judge’s decision.

     The evidentiary hearing for the USITC investigation with respect to Nokia was held from May 26, 2009 through June 2, 2009. Posthearing briefing for the USITC investigation with respect to Nokia has been completed. A final Initial Determination by the Administrative Law Judge is expected by August 14, 2009, and the Final Determination by the USITC is expected by December 14, 2009.

          Nokia TDD Arbitration

     On April 1, 2008, Nokia Corporation filed a Request for Arbitration with the International Chamber of Commerce against InterDigital, Inc. and its wholly owned subsidiaries InterDigital Communications, LLC, and InterDigital Technology Corporation, seeking a declaration that Nokia is licensed under the patents asserted by InterDigital against Nokia in the USITC investigation pursuant to the parties’ TDD Development Agreement.

     On May 9, 2008, InterDigital filed an Answer to Nokia’s Request for Arbitration, requesting, inter alia: (i) that the arbitration be dismissed because the dispute is not arbitrable and, even if arbitrable, Nokia waived its right to arbitration; and, in the alternative, (ii) a declaration that Nokia is not licensed to the patents at issue in the USITC investigation pursuant to the parties’ TDD Development Agreement.

     On July 17, 2008, the arbitral tribunal was constituted.

     On July 31, 2008, as discussed above, the United States Court of Appeals for the Second Circuit reversed the district court’s grant of an order requiring InterDigital to submit the TDD issue to arbitration, finding that Nokia waived any right to arbitrate the issue. InterDigital believed that Nokia should not be permitted to continue to pursue this arbitration in light of the Second Circuit’s finding of waiver and requested that the arbitration be dismissed. Nokia asserted that the Second Circuit’s decision was not a final decision on the issue of waiver, and has contended that Nokia may submit the waiver issue to the arbitral tribunal or, as indicated above, to the District Court on remand. However, as discussed above (see “Nokia USITC Proceeding and Related Delaware District Court and Southern District of New York Proceedings” above), on March 5, 2009, the Court in the Southern District Action issued an order dismissing Nokia’s complaint in its entirety, agreeing with InterDigital that the Second Circuit’s decision on waiver was final. In light of the above, on June 4, 2009, Nokia informed the Tribunal that Nokia was withdrawing its Request for Arbitration. On June 25, 2009, the International Chamber of Commerce informed the parties that it was closing the file for this arbitration.

Other

     We have filed patent applications in the United States and in numerous foreign countries. In the ordinary course of business, we currently are, and expect from time to time to be, subject to challenges with respect to the validity of our patents and with respect to our patent applications. We intend to continue to defend vigorously the validity of our patents and defend against any such challenges. However, if certain key patents are revoked or patent applications are denied, our patent licensing opportunities could be materially and adversely affected.

     We and our licensees, in the normal course of business, might have disagreements as to the rights and obligations of the parties under the applicable patent license agreement. For example, we could have a disagreement with a licensee as to the amount of reported sales of covered products and royalties owed. Our patent license agreements typically provide for arbitration as the mechanism for resolving disputes. Arbitration proceedings can be resolved through an award rendered by an arbitration panel or through private settlement between the parties.

     In addition to disputes associated with enforcement and licensing activities regarding our intellectual property, including the litigation and other proceedings described above, we are a party to other disputes and legal actions not related to our intellectual property, but also

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arising in the ordinary course of our business. Based upon information presently available to us, we believe that the ultimate outcome of these other disputes and legal actions will not have a material adverse effect on us.

6. REPURCHASE OF COMMON STOCK:

        In October 2007, our Board of Directors authorized a $100.0 million share repurchase program (the “2007 Repurchase Program”). In March 2009, our Board of Directors authorized another $100.0 million share repurchase program (the “2009 Repurchase Program”). The Company may repurchase shares under the programs through open market purchases, pre-arranged trading plans or privately negotiated purchases. During 2008, we completed the 2007 Repurchase Program under which we repurchased a cumulative total of 4.8 million shares totaling $100.0 million, including 1.8 million shares we repurchased for $36.0 million in first half 2008. During first half 2009, we repurchased approximately 0.6 million shares for $14.7 million under the 2009 Repurchase Program. At June 30, 2009, we accrued approximately $0.7 million associated with our obligation to settle repurchases made late in second quarter 2009.

     From July 1, 2009 through July 27, 2009, we repurchased an additional 0.1 million shares for $4.1 million, to bring the cumulative repurchase totals to 0.7 million shares at a cost of $18.8 million under the 2009 Repurchase Program.

7. COMPREHENSIVE INCOME:

    The following table summarizes comprehensive income for the periods presented (in thousands):

	For the Three Months Ended June 30,
	2009		2008
Net Income	$	26,445	$	5,852
Unrealized gain (loss) on investments		134		(226	)
Total comprehensive income	$	26,579	$	5,626
	For the Six Months Ended June 30,
	2009		2008
Net Income	$	17,759	$	13,169
Unrealized gain (loss) on investments		120		(13	)
Total comprehensive income	$	17,879	$	13,156

8. INVESTMENTS IN OTHER ENTITIES:

     We may make strategic investments in companies that have developed or are developing technologies that are complementary to our business. During 2007, we made a $5.0 million investment for a non-controlling interest in Kineto Wireless (“Kineto”). This investment is recorded on our balance sheet within Other Non-Current Assets. In first quarter 2008, we wrote-down this investment $0.7 million based on a lower valuation of Kineto by its investors. Early in second quarter 2008, we participated in a new round of financing that included several other investors, investing an additional $0.7 million in Kineto. This second investment both maintained our ownership position and preserved certain liquidation preferences. We do not have significant influence over Kineto and are accounting for this investment using the cost method of accounting. Under the cost method, we will not adjust our investment balance when the investee reports profit or loss but will monitor the investment for an other-than-temporary decline in value. When assessing whether an other-than-temporary decline in value has occurred, we will consider such factors as the valuation placed on the investee in subsequent rounds of financing, the performance of the investee relative to its own performance targets and business plan, and the investee’s revenue and cost trends, liquidity and cash position, including its cash burn rate, and updated forecasts.

9. INSURANCE REIMBURSEMENT:

     In first half 2008, we received payments from insurance providers of $6.9 million to reimburse us for portions of our defense costs in certain litigation with Nokia. This amount reduced our patent administration and licensing expense in 2008. We did not receive any such reimbursements during first half 2009.

10. CONCENTRATION OF CREDIT RISK AND FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES:

Concentration of Credit Risk and Fair Value of Financial Instruments

     Financial instruments that potentially subject us to concentration of credit risk consist primarily of cash equivalents, short-term investments, and accounts receivable. We place our cash equivalents and short-term investments only in highly rated financial instruments and in United States Government instruments.

     Our accounts receivable are derived principally from patent license agreements and technology solutions. At June 30, 2009, two customers represented 82% and 15% of our accounts receivable balance. At December 31, 2008, four customers represented 59%, 17%, 10% and 10% respectively, of our accounts receivable balance. We perform ongoing credit evaluations of our customers who generally include large, multi-national, wireless telecommunications equipment manufacturers. We believe that the carrying value of our financial instruments approximate their fair values.

SFAS No. 157 Fair Value Measurements

     Effective January 1, 2008, we adopted the provisions of SFAS No. 157. Fair Value Measurements that relate to our financial assets and financial liabilities. SFAS No. 157 establishes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach). The levels of the hierarchy are described below:

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• Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities

• Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active

• Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions

     Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of financial assets and financial liabilities and their placement within the fair value hierarchy. We use quoted market prices for similar assets to estimate the fair value of our Level 2 investments. Our financial assets that are accounted for at fair value on a recurring basis are presented in the table below (in thousands):

	Fair Value as of June 30, 2009
	Level 1		Level 2		Level 3		Total
Assets:
Demand Accounts (a)	$	23,025	$	—	$	—	$	23,025
Money Market Accounts (a)		66,848		—		—		66,848
Commercial Paper (b)		—		43,382		—		43,382
U.S. government agencies (c)		64,492		—		—		64,492
Corporate Bonds		—		18,893		—		18,893
	$	154,365	$	62,275	$	—	$	216,640

(a)	Included within cash and cash equivalents.
(b)	Includes $20.0 million of commercial paper that is included within cash and cash equivalents.
(c)	Includes $10.0 million of government agency instruments that is included within cash and cash equivalents.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

OVERVIEW

     The following discussion should be read in conjunction with the unaudited, condensed consolidated financial statements and notes thereto contained elsewhere in this document, in addition to our 2008 Form 10-K as filed with the SEC on March 2, 2009, other reports filed with the SEC and the Statement Pursuant to the Private Securities Litigation Reform Act of 1995 — Forward-Looking Statements below. Please refer to the Glossary of Terms in our 2008 Form 10-K for a list and detailed description of the various technical, industry and other defined terms that are used in this Quarterly Report on Form 10-Q.

Patent Licensing

     Patent licensing royalties of $72.7 million in second quarter 2009 posted a 29 percent increase over $56.2 million in second quarter 2008, due to the addition of $25.7 million in fixed-fee amortized royalty revenue from a patent license agreement with Samsung signed in first quarter 2009, $2.3 million in royalties for past sales, partially offset by a $10.4 million decrease in per-unit royalty revenue related to industry-wide declines in handset sales for comparable first quarter sales. Despite this overall decline in per-unit royalties, certain licensees with concentrations in the smartphone market reported increased sales for the reporting period.

Repositioning

     On March 30, 2009, we announced a repositioning plan that includes the expansion of the technology development and licensing business, the cessation of further product development of the SlimChip modem technology, and efforts to monetize the SlimChip technology investment through IP licensing and technology sales. In connection with the repositioning, the Company incurred a charge of $37.0 million during first half 2009. Of this amount, approximately $30.6 million represents non-cash asset impairments that relate to assets used in the product and product development, including $21.2 million of acquired intangible assets and $9.4 million of property, equipment and other assets. During second quarter 2009, the repositioning charge was reduced by $0.1 million primarily due to a change in estimate for contract termination costs.

     In addition, the repositioning resulted in a reduction in force of approximately 100 employees across the Company’s three locations, the majority of which were terminated effective April 3, 2009. Approximately $6.4 million of the repositioning charge represents cash obligations associated with severance and contract termination costs.

     We currently estimate that we will incur additional repositioning costs of approximately $1.0 million to $2.0 million in second half 2009, but the timing and amount of the additional charge will be dependent upon our process to wind down activities related to our SlimChip product development.

     Through the reduction in force and the cessation of further product development of the SlimChip modem technology, the repositioning reduced our Development expense for second quarter 2009 by approximately $13.6 million from first quarter 2009.

Litigation and Arbitration

     Please see Note 5, “Litigation and Legal Proceedings,” in the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a full discussion of the following matter and other matters:

Nokia USITC

     In August 2007, we filed a complaint against Nokia in the USITC seeking an exclusion order barring Nokia from importing certain unlicensed 3G handsets into the United States. Subsequently, Nokia successfully sought to consolidate the Nokia investigation with an investigation we had earlier initiated against Samsung in the USITC.

     Nokia then unsuccessfully sought to terminate or stay the USITC investigation against it on the ground that Nokia and InterDigital must first arbitrate an alleged dispute as to whether Nokia is licensed under the patents asserted by InterDigital against Nokia in the USITC investigation. After that effort failed, Nokia sought and obtained a preliminary injunction in the U.S. District Court for the Southern District of New York preventing us from proceeding in the USITC against Nokia. Shortly after the issuance of the preliminary injunction, the Nokia USITC investigation was stayed, and the Nokia and Samsung USITC investigations were de-consolidated, which permitted the Samsung USITC investigation to move forward.

     In July 2008, the Second Circuit reversed the preliminary injunction obtained by Nokia. In September 2008, the Administrative Law Judge lifted the stay in the Nokia USITC investigation. In March 2009, the U.S. District Court for the Southern District of New York dismissed Nokia’s claims relating to its alleged license dispute.

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     The evidentiary hearing in the Nokia USITC investigation was held from May 26, 2009 through June 2, 2009. A final Initial Determination by the Administrative Law Judge is expected by August 14, 2009, and the Final Determination by the USITC is expected by December 14, 2009.

     Nokia continues to vigorously contest the USITC proceedings against them, and we have been, and will continue to be, required to expend substantial amounts to continue this and related proceedings. The timing and magnitude of these expenditures remain unpredictable.

Comparability of Financial Results

When comparing second quarter 2009 financial results against other periods, the following item should be taken into consideration:

• Our second quarter 2009 revenue included $2.3 million of revenue related to the resolution of an audit of one of our licensees.

When comparing second quarter 2008 financial results against other periods, the following item should be taken into consideration:

• Our second quarter 2008 revenue included $0.3 million related to past infringement and $1.3 million of one-time, incremental revenue associated with one of our licensees transitioning from per-unit royalties to a mix of per-unit and fixed-fee royalties.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Our significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements included in our 2008 Form 10-K. A discussion of our critical accounting policies, and the estimates related to them, are included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2008 Form 10-K. There have been no material changes in our existing critical accounting policies from the disclosures included in our 2008 Form 10-K. Refer to Note 1, Basis of Presentation of this Form 10-Q for updates related to new accounting pronouncements.

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FINANCIAL POSITION, LIQUIDITY AND CAPITAL REQUIREMENTS

         Our primary sources of liquidity are cash, cash equivalents and short-term investments, as well as cash generated from operations. We have the ability to obtain additional liquidity through debt and equity financings but have not had a significant debt or equity financing in over 10 years, and we do not anticipate a need for such financings in the next twelve months. Based on our past performance and current expectations, we believe our available sources of funds, including cash, cash equivalents and short-term investments and cash generated from our operations, will be sufficient to finance our operations, capital requirements and any stock repurchase programs that we may initiate in the next twelve months. Although our existing revenue streams have been affected by the recent global economic downturn, our near-term revenues are partially insulated from market swings because approximately two-thirds of our recurring patent licensing revenues were based on fixed payments in first half 2009.

Cash, cash equivalents and short-term investments

         At June 30, 2009 and December 31, 2008, we had the following amounts of cash, cash equivalents and short-term investments (in thousands):

	June 30, 2009		December 31, 2008
Cash and cash equivalents	$	119,862	$	100,144
Short-term investments		96,778		41,516
Total Cash, cash equivalents and short-term investments	$	216,640	$	141,660

         Our cash, cash equivalents and short-term investments increased $75.0 million in first half 2009. The increase was primarily due to our receipt of the first of four $100.0 million installments from Samsung under our patent license agreement signed in January 2009. After using this and other receipts to fund our operations, working capital requirements and share repurchases in first half 2009, we invested the excess in short-term investments.

Cash flows from operations

         We generated the following cash flows from our operating activities in 2009 and 2008 (in thousands):

	For the Six Months Ended June 30,
	2009		2008
Cash flows from operating activities	$	103,290	$	117,503

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     The positive operating cash flow in first half 2009 arose principally from receipts of approximately $201.5 million primarily associated with 3G related patent license agreements. These receipts included the first of four installments of $100.0 million from Samsung under our January 2009 license agreement and $41.2 million under a new $77.0 million prepayment commitment from an existing licensee, with the remainder received early in third quarter 2009. We also received fixed royalty payments of $21.4 million and per-unit royalty payments of $38.9 million from other existing licensees and cash receipts from our technology solutions totaling $8.8 million, primarily related to royalties associated with our SlimChip modem IP. These receipts were partially offset by cash operating expenses (operating expenses less depreciation of fixed assets, amortization of intangible assets, non-cash repositioning charges and non-cash compensation) of $70.4 million, cash payments for foreign source withholding taxes of $16.5 million, cash payments for an estimated federal tax payment of $4.0 million and changes in working capital during first half 2009.

     The positive operating cash flow in first half 2008 arose principally from receipts of approximately $230.0 million primarily associated with 3G related patent license agreements. These receipts included the third of three $95.0 million payments from LG, a new prepayment of $29.6 million from an existing licensee and current royalty payments of $20.7 million from Sharp Corporation of Japan (“Sharp”), $13.4 million from NEC Corporation of Japan (“NEC”) and $6.8 million from Panasonic Mobile Communications Co., Ltd. based on the royalty reports they submitted during the period. We also received fixed and current royalty payments of $64.5 million from other existing licensees and cash receipts from our technology solutions totaling $3.0 million, primarily related to royalties associated with our SlimChip modem IP. These receipts were partially offset by cash operating expenses (operating expenses less depreciation of fixed assets, amortization of intangible assets and non-cash compensation) of $79.4 million, cash payments for foreign source withholding taxes of $15.7 million, payment of $23.0 million to post a bond for the Federal Insurance Company arbitration award and changes in working capital during first half 2008.

Working capital

     We believe that working capital, adjusted to exclude cash, cash equivalents, short-term investments, current maturities of debt and current deferred revenue provides additional information about assets and liabilities that may affect our near-term liquidity. Our adjusted working capital, a non-GAAP financial measure, reconciles to working capital, the most directly comparable GAAP financial measure, as follows (in thousands):

	June 30, 2009			December 31, 2008
Current assets	$	543,515		$	241,021
Current liabilities		(235,798	)		(126,537	)
Working capital		307,717			114,484
(Subtract) Add
Cash and cash equivalents		(119,862	)		(100,144	)
Short-term investments		(96,778	)		(41,516	)
Current portion of long-term debt		580			1,608
Current deferred revenue		177,296			78,646
Adjusted working capital	$	268,953		$	53,078

     The $215.9 million increase in adjusted working capital is primarily due to our patent license agreement with Samsung signed in January 2009. Our balance sheet at June 30, 2009 includes $200.0 million of accounts receivable associated with Samsung, including the second installment due under our agreement, which was collected early in third quarter 2009 and the third installment which is due within twelve months of the balance sheet date. The decrease of $25.3 million in accrued compensation, primarily related to our first quarter 2009 payments against our long-term cash incentive and annual bonus obligations, further contributed to the increase in adjusted working capital. These items were partially offset by an increase of $5.3 million in other accrued expenses primarily attributable to accrued repositioning charges of $1.9 million and increased accrued legal fees of $3.3 million.

     We used net cash from investing activities of $72.0 million in first half 2009 and used net cash from investing activities of $41.1 million in first half 2008. We purchased $55.2 million and $20.6 million of short-term marketable securities, net of sales, in first half 2009 and 2008, respectively. This increase in purchases was driven by lower cash requirements during first half 2009. Purchases of property and equipment decreased to $1.9 million in first half 2009 from $3.1 million in first half 2008 due to the lower levels of development tools and engineering needed in first half 2009 in connection with our cessation of further SlimChip product development. Investment costs associated with patents decreased from $15.6 million in first half 2008 to $13.8 million in first half 2009. This decrease reflects the lag effect between filing an initial patent application and the incurrence of costs to issue the patent in both the U.S. and foreign jurisdictions.

16

     Net cash used in financing activities decreased $24.7 million primarily due to our higher levels of stock repurchase activity in first half 2008. We also received $2.3 million and $0.2 million more in respective contributions from stock option exercises and tax benefits from share-based compensation as compared to the prior year.

Other

     Our combined short-term and long-term deferred revenue balance at June 30, 2009 was approximately $533.7 million, an increase of $274.0 million from December 31, 2008. We have no material obligations associated with such deferred revenue. In first half 2009, we recorded gross increases in deferred revenue of $385.0 million primarily related to the first three of four $100.0 million payments under the Samsung patent license agreement signed in January 2009. The gross increases in deferred revenue were partially offset by first half 2009 deferred revenue recognition of $88.9 million related to the amortization of fixed-fee royalty payments, $22.1 million related to per-unit exhaustion of prepaid royalties (based upon royalty reports provided by our licensees) and the recognition of deferred revenue related to technology solutions agreements.

     Over the next twelve months, based on current patent license agreements, we expect the amortization of fixed-fee royalty payments to reduce the June 30, 2009 deferred revenue balance of $533.7 million by $177.3 million. Additional reductions to deferred revenue will be dependent upon the level of per-unit royalties our licensees report against prepaid balances.

     At June 30, 2009 and December 31, 2008, we had approximately 2.3 million and 2.9 million options outstanding, respectively, that had exercise prices less than the fair market value of our stock at each balance sheet date. These options would generate $29.4 million and $38.9 million of cash proceeds to the Company if they were fully exercised.

Credit Facility

     In light of our current financial position and in connection with the reduction of recurring operating expenses expected to result from our repositioning plan, we elected to terminate our $60.0 million unsecured revolving credit facility on April 2, 2009.

Off-Balance Sheet Arrangements

     We do not have any off-balance sheet arrangements as defined by Item 303(a)(4) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended.

RESULTS OF OPERATIONS

Second Quarter 2009 Compared to Second Quarter 2008

Revenues

     The following table compares second quarter 2009 revenues to revenues in the comparable period from the prior year (in millions):

	Second		Second
	Quarter		Quarter
	2009		2008
Per-unit royalty revenue	$	23.7	$	34.1
Fixed-fee amortized royalty revenue		46.7		21.8
Recurring patent licensing royalties		70.4		55.9
Past infringement and other non-recurring royalties		2.3		0.3
Total patent licensing royalties		72.7		56.2
Technology solutions revenue		2.2		2.5
Total revenue	$	74.9	$	58.7

     Revenues were $74.9 million in second quarter 2009, compared to $58.7 million in second quarter 2008. Patent licensing royalties of $72.7 million in second quarter 2009 posted a 29 percent increase over $56.2 million in second quarter 2008, due to the addition of $25.7 million in fixed-fee amortized royalty revenue from a patent license agreement with Samsung signed in first quarter 2009, $2.3 million in royalties for past sales, partially offset by a $10.4 million decrease in per-unit royalty revenue related to industry-wide declines in handset sales for comparable first quarter sales. Despite this overall decline in per-unit royalties, certain licensees with concentrations in the smartphone market reported increased sales for the reporting period.

     Technology solution revenue decreased in second quarter 2009 to $2.2 million from $2.5 million in second quarter 2008. The decrease is primarily attributable to engineering service fees earned in second quarter 2008 that did not recur in second quarter 2009, offset by an increase in royalties earned on our SlimChip modem IP.

17

     In second quarter 2009, 53% of our total revenue of $74.9 million was attributable to companies that individually accounted for 10% or more of our total revenue, Samsung (34%) and LG (19%). In second quarter 2008, 55% of our total revenue of $58.7 million was attributable to companies that individually accounted for 10% or more of our total revenue, LG (24%), Sharp (18%) and NEC (13%).

Operating Expenses

     Operating expenses decreased 32% to $34.7 million in second quarter 2009 from $50.9 million in second quarter 2008. The $16.2 million decrease was primarily due to the following net changes in expenses (in millions):

	(Decrease)/
	Increase
Patent litigation and arbitration	$	(7.0	)
Personnel related costs		(2.9	)
Depreciation and amortization		(2.2	)
Consulting services		(2.0	)
Reserve for uncollectable accounts		(1.0	)
Engineering software and equipment maintenance		(0.9	)
Travel expenses		(0.3	)
Other		(0.9	)
Share-based compensation		1.0
Total decrease in operating expenses	$	(16.2	)

     Patent litigation and arbitration decreased primarily due to the resolution of our various disputes with Samsung and the third quarter 2008 resolution of the Nokia U.K. disputes. The decrease in personnel-related costs, depreciation and amortization, consulting services, engineering software and equipment maintenance, and travel expenses were primarily due to the repositioning announced on March 30, 2009. The decrease in the reserve for uncollectable accounts was related to our partial collection of an overdue account receivable associated with our SlimChip modem IP. The related customer has agreed to a new payment schedule and we may further reduce this reserve in future periods as the related payments are collected. The above-noted decreases in operating expenses were partially offset by an increase in share-based compensation resulting from the structure of our Long-Term Compensation Program (“LTCP”), which included overlapping restricted stock unit award (“RSU”) cycles in 2009.

The following table summarizes the change in operating expenses by category (in millions):

	Second			Second
	Quarter			Quarter
	2009			2008		Increase / (Decrease)
Selling, general and administrative	$	6.0		$	7.2	$	(1.2	)	(17%	)
Patent administration and licensing		15.6			21.5		(5.9	)	(27%	)
Development		13.2			22.2		(9.0	)	(41%	)
Repositioning		(0.1	)		—		(0.1	)	0%
Total operating expenses	$	34.7		$	50.9	$	(16.2	)	(32%	)

Selling, General and Administrative Expense: The decrease in selling, general and administrative expense in second quarter 2009 was primarily due to the above-noted reduction in the reserve for uncollectable accounts and a decrease in personnel-related costs due to the repositioning announced on March 30, 2009.

Patent Administration and Licensing Expense: The decrease in patent administration and licensing expense primarily resulted from the above-noted decrease in patent litigation and arbitration ($7.0 million), which was partially offset by increases in consulting services ($0.7 million) and other personnel-related costs ($0.4 million).

Development Expense: The decrease in development expense was primarily due to the above-noted repositioning announced on March 30, 2009.

Repositioning Expense: On March 30, 2009, we announced a repositioning plan under which we (i) have begun to expand our technology development and licensing business and (ii) ceased further product development of our SlimChip HSPA technology and have sought to monetize the product investment through technology licensing. During second quarter 2009, the repositioning charge was reduced by $0.1 million primarily due to a change in estimate for contract termination costs.

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Interest and Investment Income, Net

     Net interest and investment income for second quarter 2009 totaled $0.6 million, a decrease of $0.6 million from second quarter 2008. The decrease was primarily due to lower rates of return on lower average investment balances in second quarter 2009 as compared to second quarter 2008.

First Half 2009 Compared to First Half 2008

Revenues

          The following table compares first half 2009 revenues to revenues in the comparable period from the prior year (in millions):

	First Half		First Half
	2009		2008
Per-unit royalty revenue	$	50.9	$	66.8
Fixed-fee amortized royalty revenue		88.9		42.5
Recurring patent licensing royalties		139.8		109.3
Past infringement and other non-recurring royalties		2.3		0.8
Total patent licensing royalties		142.1		110.1
Technology solutions revenue		3.4		4.6
Total revenue	$	145.5	$	114.7

     Revenues of $145.5 million in first half 2009 grew $30.8 million, or 27 percent, compared to $114.7 million in first half 2008. Patent licensing royalties were $142.1 million in first half 2009, up from $110.1 million in first half 2008. The increase in patent licensing royalties was primarily related to a $46.4 million increase in fixed-fee amortized royalty revenue driven by the company’s patent license agreement with Samsung. This increase was partially offset by a $15.9 million decrease in per-unit royalty revenue relating to an overall decrease in industry handset sales.

     Technology solution revenue decreased in first half 2009 to $3.4 million from $4.6 million in first half 2008. The decrease is primarily attributable to engineering service fees earned in first half 2008 associated with our SlimChip modem IP, which did not recur in first half 2009. This decrease was partially offset by an increase in royalties earned on our SlimChip modem IP.

     In first half 2009, 52% of our total revenue of $145.5 million was attributable to companies that individually accounted for 10% or more of our total revenue, Samsung (32%) and LG (20%). In first half 2008, 55% of our total revenue of $114.7 million, was attributable to companies that individually accounted for 10% or more of our total revenue, LG (25%), Sharp (18%) and NEC (12%).

Operating Expenses

     Excluding a $37.0 million repositioning charge in first half 2009, operating expenses decreased 15% to $82.0 million in first half 2009 from $96.0 million in first half 2008. The $14.0 million decrease was primarily due to the following net changes in expenses (in millions):

	(Decrease)/
	Increase
Patent litigation and arbitration	$	(18.2	)
Personnel related costs		(2.2	)
Long-term cash incentive		(1.6	)
Reserve for uncollectable accounts		(1.0	)
Depreciation and amortization		(0.8	)
Engineering software and equipment maintenance		(0.5	)
Travel expenses		(0.2	)
Other		(1.2	)
Insurance reimbursement		6.9
Share-based compensation		2.6
Arbitration and contingency adjustment		1.2
Consulting services		1.0
Total decrease in operating expenses excluding repositioning charge		(14.0	)
Repositioning charge		37.0
Total increase in operating expenses	$	23.0

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     Patent litigation and arbitration decreased primarily due to the resolution of our various disputes with Samsung and the third quarter 2008 resolution of the Nokia U.K. disputes. The decrease in personnel-related costs, depreciation and amortization, consulting services, engineering software and equipment maintenance, and travel expenses were primarily due to the repositioning announced on March 30, 2009. The decrease in the reserve for uncollectable accounts was related to our partial collection of an overdue account receivable associated with our SlimChip modem IP. The related customer has agreed to a new payment schedule and we may further reduce this reserve in future periods as the related payments are collected. First half 2008 operating expenses were reduced due to the inclusion of a $6.9 million insurance reimbursement to reimburse us for a portion of our defense costs in certain litigation with Nokia. The increase in share-based compensation and the decrease in long-term cash incentives were both primarily due to the structure of our LTCP, which resulted in overlapping RSU cycles in 2009 and overlapping performance-based cash incentive cycles in 2008. In 2008, we recognized a credit of $1.2 million related to the reduction of a previously established accrual associated with our contingent obligation to reimburse Nokia for a portion of its attorney’s fees associated with the resolved U.K. matters. Consulting services increased due to first quarter interoperability testing of our SlimChip product family against various 2G/3G network vendors’ equipment, precertification efforts on our SlimChip modem chipset and reference platforms and customer evaluations and testing.

          The following table summarizes the change in operating expenses by category (in millions):

	First Half		First Half
	2009		2008			Increase / (Decrease)
Selling, general and administrative	$	14.2	$	14.7		$	(0.5	)	(3%	)
Patent administration and licensing		27.7		37.5			(9.8	)	(26%	)
Development		40.1		45.0			(4.9	)	(11%	)
Repositioning		37.0		—			37.0		0%
Arbitration and litigation contingencies		—		(1.2	)		1.2		(100%	)
Total operating expenses	$	119.0	$	96.0		$	23.0		24%

Selling, General and Administrative Expense: The slight decrease in selling, general and administrative expense in first half 2009 was primarily attributable to the above-noted reduction in the reserve for uncollectable accounts. This was partially offset by slight increases in other personnel-related costs.

Patent Administration and Licensing Expense: The decrease in patent administration and licensing expense primarily resulted from the above-noted decrease in patent litigation and arbitration ($18.2 million), which was offset by the above-noted increase in insurance reimbursement ($6.9 million) and increased patent amortization expense ($1.2 million).

Development Expense: The decrease in development expense was primarily due to the above-noted repositioning announced on March 30, 2009.

Repositioning Expense: On March 30, 2009, we announced a repositioning plan under which we (i) have begun to expand our technology development and licensing business and (ii) ceased further product development of our SlimChip HSPA technology and have sought to monetize the product investment through technology licensing. In connection with the repositioning plan, we have incurred certain costs associated with exit or disposal activities. The repositioning resulted in a reduction in force of approximately 100 employees across our three locations. We have incurred a repositioning charge of $37.0 million during first half 2009.

Arbitration and Litigation Contingencies: In 2008, we recognized a credit of $1.2 million related to the reduction of a previously established accrual associated with our contingent obligation to reimburse Nokia for a portion of its attorney’s fees associated with the resolved U.K. matters.

Interest and Investment Income, Net

     Net interest and investment income for first half 2009 totaled $1.5 million, a decrease of $0.2 million from first half 2008, which included a $0.7 million investment write-down. The decrease is primarily related to lower rates of return on lower average investment balances, which was partially offset by a first half 2009 $0.6 million interest income related to our 2009 settlement of litigation with Federal Insurance Company.

Expected Trends

     Our second quarter 2009 Development expenses were slightly lower than expected, reflecting the positive impact of a Canadian research and development credit and lower than expected consulting services as we transitioned our full development efforts to our core business. Our selling, general and administrative expenses also benefited from a $1.0 million credit associated with the reversal of an allowance for an uncollectible receivable. We don’t expect these items to recur in third quarter 2009. As is our practice, we will provide an update on our expectation for third quarter 2009 revenue after we receive and review the applicable royalty reports.

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STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 — FORWARD-LOOKING STATEMENTS

     This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include the information under the heading “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information regarding our current beliefs, plans and expectations, including without limitation the matters set forth below. Words such as “anticipate,” “continue to,” “expect,” “intend,” “will” or similar expressions are intended to identify such forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q include, without limitation, statements regarding:

• The potential effects of new accounting standards on our financial statements or results of operations, if any;

• Our amortization of fixed-fee royalty payments and recognition of deferred technology solutions revenue over the next twelve months to reduce our June 30, 2009 deferred revenue balance;

• Our future tax expense and changes to our reserves for uncertain tax positions;

• The timing, outcome and impact of our various litigation and administrative matters;

• The expansion of our technology development and licensing business and the realignment of our SlimChip product business;

• Our need for debt and equity financings in the next twelve months;

• Our belief that our available sources of funds will be sufficient to finance our operations, capital requirements and any stock repurchase programs that we may initiate in the next twelve months; and

• Our ability to add substantial new licensees.

     Forward-looking statements concerning our business, results of operations and financial condition are inherently subject to risks and uncertainties that could cause actual results, and actual events that occur, to differ materially from results contemplated by the forward-looking statements. These risks and uncertainties include, but are not limited to, the risks and uncertainties outlined in greater detail in Part I, Item 1A of our 2008 Form 10-K. We undertake no obligation to revise or publicly update any forward-looking statement for any reason, except as otherwise required by law.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     There have been no material changes in quantitative and qualitative market risk from the disclosures included in our 2008 Form 10-K.

Item 4. CONTROLS AND PROCEDURES.

     The Company’s principal executive officer and principal financial officer, with the assistance of other members of management, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective in their design to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities and Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2009 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

21

PART II — OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS.

     The information required by this Item is incorporated by reference to Note 5, “Litigation and Legal Proceedings,” to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Item 1A. RISK FACTORS.

     In addition to factors set forth in “Statement Pursuant to the Private Securities Litigation Reform Act of 1995 — Forward-Looking Statements” in Part I, Item 2 of this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A of our 2008 Form 10-K, which could materially affect our business, financial condition or future results. The risks described in this Quarterly Report on Form 10-Q and in our 2008 Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

     The following table provides information regarding the Company’s purchases of its Common Stock, $0.01 par value per share, during second quarter 2009:

							Maximum Number
					Total Number of		(or Approximate
					Shares (or Units)		Dollar Value) of
					Purchased as		Shares (or Units)
	Total Number of		Average Price		Part of Publicly		that May Yet Be
	Shares (or Units)		Paid per		Announced Plans		Purchased Under
Period	Purchased		Share (Unit)		or Programs (1)		the Plans or Programs (2)
April 1, 2009 - April 30, 2009		203,000	$	26.32		203,000	$	94,657,972
May 1, 2009 - May 31, 2009		147,000	$	26.39		147,000	$	90,778,790
June 1, 2009 - June 30, 2009		220,000	$	24.95		220,000	$	85,289,161
Total		570,000	$	25.81		570,000	$	85,289,161

(1)	Shares were purchased under a $100.0 million share repurchase program, authorized by the Board of Directors on March 11, 2009 with no expiration date. The Company may repurchase shares under the 2009 $100.0 million share repurchase program through open market purchases, pre-arranged trading plans or privately negotiated purchases.
(2)	Amounts shown in this column reflect amounts remaining under the 2009 $100.0 million share repurchase program referenced in Note 1 above.

Note: From July 1, 2009 through July 27, 2009, we repurchased an additional 0.1 million shares for $4.1 million, to bring the current cumulative repurchase totals to 0.7 million shares at a cost of $18.8 million under the $100.0 million share repurchase program.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     At our 2009 annual meeting of shareholders held on June 4, 2009, our shareholders elected Mr. William J. Merritt as a director, adopted and approved the InterDigital, Inc. 2009 Stock Incentive Plan and ratified the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2009. Our shareholders elected Mr. Merritt as a director, to serve for a three-year term expiring at our 2012 annual meeting of shareholders or until his successor has been duly elected and qualified or until his earlier resignation or removal, by a vote of 36,258,891 shares in favor and 3,313,772 shares withheld. Messrs. Harry G. Campagna, Steven T. Clontz, Edward B. Kamins and Robert S. Roath also continue to serve their terms as directors after the meeting. The vote adopting and approving the InterDigital, Inc. 2009 Stock Incentive Plan was: 15,588,171 shares in favor; 6,476,624 shares against; 67,314 shares abstaining; and 17,440,554 broker non-votes. The vote ratifying the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2009 was: 38,786,073 shares in favor; 634,655 shares against; 151,934 shares abstaining; and 0 broker non-votes.

22

Item 6. EXHIBITS.

The following is a list of Exhibits filed as part of this Quarterly Report on Form 10-Q:

Exhibit
Number	Exhibit Description
*Exhibit 3.1	Articles of Incorporation of InterDigital, Inc. (Exhibit 3.1 to InterDigital’s Quarterly Report on Form 10-Q dated August 9, 2007)
*Exhibit 3.2	Bylaws of InterDigital, Inc. (Exhibit 3.1 to InterDigital’s Current Report on Form 8-K dated December 24, 2008)
Exhibit 10.1	InterDigital Long-Term Compensation Program, as amended June 2009
Exhibit 10.2	InterDigital Annual Employee Bonus Plan, as amended June 2009
Exhibit 10.3	InterDigital Compensation Program for Outside Directors, as amended June 2009
Exhibit 10.4	InterDigital, Inc. Term Sheet for Restricted Stock Units (Nonemployee Directors – Annual Award)
Exhibit 10.5	InterDigital, Inc. Term Sheet for Restricted Stock Units (Nonemployee Directors – Election Award)
Exhibit 10.6	InterDigital, Inc. Standard Terms and Conditions for Restricted Stock Units (Nonemployee Directors)
Exhibit 31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended
Exhibit 31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended
Exhibit 32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350
Exhibit 32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350

* Incorporated by reference to the previous filing indicated.

23

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	INTERDIGITAL, INC.
Date: July 30, 2009	/s/ WILLIAM J. MERRITT
	William J. Merritt
	President and Chief Executive Officer
Date: July 30, 2009	/s/ SCOTT A. MCQUILKIN
	Scott A. McQuilkin
	Chief Financial Officer
Date: July 30, 2009	/s/ RICHARD J. BREZSKI
	Richard J. Brezski
	Chief Accounting Officer

24

EXHIBIT INDEX

*Exhibit 3.1	Articles of Incorporation of InterDigital, Inc. (Exhibit 3.1 to InterDigital’s Quarterly Report on Form 10-Q dated August 9, 2007)
*Exhibit 3.2	Bylaws of InterDigital, Inc. (Exhibit 3.1 to InterDigital’s Current Report on Form 8-K dated December 24, 2008)
Exhibit 10.1	InterDigital Long-Term Compensation Program, as amended June 2009
Exhibit 10.2	InterDigital Annual Employee Bonus Plan, as amended June 2009
Exhibit 10.3	InterDigital Compensation Program for Outside Directors, as amended June 2009
Exhibit 10.4	InterDigital, Inc. Term Sheet for Restricted Stock Units (Nonemployee Directors – Annual Award)
Exhibit 10.5	InterDigital, Inc. Term Sheet for Restricted Stock Units (Nonemployee Directors – Election Award)
Exhibit 10.6	InterDigital, Inc. Standard Terms and Conditions for Restricted Stock Units (Nonemployee Directors)
Exhibit 31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended
Exhibit 31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended
Exhibit 32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350
Exhibit 32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350

* Incorporated by reference to the previous filing indicated.

25

EX-10.1

EXHIBIT 10.1

InterDigital
Long-Term Compensation Program

Terms and Conditions

The Company implemented the Long-Term Compensation Program (the “Program”) to encourage management and executive level employees to exercise their best efforts toward ensuring the success of the Company. All regular full-time and regular part-time employees (as defined in the Employee Handbook), at or above a manager or technical equivalent level, are eligible to participate in the Program.

Compensation Components. As further described below, the Program consists of two compensation components: (1) a Long-Term Incentive providing performance-based cash bonuses (the “LTI”), and (2) an award of restricted stock units (“RSUs”).

The LTI component of the Program rewards grantees based on the Company’s achievement of performance goals established/approved by the Compensation Committee of the Board of Directors.

The RSU awards provide recipients with an opportunity to share in the growth of the Company’s value in the marketplace and rewards participants based on the achievement of performance goals established by the Compensation Committee. An RSU is a contractual right to receive a share(s) of InterDigital Common Stock after completion of a specified time period and, in the case of the performance-based RSUs, the achievement of certain goals within a specified period.

Program Cycle. The Program consists of overlapping RSU and LTI cycles, each of which are generally three years in length and recur every other year (a “Program cycle”).

LTI Cash Bonuses. Each participant’s LTI cash bonus target is established as a percentage of the participant’s annual base salary. Any payout under the LTI is determined by the Compensation Committee based on the Company’s achievement of certain performance goals, as established at the start of each Program cycle and measured at the end of each Program cycle. The cash LTI payout may exceed or be less than the targeted amount, depending on the level of achievement of the performance goals. No payout may be made if the Company fails to meet the minimum performance criteria established for the goals during the Program cycle. To be eligible for a cash payout, an employee must remain continuously employed by the Company (or an Affiliate of the Company) through the end of the Program cycle and must continue to be employed at least until the time the LTI payout is made. For purposes of this Program, an Affiliate means any other individual, corporation, partnership, association, trust or other entity that, directly or indirectly, is in control of or is controlled by or is under common control with the Company. Payout of the LTI cash bonus will be made no later than March 15 of the year following the end of each Program cycle.

RSU Terms. For all non-executives, 25% of the total equity award will be in the form of performance based RSUs (“performance shares”) and 75% will be in the form of time-based RSUs. For all executive level participants, 50% of the total equity award will be in the form of performance shares and 50% will be in the form of time-based RSUs. Participants will receive an RSU Award Agreement setting forth the terms of each RSU grant along with a copy of the prospectus for the Plan. In the event of any conflict between this summary and the RSU award agreement, the RSU award agreement will govern.

Time-based RSU awards

For all non-executives, the time-based RSUs granted in connection with each three-year Program cycle will vest in equal increments on each successive January 1 over the three-year period. For example, RSUs granted at the beginning of the Program cycle that began in January 2009 will vest as follows: 25% (one-third) of the total time-vested RSUs on January 1, 2010, 25% on January 1, 2011 and 25% on January 1, 2012. For all executive level participants, the time-based RSUs granted in connection with each Program cycle will vest 100% at the end of each Program cycle. Settlement for time-vested RSUs will occur on the first business day following the applicable vest date.

Performance based RSU awards

For all Program participants, the performance shares will vest following the end of the three-year Program cycle in conjunction with a determination by the Compensation Committee that at least minimum level of performance was achieved relative to the performance goals associated with that cycle. Settlement will occur for any such performance based RSUs as soon as practicable following vesting as described above, but in no event later than March 15 of the year in which the relevant cycle ends. To be entitled to the shares underlying the performance based RSUs, the participant must remain employed through the end of the Program cycle and also through the date settlement occurs, based on the Compensation Committee’s determination that at least a minimum level of performance was achieved.

New Program Participants. An employee promoted to a level which qualifies for participation in the Program for the first time or an employee that is newly hired within the first two years of a three-year Program cycle, will be eligible to receive a pro-rata LTI cash bonus and RSU award. The pro-rata target LTI cash bonus and RSU award will be determined based on the amount of time (number of pay periods) remaining in each cycle. For example, a non-executive employee hired October 1^st of the first year of a three year Program cycle, would be eligible to receive 3/12 of that year’s Program eligibility plus full-year eligibility for the second and third years of the Program cycle. The LTI (cash) and RSU awards will be paid out and vest respectively, as described under the sections entitled “LTI Cash Bonuses” and “RSU Terms.”

Promotion during Program Cycle. If an employee is promoted within the first six months of the start of a Program cycle and such promotion results in an accompanying increase in the Program payout target (LTI target and RSU award), the benefit of the Program target increase will be realized retroactive to the beginning of such Program cycle. If an employee is promoted at any other time during a Program cycle and such promotion results in an accompanying increase in the Program payout target (LTI target and RSU award), the benefit of the Program target increase will be realized at the beginning of the next applicable Program cycle unless the Compensation Committee, in its sole discretion, authorizes an adjustment at a different time.

Effect of Termination of Employment. In general, any benefits from the Program are forfeited upon termination of employment by the participant (i.e., the participant voluntarily resigns from employment). Benefits may be vested to some degree, as explained below, where the participant’s employment terminates due to his or her death, “disability,” “retirement,” or as a result of the termination of employment by the Company other than for “cause” (each as defined below).

Partial vesting of time-based RSUs: If a participant’s employment terminates during a year due to death, disability, or retirement, or is terminated by the Company without cause, time-based RSUs that would have become vested at the end of that year become vested on a pro-rata basis based on the portion of the year the participant was employed. Time-based RSUs that would have become vested at the end of subsequent years are forfeited entirely. The settlement of a participant’s time-based RSUs that become vested as described above will occur as soon as administratively practical after termination of employment.

Partial vesting of performance based RSUs and LTI Cash Bonus: If a participant’s employment terminates for any reason during the first year of a three year Program cycle, the participant forfeits eligibility to receive any LTI cash bonus and all performance based RSUs associated with that Program cycle. If, however, during the second or third year of a Program cycle, a participant’s employment with the Company terminates due to his or her death, disability, or retirement, or is terminated by the Company without cause, the participant will be eligible to earn a pro-rata portion of the LTI cash bonus and performance-based RSUs. The pro-rata portion will be determined by multiplying both the amount of the LTI cash bonus and the number of performance based RSUs awarded under the Program by a fraction equal to the portion of the Program cycle that has transpired prior to the cessation of employment over the entire Program cycle. The conditions for vesting of both the performance based RSUs and the LTI cash bonus in such event will be the same as set forth above except with respect to the condition of continuous employment. Any pro-rata cash payment or vesting of performance based RSUs will be made to the employee (or, if applicable, the employee’s estate) at the same time the cash bonus payments and settlement of the RSUs would have taken place if the participant had remained employed, as described above.

NOTE: To the extent an LTI payment or settlement of performance based RSUs is determined to be a form of nonqualified deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), payment may be delayed to a date that is at least six months following the participant’s termination of employment to the extent it is determined to be necessary to avoid the detrimental tax treatment applicable to

deferred compensation benefits that are not fully compliant with the distribution rules of Code Section 409A. This will only be applicable to participants who are determined to be “specified employees” as that term is defined for purposes of Code Section 409A.

For purposes of the Program:

* “cause” means: (a) willful and repeated failure of an employee to perform substantially his or her duties (other than any such failure resulting from incapacity due to physical or mental illness); (b) an employee’s conviction of, or plea of guilty or nolo contendere to, a felony which is materially and demonstrably injurious to the Company or an Affiliate; (c) willful misconduct or gross negligence by an employee in connection with his or her employment; or (d) an employee’s breach of any material obligation or duty owed to the Company or an Affiliate.

* “disability” means: (a) a disability entitling the employee to long-term disability benefits under the applicable long-term disability plan of the Company (or an Affiliate if employee is employed by such Affiliate); or (b) if the employee is not covered by such a plan, a physical or mental condition or illness that renders the employee incapable of performing his or her duties for a total of 180 days or more during any consecutive 12-month period.

* “retirement” means resignation after attaining a combination of age plus years of service at the Company (and Affiliates) equal to 70.

Effect of a Terminating Event. If a Terminating Event (meaning either a Change of Control, as defined below, or a liquidation of the Company) occurs during a Program cycle and while an employee is actively employed by the Company, then:

* immediately prior to (but contingent on the occurrence of) that Terminating Event, all time-based RSUs will become fully vested and a distribution of InterDigital shares with respect to those RSUs will be made;

* at the same time, performance-based RSUs will become fully vested to an extent that is equal to the greater of (i) the portion of the employee’s performance-based RSUs that would become vested at the target level, or (ii) the level of performance achieved at the time of the Terminating Event; and

* an early payment of the employee’s LTI cash bonus will be made in an amount equal to the greater of (i) the employee’s target LTI cash bonus, or (ii) the level of performance achieved at the time of the Terminating Event. Payment of this amount will be made not later than 30 days after the Terminating Event.

For purposes of the Program:

• “Change of Control” means the first to occur of any of the following events:

(a) Any “person,” as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any company owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company), acquires voting securities of the Company and immediately thereafter is a “50% Beneficial Owner.” For purposes of this provision, a “50% Beneficial Owner” shall mean a person who is the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then-outstanding voting securities;

(b) During any period of two consecutive years commencing on or after the Effective Date, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person (as defined above) who has entered into an agreement with the Company to effect a transaction described in subsections (a), (c), (d) or (e) of this definition) whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were

directors at the beginning of the period or whose election or nomination for election was previously so approved (the “Continuing Directors”) cease for any reason to constitute at least a majority thereof;

(c) The shareholders of the Company have approved a merger, consolidation, recapitalization, or reorganization of the Company, or a reverse stock split of any class of voting securities of the Company, or the consummation of any such transaction if shareholder approval is not obtained, other than any such transaction which would result in at least 50% of the combined voting power of the voting securities of the Company or the surviving entity outstanding immediately after such transaction being beneficially owned by the persons who were shareholders of the Company immediately prior to the transaction in substantially the same proportion as their ownership of the voting power immediately prior to the transaction; provided that, for purposes of this Section 3.7(c), such continuity of ownership (and preservation of relative voting power) shall be deemed to be satisfied if the failure to meet such 50% threshold (or to substantially preserve such relative ownership of the voting securities) is due solely to the acquisition of voting securities by an employee benefit plan of the Company, such surviving entity or a subsidiary thereof; and provided further, that, if consummation of the corporate transaction referred to in this Section 3.7(c) is subject, at the time of such approval by shareholders, to the consent of any government or governmental agency or approval of the shareholders of another entity or other material contingency, no Change in Control shall occur until such time as such consent and approval has been obtained and any other material contingency has been satisfied;

(d) The shareholders of the Company accept shares in a share exchange in which the shareholders of the Company immediately before such share exchange do not or will not own directly or indirectly immediately following such share exchange more than 50% of the combined voting power of the outstanding voting securities of the corporation resulting from or surviving such share exchange in substantially the same proportion as the ownership of the Voting Securities outstanding immediately before such share exchange;

(e) The shareholders of the Company have approved a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets (or any transaction having a similar effect); provided that, if consummation of the transaction referred to in this Section 3.7(e) is subject, at the time of such approval by shareholders, to the consent of any government or governmental agency or approval of the shareholders of another entity or other material contingency, no Change in Control shall occur until such time as such consent and approval has been obtained and any other material contingency has been satisfied; and

(f) Any other event which the Board determines shall constitute a Change in Control for purposes of this Plan.

Taxation of Awards. The following is a brief description of the federal income and employment tax treatment of Program awards. The rules governing these awards are complex and their application may vary depending upon individual circumstances. Moreover, statutory and regulatory provisions and their interpretations are subject to change. Employees are, therefore, encouraged to consult with a personal tax advisor regarding the tax consequences of participation in the Program.

For federal income and employment tax purposes, the full amount of any LTI cash bonus will be taxable at the time the cash is paid, and will be subject to applicable income and wage tax withholding requirements.

For federal income tax purposes, the value of shares distributed in respect of RSUs will be recognized as ordinary income at the time the shares are distributed based on the value of those shares at that time. If LTI payment or settlement of RSUs is delayed (e.g., in the case of later payments for certain mid-Program cycle employment terminations), the value of the shares subject to RSUs may be taxed at the time the RSUs vest, based on the value of those shares at that time. Further information regarding the taxation of RSUs is contained in the Plan prospectus.

Future Program Cycles. While the Company reserves the right to alter or discontinue the Program at any time, its present intent is to continue the Program for future cycles. The Company expects future Program cycles to include

both an LTI component and an RSU component. If an employee is eligible to participate in a future Program cycle, additional information will be distributed at the start of that cycle.

Administration. The Program is administered by the Compensation Committee. The Compensation Committee has the right to terminate or amend the Program and its components at any time for any reason. The Compensation Committee also has the authority to select employees to receive awards, to create, amend and rescind rules regarding the operation of the Program, to determine whether LTI and/or performance share goals have been achieved, to reconcile inconsistencies, to supply omissions and to otherwise make all determinations necessary or desirable for the operation of the Program. The Compensation Committee may delegate the authority to amend the Program to one or more officers of the Company, provided, however, that any amendment of the Program that is a “material amendment” (as determined pursuant to NASDAQ Stock Market Rule 5635(c) and the interpretive material thereunder) must be approved by the Compensation Committee or by a majority of the Company’s independent directors, as defined for purposes of such rule.

Election to Defer Settlement of RSUs. Participants who are eligible to defer settlement of their RSUs must make such election in the calendar year preceding the date of grant of the RSUs to be deferred. All determinations regarding eligibility to defer settlement of RSUs shall be made by the Company, in its sole discretion. Where deferral of settlement of RSUs is linked to payment following termination of employment of the participant, settlement of the RSUs may be delayed until at least six months following the participant’s termination of employment if that is necessary to avoid tax penalties under Code Section 409A. This will only be applicable to participants who are determined to be “specified employees” as defined for purposes of Code Section 409A.

No Assignment. An employee may not assign, pledge or otherwise transfer any right relating to a cash or RSU award under the Program and any attempt to do so will be void.

No Right to Continued Employment. Participation in the Program does not give any employee any right to continue in employment or limit in any way the right of the Company to terminate employment at any time, for any reason.

Questions. Please contact Gary Isaacs, Chief Administrative Officer, at 610-878-5721 with any questions regarding the Program.

June 2009

EX-10.2

EXHIBIT 10.2

InterDigital
Annual Employee Bonus Plan

Purpose

This Annual Employee Bonus Plan (“Plan”) is designed to provide an effective means to motivate and compensate eligible employees, on an annual basis, through cash and/or stock award bonuses based on the achievement of business and individual performance objectives during each calendar year (“Plan Year”). The Plan is intended to be the Company’s primary vehicle for the granting of bonuses. However, the Company may, in certain limited circumstances, grant bonuses outside of this Plan, in the sole discretion of the Company.

The compensation contemplated under this Plan is considered “pay for performance,” in that any payout under the Plan is subject to the achievement of specific performance goals by the Company and by each individual during the Plan Year. The Company believes that such compensation can be a highly effective form of compensation that can enhance the employer-employee “stakeholder” relationship. In addition, the Company hopes that by providing short-term incentive compensation, the Company will motivate and increase the retention rate among its employees, which, in turn, will enhance the Company’s long-term value.

Who Is Eligible?

All regular full-time or part-time employees¹ will be eligible to receive a bonus under the Plan, unless an employee: (i) is not working actively at the time of the payout of the bonus or at least as of March 15th of the year following the end of the Plan Year (unless such person was involuntarily terminated other than for intentional wrongdoing after the end of the Plan Year, but before the bonus was paid), (ii) was working actively for the Company for less than ninety (90) days during the Plan Year, (iii) received an individual performance appraisal rating of less than “2.75” (Meets Job Requirements) for the Plan Year, or (iv) was involuntarily terminated for unsatisfactory performance or misconduct, such determination to be made in the C.E.O.’s sole discretion (or the Compensation Committee in the case of Section 16 Officers) based upon documented or other objective substantiation.

The Compensation Committee may grant exceptions to the above eligibility criteria in its sole discretion. The Chief Administrative Officer may grant exceptions to the above eligibility criteria for non-executive employees who have worked through the end of the third quarter of a Plan Year, provided, however, that any bonus so awarded may not exceed $25,000. In addition, employees who meet the eligibility requirements set out above but were not regular full-time or part-time employees for the full Plan Year will be paid any bonus on a pro rata basis.² The pro rata amount will be calculated based on the employee’s income, i.e., base salary / regular pay and other eligible earned income, if applicable, paid during the Plan Year.

How Does the Plan Work?

Each employee is assigned a target bonus. The target bonus is a percentage of the employee’s annual base salary in effect as of the end of the Plan Year. If the Company or Department achieves certain business performance results and the employee achieves certain individual goals, then the employee will receive the target bonus. Company or Department business performance results will be measured based on either the Company’s Annual Goals, as

1

“Regular full-time” and “regular part-time” employees are defined in the Company’s employee handbook and specifically exclude “seasonal/casual employees” (which are also defined in the Company’s employee handbook).

2

Employees who do not work a full Plan Year because they were out of work on an approved leave of absence for part of the plan year will be paid any bonus on a pro rata basis by calculating the bonus based on the actual amount of eligible base income earned during the Plan Year. If the Employee is paid for part of the leave through PTO or other eligible accrued form of income (not including STD or worker’s compensation payments), this income will be included in the base salary calculation.

approved by the Compensation Committee, for the C.E.O., C.F.O, President of the Company’s patent holding subsidiaries and other Sr. Officers or based on Departmental Goals, as approved by the Department Head and the C.E.O, for all other levels of employees. If the actual results of the Company or Department business performance for the year exceed or fall short of the targets, then the target bonus will be adjusted up or down, depending upon the level of business and individual achievement. The specific adjustments and an example of how the bonus is calculated are described below.

The business performance goals will be determined by the Compensation Committee for the C.E.O., C.F.O, President of the Company’s patent holding subsidiaries and other Sr. Officer levels, and the business performance goals for each Department will be determined by the Department Head and C.E.O and will be communicated to the employees, normally in the first quarter of each Plan Year. The assessment of individual performance goals will be accomplished through the employee’s annual performance rating. The business and individual performance goals are intended to be reasonable “stretch” goals.

The impact of actual business/departmental or individual performance during the Plan Year on the bonus paid varies between positions, with the bonus for the Company officers and senior level management employees being more dependent upon overall Company/Department performance, while the bonuses for lower level management and non-management employees being more dependent upon individual performance. The relative weighting of the business/departmental and individual performance goals in the calculation of the total bonus payout is based on the employee’s position within the Company and their ability to directly impact and be held accountable for the Company’s/Department’s overall performance.

The Annual Target Bonus for each band, and the associated weighting factors, are as follows:

Band				Percentage of Bonus
(In the event a Participant changes bands during				Related to Business			Percentage of Annual
the Plan Year, the Annual Target	Annual Target			Performance			Target Bonus
Bonus will be calculated based on the Participant’s	Bonus			(either Company			Related to Individual
actual band at year-end)	(% of base salary)			or Departmental)			Performance
C.E.O.		75	%		75	%		25	%
C.F.O. / President of patent holding subsidiaries		50	%		75	%		25	%
Other Sr. Officer		40	%		75	%		25	%
Functional VP		35	%		75	%		25	%
Senior Director		25	%		60	%		40	%
Director / Functional Equivalent		20	%		60	%		40	%
Senior Manager / Functional Equivalent		15	%		40	%		60	%
Manager / Functional Equivalent		10	%		40	%		60	%
Non-Management		4%/6%/8	%
	(based on grade level)				25	%		75	%

In each Plan Year, the portion of the Annual Target Bonus related to business performance may be allocated among a number of business goals.

How Do Actual Business and Individual Performance Affect the Bonus to be Paid?

As described above, the bonus consists of two components: the bonus attributable to business /departmental performance and the bonus attributable to individual performance. The impact of actual results as compared to business/departmental and individual goals on any bonus to be paid is described below.

Business Goals. The calculation of the bonus payout for the business performance will be based upon either the Company’s actual business results measured against the goals set by the Compensation Committee (for the C.E.O., C.F.O, President of the Company’s patent holding subsidiaries and other Sr. Officers) or the Department’s actual business results measured against the goals set by the Department (for all other bands). If the Company or Department achieves a specified goal, then 100% of the bonus related to that business goal will be awarded. If actual results deviate from established business goals, then the bonus payout amounts will be determined as follows.

Results above the goal: If the Company/Department performance exceeds the established business goals by a certain percentage (e.g., actual Company earnings exceed an established goal by ten percent), then the payout of that portion of the annual target bonus related to that business goal will be increased by that percentage amount above the goal, up to a maximum of a 100% increase over the bonus associated with that goal. Thus, if actual Company/Department

performance on a particular goal exceeds the goal by 10%, then the target bonus associated with that goal will be increased by 10% (see below):

Results	Percentage Payout
101%		101	%
ò	ò
200%		200	%

Results below the goal: If the actual business performance falls short of an established goal by a certain percentage (e.g., actual Company earnings are 10% less than the earnings goal), then the bonus associated with that business goal will be decreased by that percentage of the shortfall, with no bonus being payable for a goal if the goal is missed by more than 20%. The scale for results below the target is below:

	Percentage
Results	Payout
100%		100	%
90%		90	%
80%		80	%
79%		0	%

The Compensation Committee, in its sole discretion, may determine that a business goal has been substantially met or has been met to a degree warranting a higher payout than would otherwise be calculable under this Plan. For example, the Compensation Committee may determine that one-time charges should be disregarded in determining the payout under an earnings performance goal.

Individual Performance. The evaluation of the individual performance is the responsibility of the employee’s supervisor using the Company’s performance evaluation system. The payout of the bonus related to individual performance will be based on the employee’s individual appraisal rating given pursuant to the performance evaluation, as follows:

		Percentage Payout of
		Bonus Related to
		Individual
Appraisal Rating		Performance
4.85 – 5.0	(Outstanding)	150%
4.70 – 4.84	( " )	145%
4.55 – 4.69	(Exceeds Job Requirements)	140%
4.40 – 4.54	( " )	135%
4.25 – 4.39	( " )	130%
4.10 – 4.24	( " )	125%
3.95 – 4.09	( " )	120%
3.80 – 3.94	( " )	115%
3.65 – 3.79	(Meets Job Requirements)	110%
3.50 – 3.64	( " )	105%
3.35 – 3.49	( " )	100%
3.20 – 3.34	( " )	95%
3.05 – 3.19	( " )	90%
2.90 – 3.04	( " )	85%
2.75 – 2.89	( " )	80%
2.74 ò	(Needs Improvement/Unsatisfactory)	0%

When Will the Bonus Be Paid?

Bonuses will normally be paid under the Plan between February 15 and March 31 of the year following each Plan Year.

An Example of How the Bonus Is Calculated

     Assume an entry-level management employee is earning a base salary of $50,000 and is employed for the full Plan Year. The employee has an annual target bonus of 10% of base salary ($5,000). The Department previously established two business targets of equal weight for the Plan Year. The actual results for the first goal were 4% below the goal; the actual results for the second goal were 2% above the goal. The employee achieves an individual performance appraisal of “3.3”. The employee’s bonus would be calculated as follows:

	A
	Percentage of			B
	Bonus Relating to			Result as a			C
	Performance			Percentage			Percentage			A x C
Performance Factor	Factor			of Goal			Payout			Weighted Result
Goal One								96	%		19.00	%
		20	%		96	%	(1 to 1 ratio)				(96% x 20	%)
Goal Two								102	%		20.40	%
		20	%		102	%	(1 to 1 ratio)				(102% x 20	%)
Individual Performance											57	%
		60	%		95	%		95	%		(60% x 95	%)
Total		100	%		N/A			N/A			96.40	%
Bonus Calculation		Base Salary x Weighted Result x Annual Target Bonus = Bonus to be paid $50,000 x 96.40% x 10% = $4,820

Who Will Receive Bonus Payments in Common Stock?

For the C.E.O., C.F.O, President of the Company’s patent holding subsidiaries, other Sr. Officer and Functional Vice President bands or technical equivalent positions (i.e., “Fellow”), the Compensation Committee may, in its discretion, pay up to 30% of the bonus in restricted common stock pursuant to the 2009 Stock Incentive Plan, as amended. If restricted common stock is to be paid in lieu of cash, the number of shares to be granted will be calculated as follows:

Number of Shares =	Up to 30% of Bonus
	Closing Common Stock Price on the Date Prior to the Grant as Reported in the Wall Street Journal

The Company will reimburse the employee, on a grossed-up basis, for any tax liability (including, in the event of a Change of Control, any excise tax liability under Section 4999 of the Internal Revenue Code, as amended, or any successor provision that may apply to such restricted stock payment) associated with the grant of restricted stock. Tax liability will be calculated using maximum tax rates. The stock will be registered but will be subject to a two-year holding period. The Company will not impose any other material restrictions (other than those set out in the 2009 Stock Incentive Plan or required by law) or forfeiture provisions, including no forfeiture provisions applicable to termination of employment except in the case of termination during the two-year holding period for intentional wrongdoing.

Miscellaneous

The establishment of this Plan, any provisions of this Plan, and/or any action of the Compensation Committee or any Company officer with respect to this Plan, does not confer upon any employee the right to continued employment with the Company. The Company reserves the right to dismiss any employee at will (at any time, with or without prior notice, with or without cause), or otherwise deal with an employee to the same extent as though the Plan had not been adopted.

The Company may, at its discretion, provide for any federal, state or local income tax withholding requirements and Social Security or other tax requirements applicable to the accrual of payment of benefits under the Plan, and all such determinations shall be final and conclusive.

Payment of bonuses awarded under this Plan shall be made no later than March 15 of the year following the Plan Year in which the services relating to such bonus award were rendered. The resolution of any questions with respect

to payments and entitlements pursuant to the provisions of this Plan shall be determined by the Compensation Committee, in its sole discretion, and all such determinations shall be final and conclusive.

This Plan may be terminated or revoked by the Compensation Committee, at its sole discretion, at any time and amended by the Compensation Committee, at its sole discretion, from time to time without the approval of any employee, provided that such action does not reduce the amount of any Bonus payment below an amount equal to the amount that would have been payable to the eligible employee with respect to the Plan Year in which the termination, revocation or amendment of the Plan occurs under the terms of the Plan as in effect immediately prior to such termination, revocation or amendment, applied on a pro rata basis.

June 2009

EX-10.3

EXHIBIT 10.3

InterDigital
2009 Compensation Program for Outside Directors

Annual Board Retainer:	$25,000
Audit Committee Chair:	$30,000
Other Committee Chairs:	$15,000
Committee Membership:	$  5,000
Re-election RSU Grant:	6,000 RSUs (vesting 2,000 each year beginning at first anniversary of re-election)
Initial Election RSU Grant:	6,000 RSUs (vesting 2,000 each year beginning at first anniversary of election)
Annual RSU Grant (made to all outside directors at each annual meeting):	2,000 RSUs (vesting in full one year from grant date)
Chairman’s Annual RSU Grant:	10,000 RSUs (vesting in full one year from grant date)

All cash payments and RSU grants shall be based on service for a full year; pro rata payments and grants shall be made for service of less than one year. Cash payments shall be made on a quarterly basis. Both cash payments and RSUs may be deferred. An election to defer must be made in the calendar year preceding the year in which services are rendered and the compensation is earned (i.e., elections to defer must be made by December 31 of each year for the deferral to apply to the next year’s cash payments and/or RSU award(s)).

The Chairman’s Annual RSU Grant shall be granted effective January 15^th of each fiscal year.¹ Other equity grants shall be granted, as appropriate, effective at each Annual Meeting of Shareholders.

The terms of this program shall be periodically reviewed.

June 2009

¹ If January 15^th of a year is not a trading day, the next preceding trading day shall be the grant date.

EX-10.4

EXHIBIT 10.4

INTERDIGITAL, INC.

TERM SHEET FOR RESTRICTED STOCK UNITS
(Nonemployee Directors — Annual Award)

InterDigital, Inc. (the “Company”), hereby grants to Grantee named below the number of restricted stock units specified below (the “Award”), upon the terms and subject to the conditions set forth in this Term Sheet, the Plan specified below (the “Plan”) and the Standard Terms and Conditions (the “Standard Terms and Conditions”) adopted under the Plan and provided to Grantee, each as amended from time to time. Each restricted stock unit subject to the Award represents the right to receive one share of the Company’s Common Stock, subject to the conditions set forth in this Term Sheet, the Plan and the Standard Terms and Conditions. The Award is granted pursuant to the Plan and is subject to and qualified in its entirety by the Standard Terms and Conditions. Capitalized terms not defined herein have the meanings set forth in the Plan or Standard Terms and Conditions.

Plan:	The Award is granted pursuant to the Company’s 2009 Stock Incentive Plan.
Name of Grantee:
Grant Number:
Grant Date:
Number of restricted stock units subject to the Award:
Vesting Schedule:	The Award vests with respect to 100% of the restricted stock units on the earliest of (i) the first anniversary of the Grant Date, (ii) a Change in Control, or (iii) the date on which Grantee suffers an Unforeseeable Emergency (the earliest such date the “Vesting Date”).

By accepting this Term Sheet, Grantee acknowledges that he or she has received and read, and agrees that the Award shall be subject to, the terms of this Term Sheet, the Plan and the Standard Terms and Conditions.

ATTEST:	INTERDIGITAL, INC.
	BY:
		William J. Merritt, President and CEO
ATTEST:	GRANTEE

EX-10.5

EXHIBIT 10.5

INTERDIGITAL, INC.

TERM SHEET FOR RESTRICTED STOCK UNITS
(Nonemployee Directors — Election Award)

InterDigital, Inc. (the “Company”), hereby grants to Grantee named below the number of restricted stock units specified below (the “Award”), upon the terms and subject to the conditions set forth in this Term Sheet, the Plan specified below (the “Plan”) and the Standard Terms and Conditions (the “Standard Terms and Conditions”) adopted under the Plan and provided to Grantee, each as amended from time to time. Each restricted stock unit subject to the Award represents the right to receive one share of the Company’s Common Stock, subject to the conditions set forth in this Term Sheet, the Plan and the Standard Terms and Conditions. The Award is granted pursuant to the Plan and is subject to and qualified in its entirety by the Standard Terms and Conditions. Capitalized terms not defined herein have the meanings set forth in the Plan or Standard Terms and Conditions.

Plan:	The Award is granted pursuant to the Company’s 2009 Stock Incentive Plan.
Name of Grantee:
Grant Number:
Grant Date:
Number of Restricted Stock Units Subject to the Award:
Vesting Schedule:	The Award vests with respect to one-third of the restricted stock units on each of the first three anniversaries of the Grant Date, provided that the Award will earlier vest with respect to 100% of the restricted stock units on the earlier of (i) a Change in Control or (ii) the date on which Grantee suffers an Unforeseeable Emergency (each date on which all or a portion of the Award vests a “Vesting Date”).

By accepting this Term Sheet, Grantee acknowledges that he or she has received and read, and agrees that the Award shall be subject to, the terms of this Term Sheet, the Plan and the Standard Terms and Conditions.

ATTEST:	INTERDIGITAL, INC.
	BY:
		William J. Merritt, President and CEO
ATTEST:	GRANTEE

EX-10.6

EXHIBIT 10.6

INTERDIGITAL, INC.

STANDARD TERMS AND CONDITIONS FOR RESTRICTED STOCK UNITS
(Nonemployee Directors)

These Standard Terms and Conditions apply to any Award of restricted stock units granted to Nonemployee Directors of the Company on or after June 4, 2009 under the InterDigital, Inc. 2009 Stock Incentive Plan and its amendments (the “Plan”), which are evidenced by a Term Sheet or an action of the Administrator that specifically refers to these Standard Terms and Conditions.

          1. Definitions. Capitalized terms not defined herein shall have the meanings set forth in either the Term Sheet or the Plan. As used herein:

               (a) “Account” means a bookkeeping account reflecting Grantee’s interest in restricted stock units.

               (b) “Disability” means a physical or mental condition or illness that renders Grantee incapable of performing his or her duties for a total of 180 days or more during any consecutive 12-month period.

               (c) “Dividend Equivalent” means credits arising in respect of dividends paid on Shares, as described in Section 6 herein.

               (d) “Restricted Period” means the period beginning on the Date of Grant and ending on the final Vesting Date.

               (e) “Unforeseeable Emergency” means an unforeseeable emergency within the meaning of Section 409A(a)(2)(B)(ii) of the Internal Revenue Code, or any successor provision.

          2. Grant of Restricted Stock Units.

               (a) The Company has granted to Grantee named in the Term Sheet provided to said Grantee herewith (the “Term Sheet”) an award of a number of restricted stock units (the “Award”) specified in the Term Sheet. Each restricted stock unit represents the right to receive one share of the Company’s Common Stock, upon the terms and subject to the conditions set forth in the Term Sheet, these Standard Terms and Conditions, and the Plan, each as amended from time to time. For purposes of these Standard Terms and Conditions and the Term Sheet, any reference to the Company shall, unless the context requires otherwise, include a reference to any Subsidiary.

               (b) The Company shall maintain an Account for Grantee reflecting the number of restricted stock units credited to Grantee hereunder.

          3. Restrictions on Restricted Stock Units. Subject to the terms and conditions set forth herein and in the Plan, Grantee shall not be permitted to sell, transfer, pledge or assign the Award or the Shares subject to the Award except by will or by the laws of descent and distribution. No such transfer occurring as a result of Grantee’s death shall be effective to bind the Company unless the Administrator shall have been furnished with a copy of the applicable will or such other evidence as the Administrator may deem necessary to establish the validity of the transfer.

          4. Vesting and Forfeiture.

               (a) The Award shall not be vested as of the Grant Date set forth in the Term Sheet and shall be forfeitable unless and until otherwise vested pursuant to the terms of the Term Sheet and these Standard Terms and Conditions. After the Grant Date, subject to termination or acceleration as provided in these Standard Terms and Conditions and the Plan, the Award shall become vested as described in the Term Sheet, provided that (except as set forth in Section 5 below) Grantee remains continuously in service to the Company through the applicable Vesting Date. Each restricted stock unit credited under Section 6 in respect of Dividend Equivalents shall vest at the time of vesting of the portion of the Award that gives rise, directly or indirectly, to such Dividend Equivalent.

               (b) Except as set forth in Section 4(c) hereof, upon the date Grantee’s service to the Company terminates for any reason, the then unvested portion of the Award shall be forfeited by Grantee and cancelled and surrendered to the Company without payment of any additional consideration to Grantee.

               (c) If Grantee’s service with the Company ceases prior to the applicable Vesting Date due to death or Disability, then Grantee will become vested in a pro-rata portion of the Award. That pro-rata portion will be determined by multiplying the number of restricted stock units by a fraction equal to the portion of the Restricted Period that has transpired prior to such cessation of service or employment. Settlement for the portion of the Award that becomes vested pursuant to this Section 4(c) will occur on the first business day following the termination of service, provided, however, that in no event will settlement of Grantee’s restricted stock units be made before the date which is six months after the date of Grantee’s termination of service if Grantee is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code.

          5. Settlement and Election to Defer Settlement. Each restricted stock unit credited hereunder (including restricted stock units credited in respect of Dividend Equivalents) will be settled by the delivery of one share of Common Stock (subject to adjustment under Section 12 of the Plan). Subject to Section 4(c) hereof, except to the extent Grantee has elected that delivery be deferred in accordance with the rules and procedures prescribed by the Administrator (which rules and procedures, among other things, shall be consistent with the requirements of Section 409A of the Code), settlement will occur on the first business day following the applicable Vesting Date, provided, however, that (a) if the Vesting Date occurs as a result of a Change in Control, then settlement will occur on the Vesting Date if such Change in Control qualifies as either (i) a “change in the ownership” of the Company, (ii) a “change in the effective control” of the Company or (iii) a “change in the ownership of a substantial portion of the assets” of the Company (each as defined under Section 409A of the Code), (b) if the Vesting Date occurs as a result of an Unforeseeable Emergency, then settlement will occur on the Vesting Date only to the extent permitted by Section 409A(a)(2)(B)(ii)(II) of the Code and (c) any portion of the Award for which settlement is delayed pursuant to the preceding clauses (a) or (b) will be settled on the date on which such portion of the Award would have been settled in the absence of the Unforeseen Emergency or Change in Control (as applicable).

          6. Dividend Equivalents and Adjustments. Dividend Equivalents shall be credited on the restricted stock units subject to this Award (other than restricted stock units that, at the relevant record date, previously have been settled or forfeited) in accordance with this Section 6:

               (a) Cash Dividends. If the Company declares and pays a dividend or distribution on its Shares in the form of cash, then a number of additional restricted stock units shall be credited to Grantee’s Account as of the payment date for such dividend or distribution equal to the number of restricted stock units credited to the Account as of the record date for such dividend or distribution, multiplied by the amount of cash actually paid as a dividend or distribution on each outstanding Share at such payment date, divided by the Fair Market Value of a Share as of such payment date.

               (b) Non-Cash Dividends. If the Company declares and pays a dividend or distribution on Shares in the form of property other than Shares, then a number of additional restricted stock units shall be credited to Grantee’s Account as of the payment date for such dividend or distribution equal to the number of restricted stock units credited to the Account as of the record date for such dividend or distribution, multiplied by

the Fair Market Value of such property actually paid as a dividend or distribution on each outstanding Share at such payment date, divided by the Fair Market Value of a Share as of such payment date.

               (c) Stock Dividends. If the Company declares and pays a dividend or distribution on Shares in the form of additional Shares, then a number of additional restricted stock units shall be credited to Grantee’s Account as of the payment date for such dividend or distribution equal to the number of restricted stock units credited to the Account as of the record date for such dividend or distribution or split, multiplied by the number of additional Shares actually paid as a dividend or distribution or issued in such split in respect of each outstanding Share.

          7. Other Terms Relating to Restricted Stock Units. The number of restricted stock units credited to a Grantee’s Account shall include fractional restricted stock units calculated to at least three decimal places, unless otherwise determined by the Administrator. Upon settlement of restricted stock units, Grantee shall be paid, in cash, an amount equal to the value of any fractional Share that would have otherwise been deliverable in settlement of such restricted stock units.

          8. Rights as Stockholder. Excepts with respect to Dividend Equivalents as set forth herein, Grantee will not be entitled to any privileges of ownership of the shares of Common Stock (including, without limitation, any voting rights) underlying the Award (whether or not vested) unless and until shares of Common Stock are actually delivered to Grantee hereunder.

          9. Absence of Tax Gross-Up Payment. There shall be no tax gross-up on the restricted stock units.

          10. Notices. Any notice to the Company shall be made in care of the Administrator to the office of the General Counsel, at the Company’s main office in King of Prussia, Pennsylvania. All notices shall be deemed to have been given when hand-delivered or mailed, first class postage prepaid, and shall be irrevocable once given.

          11. Securities Laws. The Administrator may from time to time impose any conditions on the restricted stock units (or the underlying Shares) as it deems necessary or advisable to comply with applicable securities laws.

          12. Award Not to Affect Service. The award granted hereunder shall not confer upon Grantee any right to continue service as an employee and/or director of the Company.

          13. Miscellaneous.

               (a) The address for Grantee to which notice, demands and other communications to be given or delivered under or by reason of the provisions hereof shall be Grantee’s address as reflected in the Company’s personnel records.

               (b) Any provision for distribution in settlement of Grantee’s Account hereunder shall be by means of bookkeeping entries on the books of the Company and shall not create in Grantee or any person to whom ownership right may have passed any right to, or claim against any specific assets of the Company, nor result in the creation of any trust or escrow account for Grantee or any person to whom ownership rights may have passed. Grantee (or any other person entitled to a distribution hereunder) shall be a general creditor of the Company.

               (c) These Standard Terms and Conditions shall inure to the benefit of and be binding upon the parties hereto and their respective permitted heirs, beneficiaries, successors and assigns.

               (d) In addition to these Standard Terms and Conditions, the Award shall be subject to the terms of the Plan and the Term Sheet, which are incorporated into these Standard Terms and Conditions by this reference. In the event of a conflict between the terms and conditions of these Standard Terms and Condition and the Plan, the Plan controls.

               (e) Any question concerning the interpretation of these Standard Terms and Conditions, the Term Sheet or the Plan, any adjustments required to be made hereunder, and any controversy that may arise under these Standard Terms and Conditions, the Term Sheet or the Plan shall be determined by the Administrator in its sole and absolute discretion. All decisions by the Administrator shall be final and binding.

               (f) To the extent not preempted by federal law, the validity, performance, construction and effect of this award shall be governed by the laws of the Commonwealth of Pennsylvania, without giving effect to principles of conflicts of law.

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO EXCHANGE ACT RULE 13a-14(a)
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES OXLEY-ACT OF 2002

I, William J. Merritt, President and Chief Executive Officer of InterDigital, Inc., certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of InterDigital, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 30, 2009	/s/ WILLIAM J. MERRITT
	William J. Merritt
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO EXCHANGE ACT RULE 13a-14(a)
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES OXLEY-ACT OF 2002

I, Scott A. McQuilkin, Chief Financial Officer of InterDigital, Inc., certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of InterDigital, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 30, 2009	/s/ SCOTT A. MCQUILKIN
	Scott A. McQuilkin
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the accompanying Quarterly Report on Form 10-Q of InterDigital, Inc. (the “Company”) for the quarter ended June 30, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William J. Merritt, President and Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 30, 2009	/s/ WILLIAM J. MERRITT
	William J. Merritt
	President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the accompanying Quarterly Report on Form 10-Q of InterDigital, Inc. (the “Company”) for the quarter ended June 30, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott A. McQuilkin, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 30, 2009	/s/ SCOTT A. MCQUILKIN
	Scott A. McQuilkin
	Chief Financial Officer