10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

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

    For the quarterly period ended March 31, 2021

OR

☐ 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 1-33579

INTERDIGITAL, INC.

(Exact Name of Registrant as Specified in Its Charter)

Pennsylvania	82-4936666
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

200 Bellevue Parkway, Suite 300, Wilmington, DE 19809-3727

(Address of Principal Executive Offices and Zip Code)

(302) 281-3600

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	IDCC	NASDAQ Stock Market LLC

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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

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

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ 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	30,772,057
Title of Class	Outstanding at May 4, 2021

INDEX

	PAGES
Part I — Financial Information:	3
Item 1 Financial Statements (unaudited):	3
Condensed Consolidated Balance Sheets — March 31, 2021 and December 31, 2020	3
Condensed Consolidated Statements of Income — Three Months Ended March 31, 2021 and 2020	4
Condensed Consolidated Statements of Comprehensive Income — Three Months Ended March 31, 2021 and 2020	5
Condensed Consolidated Statements of Shareholders Equity — Three Months Ended March 31, 2021 and 2020	6
Condensed Consolidated Statements of Cash Flows — Three Months Ended March 31, 2021 and 2020	7
Notes to Condensed Consolidated Financial Statements	8
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3 Quantitative and Qualitative Disclosures About Market Risk	27
Item 4 Controls and Procedures	27
Part II — Other Information:	28
Item 1 Legal Proceedings	28
Item 1A Risk Factors	28
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 4 Mine Safety Disclosures	28
Item 6 Exhibits	29
SIGNATURES	30

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

PART I — FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

INTERDIGITAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

	MARCH 31, 2021		DECEMBER 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	396,156	$	473,474
Short-term investments	488,559		453,173
Accounts receivable	12,502		16,008
Prepaid and other current assets	87,663		84,224
Total current assets	984,880		1,026,879
PROPERTY AND EQUIPMENT, NET	15,626		16,630
PATENTS, NET	407,732		418,343
DEFERRED TAX ASSETS	82,216		80,380
OTHER NON-CURRENT ASSETS, NET	71,420		74,043
Total non-current assets	576,994		589,396
TOTAL ASSETS	$	1,561,874	$	1,616,275
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	8,592	$	10,979
Accrued compensation and related expenses	21,527		32,413
Deferred revenue	192,422		219,935
Dividends payable	10,766		10,786
Other accrued expenses	19,927		21,649
Total current liabilities	253,234		295,762
LONG-TERM DEBT	419,396		367,992
LONG-TERM DEFERRED REVENUE	112,153		108,069
OTHER LONG-TERM LIABILITIES	44,518		47,886
TOTAL LIABILITIES	829,301		819,709
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, 71,476 and 71,389 shares issued and 30,812 and 30,816 shares outstanding	714		714
Additional paid-in capital	738,619		738,481
Retained earnings	1,358,380		1,413,969
Accumulated other comprehensive loss	(254)		(184)
	2,097,459		2,152,980
Treasury stock, 40,664 and 40,573 shares of common held at cost	1,385,361		1,379,611
Total InterDigital, Inc. shareholders’ equity	712,098		773,369
Noncontrolling interest	20,475		23,197
Total equity	732,573		796,566
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,561,874	$	1,616,275

The accompanying notes are an integral part of these statements.

3

INTERDIGITAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)

	FOR THE THREE MONTHS ENDED MARCH 31,
	2021		2020
REVENUES:
Patent licensing royalties	$	80,173	$	72,998
Technology solutions	2,190		3,212
Total Revenue	82,363		76,210
OPERATING EXPENSES:
Patent administration and licensing	36,574		40,108
Development	22,583		18,818
Selling, general and administrative	11,217		12,603
Total Operating expenses	70,374		71,529
Income from operations	11,989		4,681
INTEREST EXPENSE	(6,990)		(10,545)
OTHER INCOME, NET	724		6,023
Income before income taxes	5,723		159
INCOME TAX PROVISION	(1,765)		(1,820)
NET INCOME (LOSS)	$	3,958	$	(1,661)
Net loss attributable to noncontrolling interest	(1,613)		(1,777)
NET INCOME ATTRIBUTABLE TO INTERDIGITAL, INC.	$	5,571	$	116
NET INCOME PER COMMON SHARE — BASIC	$	0.18	$	—
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC	30,836		30,722
NET INCOME PER COMMON SHARE — DILUTED	$	0.18	$	—
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED	31,195		30,920

The accompanying notes are an integral part of these statements.

4

INTERDIGITAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

	FOR THE THREE MONTHS ENDED MARCH 31,
	2021		2020
Net income (loss)	$	3,958	$	(1,661)
Unrealized gain (loss) on investments, net of tax	(70)		32
Comprehensive income (loss)	$	3,888	$	(1,629)
Comprehensive loss attributable to noncontrolling interest	(1,613)		(1,777)
Total comprehensive income attributable to InterDigital, Inc.	$	5,501	$	148

The accompanying notes are an integral part of these statements.

5

INTERDIGITAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands, except per share data)

(unaudited)

	Common Stock			Additional  Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive  Loss		Treasury Stock			Non-Controlling Interest		Total Shareholders' Equity
	Shares	Amount								Shares	Amount
BALANCE, DECEMBER 31, 2019	71,268	$	712	$	727,402	$	1,412,779	$	(74)	40,567	$	(1,379,262)	$	24,724	$	786,281
Net income attributable to InterDigital, Inc.	—	—		—		116		—		—	—		—		116
Net loss attributable to noncontrolling interest	—	—		—		—		—		—	—		(1,777)		(1,777)
Net change in unrealized gain on short-term investments	—	—		—		—		32		—	—		—		32
Dividends declared ($0.35 per share)	—	—		84		(10,847)		—		—	—		—		(10,763)
Exercise of common stock options	27	1		777		—		—		—	—		—		778
Issuance of common stock, net	27	—		(725)		—		—		—	—		—		(725)
Amortization of unearned compensation	—	—		2,003		—		—		—	—		—		2,003
Repurchase of common stock	—	—		—		—		—		6	(349)		—		(349)
BALANCE, MARCH 31, 2020	71,322	$	713	$	729,541	$	1,402,048	$	(42)	40,573	$	(1,379,611)	$	22,947	$	775,596

	Common Stock			Additional  Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive  Loss		Treasury Stock			Non-Controlling Interest		Total Shareholders' Equity
	Shares	Amount								Shares	Amount
BALANCE, DECEMBER 31, 2020	71,389	$	714	$	738,481	$	1,413,969	$	(184)	40,573	$	(1,379,611)	$	23,197	$	796,566
Adjustment to Retained Earnings related to adoption of ASU 2020-06	—	—		—		(50,184)		—		—	—		—		(50,184)
Net income attributable to InterDigital, Inc.	—	—		—		5,571		—		—	—		—		5,571
Net loss attributable to noncontrolling interest	—	—		—		—		—		—	—		(1,613)		(1,613)
Noncontrolling interest distribution	—	—		—		—		—		—	—		(1,109)		(1,109)
Net change in unrealized loss on short-term investments	—	—		—		—		(70)		—	—		—		(70)
Dividends declared ($0.35 per share)	—	—		210		(10,976)		—		—	—		—		(10,766)
Exercise of common stock options	32	—		737		—		—		—	—		—		737
Issuance of common stock, net	55	—		(2,962)		—		—		—	—		—		(2,962)
Amortization of unearned compensation	—	—		2,153		—		—		—	—		—		2,153
Repurchase of common stock	—	—		—		—		—		91	(5,750)		—		(5,750)
BALANCE, MARCH 31, 2021	71,476	$	714	$	738,619	$	1,358,380	$	(254)	40,664	$	(1,385,361)	$	20,475	$	732,573

The accompanying notes are an integral part of these statements.

6

INTERDIGITAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	FOR THE THREE MONTHS ENDED MARCH 31,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	3,958	$	(1,661)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	19,861		19,160
Non-cash interest expense, net	1,819		4,637
Non-cash change in fair-value	—		(5,501)
Change in deferred revenue	(23,429)		(39,512)
Deferred income taxes	(1,817)		(751)
Share-based compensation	2,153		2,003
Other	—		1,108
(Increase) decrease in assets:
Receivables	3,507		2,664
Deferred charges and other assets	631		(1,658)
Increase (decrease) in liabilities:
Accounts payable	(291)		(2,477)
Accrued compensation and other expenses	(16,234)		(4,897)
Net cash used in operating activities	(9,842)		(26,885)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments	(173,120)		(110,378)
Sales of short-term investments	137,174		23,701
Purchases of property and equipment	(387)		(1,603)
Capitalized patent costs	(9,602)		(6,256)
Long-term investments	(1,091)		—
Net cash used in investing activities	(47,026)		(94,536)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from exercise of stock options	737		778
Payments on long-term debt	—		(94,909)
Repurchase of common stock	(5,750)		(349)
Non-controlling interest distribution	(1,109)		—
Taxes withheld upon restricted stock unit vestings	(2,962)		(725)
Dividends paid	(10,786)		(10,747)
Net cash used in financing activities	(19,870)		(105,952)
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(76,738)		(227,373)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD	477,663		757,098
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	$	400,925	$	529,725

Refer to Note 1, "Basis of Presentation," for additional supplemental cash flow information. Additionally, refer to Note 6, "Cash, Concentration of Credit Risk and Fair Value of Financial Instruments" for a reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets.

The accompanying notes are an integral part of these statements.

7

INTERDIGITAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(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. (individually and/or collectively with its subsidiaries referred to as “InterDigital,” the “Company,” “we,” “us” or “our,” unless otherwise indicated) as of March 31, 2021, the results of our operations for the three months ended March 31, 2021 and 2020 and our cash flows for the three months ended March 31, 2021 and 2020. The accompanying unaudited, condensed consolidated financial statements have been prepared in accordance with the instructions to 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 United States generally accepted accounting principles (“GAAP”). The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP for year-end financial statements. Therefore, these financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (our “2020 Form 10-K”) as filed with the Securities and Exchange Commission (“SEC”) on February 18, 2021. Definitions of capitalized terms not defined herein appear within our 2020 Form 10-K. 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 GAAP 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.

InterDigital has analyzed the impact of the ongoing Coronavirus pandemic (“COVID-19”) on its financial statements as of March 31, 2021.  InterDigital has determined that the changes to its significant judgments and estimates as a result of COVID-19 did not have a material impact on its financial statements.  The potential impact of COVID-19 will continue to be analyzed going forward.

Change in Accounting Policies

There have been no material changes or updates to our existing accounting policies from the disclosures included in our 2020 Form 10-K, except as indicated below in "New Accounting Guidance".

Reclassifications

Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

Supplemental Cash Flow Information

The following table presents additional supplemental cash flow information for the three months ended March 31, 2021 and 2020 (in thousands):

	FOR THE THREE MONTHS ENDED MARCH 31,
SUPPLEMENTAL CASH FLOW INFORMATION:	2021		2020
Interest paid	$	—	$	712
Income taxes paid, including foreign withholding taxes	4,328		2,228
Non-cash investing and financing activities:
Dividend payable	10,766		10,762
Accrued capitalized patent costs and property and equipment	2,096		(1,288)
Unsettled repurchase of common stock	1,994		—

8

New Accounting Guidance

Accounting Standards Update: Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes" ("ASU 2019-12"). The amendments in this ASU are intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 with early adoption allowed. We adopted this guidance as of January 1, 2021 and the adoption did not have a material impact on our consolidated financial statements.

Accounting Standards Update: Simplifying the Accounting for Convertible Instruments

In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”). The amendments in this ASU are intended to simplify accounting for convertible debt instruments and convertible preferred stock by removing certain accounting models which separate the embedded conversion features from the host contract. ASU 2020-06 also amends certain guidance in ASC 260 on the computation of earnings per share for convertible instruments and contracts on an entity’s own equity. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, and early adoption is permitted for fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective methods of transition. We elected to early adopt this standard on a modified retrospective approach as of January 1, 2021.

This adoption increased Long-term debt by $50.2 million at January 1, 2021, which was comprised of $51.6 million of unamortized interest discount and was partially offset by a net increase of $1.4 million equity component of deferred financing costs. This was due to the standard no longer requiring bifurcation of the embedded conversion feature from the host contract on the 2024 Notes, as defined in Note 7, "Obligations." This adoption also reduced non-cash interest expense starting in 2021 due to the removal of the accretion of the debt discount on the 2024 Notes.

Lastly, the adoption requires the use of the if-converted method of calculating diluted earnings per share rather than the treasury stock method for convertible instruments and requires the inclusion of the potential effect of shares settled in cash or shares in the diluted earnings per share calculation. Due to the reduction in non-cash interest expense, this adoption increased both basic and diluted earnings per share by $0.09 for the three months ended March 31, 2021.

2. REVENUE

Disaggregated Revenue

The following table presents the disaggregation of our revenue for the three months ended March 31, 2021 and 2020 (in thousands):

	Three months ended March 31,
	2021		2020		Increase/(Decrease)
Variable patent royalty revenue	$	7,096	$	5,946	$	1,150	19	%
Fixed-fee royalty revenue	69,296		66,347		2,949		4	%
Current patent royalties a	76,392		72,293		4,099		6	%
Non-current patent royalties b	3,781		705		3,076		436	%
Total patent royalties	80,173		72,998		7,175		10	%
Current technology solutions revenue a	2,190		3,212		(1,022)		(32)	%
Total revenue	$	82,363	$	76,210	$	6,153	8	%

a.    Recurring revenues are comprised of current patent royalties, inclusive of Dynamic Fixed-Fee Agreement royalties, and current technology solutions revenue.

b.    Non-recurring revenues are comprised of non-current patent royalties, which primarily include past patent royalties and royalties from static agreements, as well as patent sales.

During the three months ended March 31, 2021, we recognized $62.7 million of revenue that had been included in deferred revenue as of the beginning of the period. As of March 31, 2021, we had contract assets of $9.4 million and $8.9 million included within "Accounts receivable" and "Other non-current assets, net" in the condensed consolidated balance sheet, respectively. As of December 31, 2020, we had contract assets of $9.7 million and $8.9 million included within "Accounts receivable" and "Other non-current assets, net" in the condensed consolidated balance sheet, respectively.

9

Contracted Revenue

Based on contracts signed and committed as of March 31, 2021, we expect to recognize the following revenue from Dynamic Fixed-Fee Agreement payments over the term of such contracts (in thousands):

	Revenue
Remainder 2021	$	207,482
2022	238,057
2023	44,469
2024	89
2025 and beyond	—
Total Revenue	$	490,097

3. INCOME TAXES

In the three months ended March 31, 2021 and 2020, the Company had an effective tax rate of 30.8% and 1,144.7%, respectively. The effective tax rate in both periods was impacted by losses in certain jurisdictions where the Company presently has recorded a valuation allowance against the related tax benefit. Excluding this valuation allowance, our first quarter 2021 and 2020 effective tax rate would have been 12.0% and 65.5% respectively. During the first quarter 2021 and 2020, the Company recorded discrete net expense of $0.3 million primarily related to share-based compensation.

The effective tax rate reported in any given year will continue to be influenced by a variety of factors, including timing differences between the recognition of book and tax revenue, the level of pre-tax income or loss, the foreign vs. domestic classification of the Company’s customers, and any discrete items that may occur.

During the three months ended March 31, 2021 and 2020, the Company paid approximately $3.6 million and $2.0 million, respectively, in foreign source creditable withholding tax.

4. NET INCOME (LOSS) PER SHARE

Basic Earnings Per Share ("EPS") is calculated by dividing net income or loss available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if options or other securities with features that could result in the issuance of common stock were exercised or converted to common stock or resulting from the unvested outstanding RSUs. The following tables reconcile the numerator and the denominator of the basic and diluted net income per share computation (in thousands, except for per share data):

	Three months ended March 31,
	2021		2020
Net income applicable to InterDigital, Inc.	$	5,571	$	116
Weighted-average shares outstanding:
Basic	30,836		30,722
Dilutive effect of stock options, RSUs, convertible securities and warrants	359		198
Diluted	31,195		30,920
Earnings per share:
Basic	$	0.18	$	—
Dilutive effect of stock options, RSUs, convertible securities and warrants	—		—
Diluted	$	0.18	$	—

10

Shares of common stock issuable upon the exercise or conversion of certain securities have been excluded from our computation of EPS because the strike price or conversion rate, as applicable, of such securities was greater than the average market price of our common stock and, as a result, the effect of such exercise or conversion would have been anti-dilutive. Set forth below are the securities and the weighted average number of shares of common stock underlying such securities that were excluded from our computation of EPS for the periods presented (in thousands):

	Three months ended March 31,
	2021	2020
Restricted stock units and stock options	120	260
Convertible securities(a)	—	6,268
Warrants	4,921	6,268
Total	5,041	12,796

______________________________

(a)As of December 31, 2020, we made the irrevocable election to settle all conversions of the 2024 Notes through combination settlements of cash and shares of our common stock, with a specified dollar amount of $1,000 per $1,000 principal amount of 2024 Notes and any remaining amounts in shares of our common stock.

Convertible Notes and Warrants

Refer to Note 7, "Obligations," for information about the Company's convertible notes and warrants and related conversion and strike prices. During periods in which the average market price of the Company's common stock is above the applicable conversion price of the Company's convertible notes, or above the strike price of the Company's outstanding warrants, the impact of conversion or exercise, as applicable, would be dilutive and such dilutive effect is reflected in diluted EPS. As a result, in periods where the average market price of the Company's common stock is above the conversion price or strike price, as applicable, under the if-converted method, the Company calculates the number of shares issuable under the terms of the convertible notes and the warrants based on the average market price of the stock during the period, and includes that number in the total diluted shares outstanding for the period.

5. LITIGATION AND LEGAL PROCEEDINGS

COURT PROCEEDINGS

Lenovo

UK Proceeding

On August 27, 2019, the Company and certain of its subsidiaries filed a claim in the UK High Court against Lenovo Group Limited and certain of its subsidiaries. The claim, as amended, alleges infringement of five of the Company's patents relating to 3G and/or 4G/LTE standards: European Patent (U.K.) Nos. 2,363,008; 2,421,318; 2,485,558; 2,557,714; and 3,355,537.

The UK High Court held case management conferences on October 6, 2020 and December 16, 2020, a disclosure hearing on January 19, 2021 and pre-trial review hearings for the first trial on January 28, 2021 and February 8, 2021. At those hearings, the UK High Court entered a schedule for the technical and non-technical FRAND proceedings. Two technical trials were scheduled for March 2021 and June 2021 and the non-technical FRAND trial is scheduled in January 2022. There are additional technical trials scheduled for the remaining patents following the FRAND trial. The first technical trial was completed, and the Company is awaiting the court’s decision regarding the merits.

District of Delaware Patent Proceeding

On August 28, 2019, the Company and certain of its subsidiaries filed a complaint in the United States District Court for the District of Delaware (the "Delaware District Court") against Lenovo Holding Company, Inc. and certain of its subsidiaries alleging that Lenovo infringes eight of InterDigital's U.S. patents—U.S. Patent Nos. 8,085,665; 8,199,726; 8,427,954; 8,619,747; 8,675,612; 8,797,873; 9,203,580; and 9,456,449—by making, using, offering for sale, and/or selling Lenovo wireless devices with 3G and/or 4G LTE capabilities. As relief, InterDigital is seeking: (a) a declaration that InterDigital is not in breach of its relevant FRAND commitments with respect to Lenovo; (b) to the extent Lenovo does not agree to negotiate a worldwide patent license, does not agree to enter into binding international arbitration to set the terms of a FRAND license, and does not agree to be bound by the FRAND terms to be set by the UK High Court in the separately filed UK proceedings described above, an injunction prohibiting Lenovo from continued infringement; (c) damages, including enhanced damages for willful infringement and supplemental damages; and (d) attorneys’ fees and costs.

11

On September 16, 2020, the Delaware District Court entered a schedule for the case, setting a patent jury trial for December 5, 2022.On March 8, 2021, the Delaware District Court held a claim construction hearing. The ruling is pending.

District of Delaware Antitrust Proceeding

On April 9, 2020, Lenovo (United States) Inc. and Motorola Mobility LLC filed a complaint in the Delaware District Court against the Company and certain of its subsidiaries. The complaint alleges that the Company defendants have violated Sections 1 and 2 of the Sherman Act in connection with, among other things, their licensing of 3G and 4G standards essential patents ("SEPs"). The complaint further alleges that the Company defendants have violated their commitment to the ETSI with respect to the licensing of 3G and 4G SEPs on FRAND terms and conditions. The complaint seeks, among other things (i) rulings that the Company defendants have violated Sections 1 and 2 of the Sherman Act and are liable for breach of their ETSI FRAND commitments, (ii) a judgment that the plaintiffs are entitled to a license with respect to the Company's 3G and 4G SEPs on FRAND terms and conditions, and (iii) injunctions against any demand for allegedly excessive royalties or enforcement of the Company defendants' 3G and 4G U.S. SEPs against the plaintiffs or their customers via patent infringement proceedings.

On June 22, 2020, the Company filed a motion to dismiss Lenovo's Sherman Act claims with prejudice, and to dismiss Lenovo's breach of contract claim with leave to re-file as a counterclaim in the Company's legal proceeding against Lenovo in the Delaware District Court discussed above. Oral argument on the Company's motion to dismiss was held on October 27, 2020.

On March 24, 2021, the court ruled on the Company’s motion to dismiss. The court dismissed the Sherman Act Section 1 claim without prejudice, denied the motion to dismiss the Sherman Act Section 2 claim, and consolidated the Section 2 and breach of contract claims with Company’s patent proceeding against Lenovo in the Delaware District Court discussed above.

China Proceeding

On April 10, 2020, Lenovo (Beijing) Ltd. and certain of its affiliates filed a complaint against the Company and certain of its subsidiaries in the Beijing Intellectual Property Court (Beijing IP Court) seeking a determination of the FRAND royalty rates payable for the Company's Chinese 3G, 4G and 5G SEPs. On February 20, 2021, the Company filed an application challenging the jurisdiction of the Beijing IP Court to take up Lenovo’s complaint. The jurisdiction challenge remains pending.

Xiaomi

China Proceeding

On August 5, 2020, the Company was informed in writing by Xiaomi Corporation ("Xiaomi") that, on June 3, 2020, Xiaomi Communication Technology Co., Ltd. and certain of its affiliates filed a complaint against the Company and one of its subsidiaries in the Wuhan Intermediate People's Court (the "Wuhan Court") seeking for the Wuhan Court to determine a global FRAND rate for a license to the Company's 3G and/or 4G/LTE SEPs. The Company was informed on September 25, 2020 that the Wuhan Court held an ex parte hearing on or about September 23, 2020 and issued an order that, among other things, enjoins the Company from seeking a preliminary and permanent injunction against Xiaomi and certain of its subsidiaries for infringement of certain of the Company's patents related to 3G and/or 4G/LTE standards in the Company's case in the Delhi High Court discussed below, or elsewhere. The Wuhan Court ordered a fine of up to one million yuan per day if the Company were to violate the order. The Company contends that it has not yet been properly served with Xiaomi's complaint or the Wuhan Court's anti-suit injunction order. On October 13, 2020, the Company filed an application challenging the jurisdiction of the Wuhan Court to take up Xiaomi’s complaint. On March 12, 2021, the Company’s Chinese counsel was orally informed by the Court that the Company’s application challenging jurisdiction of the Wuhan Court had been rejected. The Company has not yet received the written decision but is challenging the decision at the IP Tribunal of the SPC.

On September 30, 2020, the Company filed a preliminary conditional response seeking reconsideration of the Wuhan Court's anti-suit injunction. In a decision dated December 4, 2020, the Wuhan Court dismissed the Company’s reconsideration petition. The Company is challenging that decision at the SPC.

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India Proceeding

On July 29, 2020, the Company and certain of its subsidiaries filed two patent infringement actions in the Delhi High Court in New Delhi, India (the "Delhi High Court") against Xiaomi and certain of its subsidiaries. The first complaint alleges infringement of five of the Company's patents related to 3G and/or 4G/LTE standards: Indian Patent Nos. 262910; 295912; 298719; 313036; and 320182. The second complaint alleges infringement of three of the Company's patents related to H.265/HEVC standards: Indian Patent Nos. 242248; 299448; and 308108. In these proceedings, the Company is seeking compensatory and punitive damages for Xiaomi's infringement of the asserted patents. The Company is further seeking, among other remedies, interim and permanent injunctive relief to prevent further infringement of the litigated patents in India, unless Xiaomi elects to take a license on terms determined to be FRAND by the Delhi High Court. The Company’s application for interim injunctive relief remains pending.

On September 29, 2020, the Company filed an anti-anti-suit injunction application against Xiaomi in the Delhi High Court, seeking, among other things, to enjoin Xiaomi from enforcing the Wuhan Court's September 23, 2020 anti-suit injunction order described above. On October 9, 2020, the Delhi High Court granted the Company's motion and issued an ad interim injunction restraining Xiaomi from enforcing the anti-suit injunction order issued by the Wuhan Court, pending further consideration of the Company's application for an anti-anti-suit injunction at a hearing on November 25, 2020. On May 3, 2021, in an oral pronouncement by the Delhi High Court, the interim anti-anti-suit injunction was made permanent throughout the pendency of the Indian cellular case. Furthermore, the Delhi High Court stated that, if any orders or other measures are passed by the Wuhan Court related to the anti-suit injunction that result in the Company incurring a monetary penalty, then Xiaomi must deposit a corresponding, equal amount with the Delhi High Court for the Company's benefit within one week.

German Proceeding

On October 30, 2020, the Company filed an anti-anti-suit injunction application against Xiaomi in the Munich District Court, seeking to enjoin Xiaomi from continuing to pursue the Wuhan Court's September 23, 2020 anti-suit injunction order described above with respect to Germany. On November 11, 2020, the Munich District Court granted the Company's motion and issued an ex parte injunction restraining Xiaomi from enforcing pursuing the anti-suit injunction. The Company filed penalty requests for non-compliance with said court order. Xiaomi opposed the injunction and requested stay of enforcement, and an oral hearing was held on January 28, 2021. At the hearing, the Munich District Court dismissed the request for stay of enforcement. On February 25, 2021 the Munich District Court confirmed its earlier ex parte anti-anti-suit injunction against Xiaomi. This judgment was appealed by Xiaomi to the Higher Regional Court Munich.

On April 27, the Company was informed that the Munich Regional Court commenced service of three patent infringement actions filed in Germany against Xiaomi by a subsidiary of the Company. The complaints involve infringement of the Company's German patents related to 3G and 4G cellular handsets (Patent Nos. EP 2,421,318; EP 2,485,558; and EP 3,355,537). The Company is seeking injunctive relief to prevent further infringement of the asserted patents in Germany.

OTHER

We are party to certain other disputes and legal actions in the ordinary course of business, including arbitration and legal proceedings with licensees regarding the terms of their agreements and the negotiation thereof. We do not currently believe that these matters, even if adversely adjudicated or settled, would have a material adverse effect on our financial condition, results of operations or cash flows. None of the preceding matters have met the requirements for accrual or disclosure of a potential range as of March 31, 2021.

6. CASH, CONCENTRATION OF CREDIT RISK AND FAIR VALUE OF FINANCIAL INSTRUMENTS

Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash currently consists of money market and demand accounts. The following table provides a reconciliation of total cash, cash equivalents and restricted cash as of March 31, 2021, December 31, 2020 and March 31, 2020 to the captions within the condensed consolidated balance sheets and condensed consolidated statements of cash flows (in thousands):

	March 31,		December 31,		March 31,
	2021		2020		2020
Cash and cash equivalents	$	396,156	$	473,474	$	515,793
Restricted cash included within prepaid and other current assets	3,688		3,108		12,851
Restricted cash included within other non-current assets	1,081		1,081		1,081
Total cash, cash equivalents and restricted cash	$	400,925	$	477,663	$	529,725

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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 and contract assets are derived principally from patent license and technology solutions agreements. As of March 31, 2021 and December 31, 2020, five licensees comprised 50% and 53%, respectively, of our net accounts receivable balance. We perform ongoing credit evaluations of our licensees, who generally include large, multinational, wireless telecommunications equipment manufacturers. We believe that the book values of our financial instruments approximate their fair values.

Fair Value Measurements

We use various valuation techniques and assumptions when measuring the fair value of our assets and liabilities. We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. This guidance established a hierarchy that prioritizes fair value measurements based on the types of input used for the various valuation techniques (market approach, income approach and cost approach). The levels of the hierarchy are described below:

Level 1 Inputs — Level 1 includes financial instruments for which quoted market prices for identical instruments are available in active markets.

Level 2 Inputs — Level 2 includes financial instruments for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets with insufficient volume or infrequent transactions (less active markets) or model-driven valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data, including market interest rate curves, referenced credit spreads and pre-payment rates.

Level 3 Inputs — Level 3 includes financial instruments for which fair value is derived from valuation techniques including pricing models and discounted cash flow models in which one or more significant inputs are unobservable, including the Company’s own assumptions. The pricing models incorporate transaction details such as contractual terms, maturity and, in certain instances, timing and amount of future cash flows, as well as assumptions related to liquidity and credit valuation adjustments of marketplace participants.

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.

Recurring Fair Value Measurements

Our financial assets are generally included within short-term investments on our condensed consolidated balance sheets, unless otherwise indicated. Our financial assets and liabilities that are accounted for at fair value on a recurring basis are presented in the tables below as of March 31, 2021 and December 31, 2020 (in thousands):

	Fair Value as of March 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market and demand accounts (a)	$	386,825	$	—	$	—	$	386,825
Commercial paper (b)	—		274,108		—		274,108
U.S. government securities	—		155,752		—		155,752
Corporate bonds, asset backed and other securities	—		72,799		—		72,799
Total	$	386,825	$	502,659	$	—	$	889,484

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	Fair Value as of December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Money market and demand accounts (a)	$	397,522	$	—	$	—	$	397,522
Commercial paper(b)	—		285,242		—		285,242
U.S. government securities	—		166,223		—		166,223
Corporate bonds, asset backed and other securities	—		81,849		—		81,849
Total	$	397,522	$	533,314	$	—	$	930,836

______________________________

(a)Primarily included within cash and cash equivalents.

(b)As of March 31, 2021 and December 31, 2020, $14.1 million and $80.1 million, respectively, of commercial paper was included within cash and cash equivalents.

Non-Recurring Fair Value Measurements

Investments in Other Entities

During the three months ended March 31, 2020, we recognized a $5.5 million gain resulting from observable price changes of one of our long-term strategic investments, which was included within “Other Income, Net” in the condensed consolidated statement of income.

Lease Assets

During the three months ended March 31, 2020, we recognized a $1.1 million impairment, comprised of $0.8 million of Property, Plant, and Equipment, and $0.3 million of Right of Use Asset related to the abandonment of one of our leased properties, which was included within “Operating Expense” in the condensed consolidated statement of income.

Fair Value of Long-Term Debt

2024 Senior Convertible Notes

The principal amount, carrying value and related estimated fair value of the Company's senior convertible debt reported in the condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020 was as follows (in thousands). The aggregate fair value of the principal amount of the senior convertible long-term debt is a Level 2 fair value measurement.

	March 31, 2021						December 31, 2020
	Principal Amount		Carrying Value		Fair Value		Principal Amount		Carrying Value		Fair Value
Senior Convertible Long-Term Debt	$	400,000	$	394,404	$	422,000	$	400,000	$	343,821	$	418,760

Technicolor Patent Acquisition Long-term Debt

The carrying value and related estimated fair value of the Technicolor Patent Acquisition long-term debt reported in the condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020 was as follows (in thousands). The aggregate fair value of the Technicolor Patent Acquisition long-term debt is a Level 3 fair value measurement.

	March 31, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
Technicolor Patent Acquisition Long-Term Debt	$	24,992	$	26,762	$	24,171	$	27,016

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7. OBLIGATIONS

Technicolor Patent Acquisition Long-Term Debt

On July 30, 2018, we completed our acquisition of the patent licensing business of Technicolor SA ("Technicolor"), a worldwide technology leader in the media and entertainment sector (the "Technicolor Patent Acquisition"). In conjunction with the Technicolor Patent Acquisition we assumed Technicolor’s rights and obligations under a joint licensing program with Sony Corporation ("Sony") relating to digital televisions and standalone computer display monitors, which commenced in 2015 and is referred to as the "Madison Arrangement." An affiliate of CPPIB Credit Investments Inc. ("CPPIB Credit"), a wholly owned subsidiary of Canada Pension Plan Investment Board, is a third-party investor in the Madison Arrangement. CPPIB Credit has made certain payments to Technicolor and Sony and has agreed to contribute cash to fund certain capital reserve obligations under the arrangement in exchange for a percentage of future revenues, specifically through September 11, 2030 in regard to the Technicolor patents.

Upon our assumption of Technicolor’s rights and obligations under the Madison Arrangement, our relationship with CPPIB Credit meets the criteria in ASC 470-10-25 - Sales of Future Revenues or Various Other Measures of Income ("ASC 470"), which relates to cash received from an investor in exchange for a specified percentage or amount of revenue or other measure of income of a particular product line, business segment, trademark, patent, or contractual right for a defined period. Under this guidance, we recognized the fair value of our contingent obligation to CPPIB Credit, as of the acquisition date, as long-term debt in our condensed consolidated balance sheet. This initial fair value measurement was based on the perspective of a market participant and included significant unobservable inputs which are classified as Level 3 inputs within the fair value hierarchy. The fair value of the long-term debt as of March 31, 2021 and December 31, 2020 is disclosed within Note 6, "Cash, Concentration of Credit Risk and Fair Value of Financial Instruments." Our repayment obligations are contingent upon future royalty revenues generated from the Madison Arrangement and there are no minimum or maximum payments under the arrangement.

Under ASC 470, amounts recorded as debt are amortized under the interest method. At each reporting period, we will review the discounted expected future cash flows over the life of the obligation. The Company made an accounting policy election to utilize the catch-up method when there is a change in the estimated future cash flows, whereby we will adjust the carrying amount of the debt to the present value of the revised estimated future cash flows, discounted at the original effective interest rate, with a corresponding adjustment recognized as interest expense within “Interest Expense” in the condensed consolidated statements of income. The effective interest rate as of the acquisition date was approximately 14.5%. This rate represents the discount rate that equates the estimated future cash flows with the fair value of the debt as of the acquisition date, and is used to compute the amount of interest to be recognized each period based on the estimated life of the future revenue streams. During the three months ended March 31, 2021 and 2020, we recognized $0.8 million and $0.7 million, respectively, of interest expense related to this debt. This was included within “Interest Expense” in the condensed consolidated statements of income. Any future payments made to CPPIB Credit, or additional proceeds received from CPPIB Credit, will decrease or increase the long-term debt balance accordingly.

2024 Senior Convertible Notes, and Related Note Hedge and Warrant Transactions

On June 3, 2019 we issued $400.0 million in aggregate principal amount of 2.00% Senior Convertible Notes due 2024 (the "2024 Notes"). The net proceeds from the issuance of the 2024 Notes, after deducting the initial purchasers' transaction fees and offering expenses, were approximately $391.6 million. The 2024 Notes (i) bear interest at a rate of 2.00% per year, payable in cash on June 1 and December 1 of each year, commencing on December 1, 2019, and (ii) mature on June 1, 2024, unless earlier converted or repurchased. The effective interest rate of the 2024 Notes is 2.02%.

The 2024 Notes are convertible into cash, shares of our common stock or a combination thereof, at our election, at an initial conversion rate of 12.3018 shares of our common stock per $1,000 principal amount of 2024 Notes (which is equivalent to an initial conversion price of approximately $81.29 per share), as adjusted pursuant to the terms of the indenture governing the 2024 Notes (the "Indenture"). The conversion rate of the 2024 Notes, and thus the conversion price, may be adjusted in certain circumstances, including in connection with a conversion of the 2024 Notes made following certain fundamental changes and under other circumstances set forth in the Indenture. As of December 31, 2020, we made the irrevocable election to settle all conversions of the 2024 Notes through combination settlements of cash and shares of our common stock, with a specified dollar amount of $1,000 per $1,000 principal amount of 2024 Notes and any remaining amounts in shares of our common stock.

The 2024 Notes are senior unsecured obligations of the Company and rank equally in right of payment with any of our current and any future senior unsecured indebtedness. The 2024 Notes are effectively subordinated to all of our future secured indebtedness to the extent of the value of the related collateral, and the 2024 Notes are structurally subordinated to indebtedness and other liabilities, including trade payables, of our subsidiaries.

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On May 29 and May 31, 2019, in connection with the offering of the 2024 Notes, we entered into convertible note hedge transactions (collectively, the "2024 Note Hedge Transactions") that cover, subject to customary anti-dilution adjustments, approximately 4.9 million shares of common stock, in the aggregate, at a strike price that initially corresponds to the initial conversion price of the 2024 Notes, subject to adjustment, and are exercisable upon any conversion of the 2024 Notes. On May 29 and May 31, 2019, we also entered into privately negotiated warrant transactions (collectively, the "2024 Warrant Transactions" and, together with the 2024 Note Hedge Transactions, the "2024 Call Spread Transactions"), whereby we sold warrants to acquire, subject to customary anti-dilution adjustments, approximately 4.9 million shares of common stock at an initial strike price of approximately $109.43 per share, subject to adjustment.

There have been no material changes regarding the 2024 Notes and 2024 Call Spread Transactions from the disclosures included in Note 10, "Obligations" within the Notes to the Consolidated Financial Statements included in Part II, Item 8 of the 2020 Form 10-K.

2020 Senior Convertible Notes

On March 11, 2015, we issued $316.0 million in aggregate principal amount of 1.50% Senior Convertible Notes due 2020 (the "2020 Notes"). The 2020 Notes bore interest at a rate of 1.50% per year and matured on March 1, 2020. On the maturity date, the outstanding balance of $94.9 million under the 2020 Notes was repaid in full.

The following table reflects the carrying value of our Long-Term Debt as of March 31, 2021 and December 31, 2020 (in thousands):

	March 31, 2021		December 31, 2020
Principal	$	400,000	$	400,000
Less:
Unamortized interest discount(a)	—		(51,567)
Deferred financing costs(a)	(5,596)		(4,612)
Net carrying amount of the 2024 Notes	$	394,404	$	343,821

______________________________

(a)Due to the adoption of ASU 2020-06 on January 1, 2021, the unamortized interest discount was reclassified back to the carrying value of the 2024 Notes. Refer to Note 1, "Basis of Presentation", for further information regarding this adoption.

The following table presents the amount of interest cost recognized, which is included within "Interest Expense" in our condensed consolidated statements of income, for the three months ended March 31, 2021 and March 31, 2020 relating to the contractual interest coupon, accretion of the debt discount, and the amortization of deferred financing costs of the 2024 Notes and 2020 Notes (in thousands):

	Three months ended March 31,
	2021		2020
	2024 Notes		2024 Notes		2020 Notes		Total
Contractual coupon interest	$	2,000	$	2,000	$	237	$	2,237
Accretion of debt discount(a)	—		3,222		669		3,891
Amortization of deferred financing costs	398		288		70		358
Total	$	2,398	$	5,510	$	976	$	6,486

______________________________

(a)Due to the adoption of ASU 2020-06, there is no longer accretion of the debt discount starting January 1, 2021. Refer to Note 1, "Basis of Presentation", for further information regarding this adoption.

Technicolor Contingent Consideration

As part of the Technicolor Patent Acquisition, we entered into a revenue-sharing arrangement with Technicolor that created a contingent consideration liability. Under the revenue-sharing arrangement, Technicolor receives 42.5% of future cash receipts from new licensing efforts from the Madison Arrangement only, subject to certain conditions and hurdles. As of March 31, 2021, the contingent consideration liability from the revenue-sharing arrangement was deemed not probable and estimable and is therefore not reflected within the consolidated financial statements.

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8. VARIABLE INTEREST ENTITIES

As further discussed below, we are the primary beneficiary of three variable interest entities. As of March 31, 2021, the combined book values of the assets and liabilities associated with these variable interest entities included in our condensed consolidated balance sheet were $56.4 million and $6.1 million, respectively. Assets included $18.9 million of cash and cash equivalents, $2.4 million of accounts receivable and prepaid assets, and $35.1 million of patents, net. As of December 31, 2020, the combined book values of the assets and liabilities associated with these variable interest entities included in our condensed consolidated balance sheet were $62.0 million and $5.8 million, respectively. Assets included $24.5 million of cash and cash equivalents, $2.3 million of accounts receivable and prepaid assets, and $35.2 million of patents, net.

Chordant

On January 31, 2019, we launched the Company’s Chordant™ business as a standalone company. The spinout of the unit, which now includes an affiliate of Sony as an investor along with the Company, gives Chordant added independence and flexibility in driving into its core operator and smart city markets. Chordant is a variable interest entity and we have determined that we are the primary beneficiary for accounting purposes and consolidate Chordant.  For the three months ended March 31, 2021 and 2020, we have allocated approximately $0.1 million and $0.3 million, respectively, of Chordant's net loss to noncontrolling interests held by other parties.

Convida Wireless

Convida Wireless was launched in 2013 and most recently renewed in 2018 to combine Sony's consumer electronics expertise with our pioneering IoT expertise to drive IoT communications and connectivity.  Based on the terms of the agreement, the parties will contribute funding and resources for additional research and platform development, which we will perform.  SCP IP Investment LLC, an affiliate of Stephens Inc., is a minority investor in Convida Wireless.

Convida Wireless is a variable interest entity. Based on our provision of research and platform development services to Convida Wireless, we have determined that we remain the primary beneficiary for accounting purposes and will continue to consolidate Convida Wireless.  For each of the three months ended March 31, 2021 and 2020, we have allocated approximately $1.5 million of Convida Wireless's net loss to noncontrolling interests held by other parties.

Signal Trust for Wireless Innovation

During 2013, we announced the establishment of the Signal Trust for Wireless Innovation (the “Trust”), the goal of which was to monetize a patent portfolio primarily related to 3G cellular infrastructure. In response to a request from Signal Trust, in first quarter 2021 we provided our consent, as major beneficiary, to dissolve Signal Trust.

The Trust has been accounted for as a variable interest entity. Based on the terms of the trust agreement, we determined that we are the primary beneficiary for accounting purposes and have included the Trust in our consolidated financial statements. Pending the dissolution of the Trust, we will continue to consolidate the Trust in our consolidated financial statements.

9. OTHER INCOME, NET

The amounts included in "Other income, net" in the condensed consolidated statements of income for the three months ended March 31, 2021 and 2020 were as follows (in thousands):

	Three months ended March 31,
	2021		2020
Interest and investment income	$	553	$	2,877
Other	171		3,146
Other income, net	$	724	$	6,023

The decrease in Other income, net between periods was primarily driven by a net $4.4 million gain in the three months ended March 31, 2020, primarily resulting from observable price changes of one of our long-term strategic investments, partially offset by a $1.9 million gain in the three months ended March 31, 2021 on a contract termination. Additionally, Interest and investment income decreased $2.3 million in the three months ended March 31, 2021 due to lower rates of return on our short-term investments.

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10.    PREPAID AND OTHER CURRENT ASSETS

The amounts included in "Prepaid and other current assets" in the consolidated balance sheet as of March 31, 2021 and December 31, 2020 were as follows (in thousands):

	March 31, 2021		December 31, 2020
Tax receivables	$	70,334	$	69,592
Prepaid assets	12,045		10,899
Unsettled repurchase of common stock	1,994		—
Operating lease receivable	—		817
Other current assets	3,290		2,916
Total Prepaid and other current assets	$	87,663	$	84,224

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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 in Part I, Item 1 of this Quarterly Report on Form 10-Q, in addition to our 2020 Form 10-K, other reports filed with the SEC and the Statement Pursuant to the Private Securities Litigation Reform Act of 1995 — Forward-Looking Statements below.

Throughout the following discussion and elsewhere in this Form 10-Q, we refer to “recurring revenues” and “non-recurring revenues.”  Recurring revenues are comprised of “current patent royalties” and “current technology solutions revenue.”  Non-recurring revenues are comprised of “non-current patent royalties,” which primarily include past patent royalties and royalties from static agreements, as well as “patent sales.”

Throughout the following discussion and elsewhere in this Form 10-Q, we refer to the “Technicolor Acquisitions” which is the combined Technicolor Patent Acquisition, which closed in July 2018 and was integrated throughout 2019, and the R&I Acquisition, which closed in May 2019. Refer to Note 5, "Business Combinations and Other Transactions," within the Notes to the Consolidated Financial Statements included in Part II, Item 8 of the 2020 Form 10-K for further information on the Technicolor Acquisitions.

Recurring Revenue

First quarter 2021 recurring revenue was $78.6 million, compared to recurring revenue of $75.5 million in first quarter 2020, a 4% year-over-year increase. The increase was primarily driven by five new patent license agreements signed over the last twelve months, including Huawei signed in second quarter 2020, and was partially offset by the reduction from the expired LG patent license agreement. In April 2021, LG confirmed that it is exiting the smartphone market. Refer to "Results of Operations --First Quarter 2021 Compared to First Quarter 2020" for further discussion of our 2021 revenue.

Impact of COVID-19 Pandemic

In March 2020, the World Health Organization categorized the novel coronavirus ("COVID-19") as a pandemic, and it continues to significantly impact the United States and the rest of the world. Though the COVID-19 pandemic and the measures taken to reduce its transmission, such as the imposition of social distancing and orders to work-from-home and shelter-in-place, have altered our business environment and overall working conditions, we continue to believe that our strategic strengths, including talent, our strong balance sheet, stable revenue base, and the strength of our patent portfolio, will allow us to weather a rapidly changing marketplace.

While the environment in which we conduct our business and our overall working conditions have changed as a result of the COVID-19 pandemic, we experienced a limited impact on our operations and financial position during three months ended March 31, 2021. As discussed in our 2020 Form 10-K, fixed-fee royalties accounted for nearly 89% of our revenues in 2020. To that end, in three months ended March 31, 2021, we did not experience a significant impact on our revenue due to COVID-19. Meanwhile, we have taken steps to protect the health and safety of our employees and their families, with our entire worldwide workforce continuing to work remotely with limited exceptions. We are currently anticipating a return to in-person work in September 2021, with certain locations potentially opening earlier on a limited and voluntary basis. Despite the remote working conditions, our business activities have continued to operate with minimal interruption, and we expect them to continue to operate efficiently. Nearly all work-related travel continues to remain suspended, and we have conducted our licensing negotiations, investor presentations and participation in standards organizations and industry events virtually. Between March 12, 2020, when we began to work almost entirely remotely, and March 31, 2021, we successfully concluded six new patent license agreements that we estimate will result in aggregate revenues exceeding $180.0 million over the two- to four- year terms of those agreements. Our financial position remains strong, we believe we have sufficient access to capital if needed, and we remain committed to our efforts around cost discipline.

Despite our success thus far in navigating the challenging environment that COVID-19 has presented, as more fully discussed in Part I, Item 1A "Risk Factors" in our 2020 Form 10-K, the extent to which COVID-19 will adversely impact our business, financial condition and results of operations is dependent upon numerous factors resulting therefrom, many of which are highly uncertain, rapidly changing and uncontrollable. However, with a strong balance sheet and the vast majority of our current revenue coming from fixed price agreements, we believe that we are well-positioned to continue to overcome and adapt to the challenges that we have been presented with thus far.

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Comparability of Financial Results

When comparing first quarter 2021 financial results against other periods, the following items should be taken into consideration:

•Our first quarter 2021 revenue includes $3.8 million of non-recurring revenue primarily related to a consumer electronics patent licensing agreement signed in first quarter 2021.

•Interest expense decreased in first quarter 2021 $3.6 million primarily due to a reduction in non-cash interest expense resulting from the accounting adoption of ASU 2020-06, related to the accounting for convertible debts.

•In first quarter 2021 Other income, net includes a $1.9 million gain on a contract termination.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our significant accounting policies are described in Note 2, "Summary of Significant Accounting Policies and New Accounting Guidance", in the Notes to Consolidated Financial Statements included in our 2020 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 2020 Form 10-K. There have been no material changes to our existing critical accounting policies from the disclosures included in our 2020 Form 10-K. In addition, we have analyzed the impact of COVID-19 on our financial statements as of March 31, 2021, and we have determined that the changes to our significant judgments and estimates did not have a material impact on our financial statements. Refer to Note 1, “Basis of Presentation,” in the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for updates related to new accounting pronouncements and changes in accounting policies.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity are cash, cash equivalents and short-term investments, as well as cash generated from operations. We believe we have the ability to obtain additional liquidity through debt and equity financings. 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, debt obligations, existing stock repurchase program and dividend program for the next twelve months.

Cash, cash equivalents, restricted cash and short-term investments

As of March 31, 2021 and December 31, 2020, we had the following amounts of cash, cash equivalents, restricted cash and short-term investments (in thousands):

	March 31, 2021		December 31, 2020		Increase / (Decrease)
Cash and cash equivalents	$	396,156	$	473,474	$	(77,318)
Restricted cash included within prepaid and other current assets	3,688		3,108		580
Restricted cash included within other non-current assets	1,081		1,081		—
Short-term investments	488,559		453,173		35,386
Total cash, cash equivalents, restricted cash and short-term investments	$	889,484	$	930,836	$	(41,352)

The net decrease in cash, cash equivalents, restricted cash and short-term investments was attributable to cash used in financing activities of $19.9 million, primarily related to dividend payments and repurchases of common stock, cash used in investing activities of $11.1 million, excluding sales and purchases of short-term investments, and cash used in operating activities of $9.8 million. Refer to the sections below for further discussion of these items.

Cash flows from operating activities

We used the following cash flows in our operating activities in first quarter 2021 and 2020 (in thousands):

	Three months ended March 31,
	2021		2020		Increase / (Decrease)
Net cash used in operating activities	$	(9,842)	$	(26,885)	$	17,043

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Our cash flows used in operating activities are principally derived from cash receipts from patent license and technology solutions agreements, offset by cash operating expenses and income tax payments. The $17.0 million change in net cash used in operating activities was primarily driven by higher cash receipts primarily related to new patent license agreements signed over the last twelve months, as well as the timing of cash receipts related to existing patent license agreements. The table below sets forth the significant items comprising our cash flows used in operating activities during the three months ended March 31, 2021 and 2020 (in thousands):

	Three months ended March 31,
	2021		2020		Increase / (Decrease)
Cash Receipts:
Patent royalties	$	56,107	$	33,464	$	22,643
Technology solutions	1,881		973		908
Total cash receipts	57,988		34,437		23,551
Cash Outflows:
Cash operating expenses a	48,360		49,264		(904)
Income taxes paid b	4,328		2,228		2,100
Total cash outflows	52,688		51,492		1,196
Other working capital adjustments	(15,142)		(9,830)		(5,312)
Cash flows used in operating activities	$	(9,842)	$	(26,885)	$	17,043

______________________________

(a) Cash operating expenses include operating expenses less depreciation of fixed assets, amortization of patents, non-cash compensation and non-cash changes in fair value.

(b) Income taxes paid include foreign withholding taxes.

Cash flows from investing and financing activities

Net cash used in investing activities in first quarter 2021 was $47.0 million, a $47.5 million change from $94.5 million of net cash used in investing activities in first quarter 2020. During first quarter 2021, we purchased $35.9 million of short-term marketable securities, net of sales, and invested $1.1 million in a new strategic investment. During first quarter 2020, we purchased $86.7 million of short-term marketable securities, net of sales.

Net cash used in financing activities for first quarter 2021 was $19.9 million, a change of $86.1 million from net cash used in financing activities of $106.0 million for first quarter 2020. This change was primarily attributable to a $94.9 million payment on long-term debt related to the repayment of our 2020 Notes during the first quarter 2020 offset by $5.4 million of additional repurchases of common stock and a $1.1 million non-controlling interest distribution in first quarter 2021.

Other

Our combined short-term and long-term deferred revenue balance as of March 31, 2021 was approximately $304.6 million, a net decrease of $23.4 million from December 31, 2020. This decrease in deferred revenue was primarily attributable to timing of cash receipts from our dynamic fixed-fee royalty agreements and amortization of deferred revenue recognized in the period.

Based on current license agreements, we expect the amortization of dynamic fixed-fee royalty payments to reduce the March 31, 2021 deferred revenue balance of $304.6 million by $192.4 million over the next twelve months.

Convertible Notes

See Note 7, “Obligations” to the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for definitions of capitalized terms below.

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Our 2024 Notes, which for purposes of this discussion are also referred to as the "Convertible Notes", are included in the dilutive earnings per share calculation using the if-converted method, as required by the adoption of ASU 2020-06. Under the if-converted method, we must assume that conversion of convertible securities occurs at the beginning of the reporting period. As of December 31, 2020, we made the irrevocable election to settle all conversions of the 2024 Notes through combination settlements of cash and shares of our common stock, with a specified dollar amount of $1,000 per $1,000 principal amount of 2024 Notes and any remaining amounts in shares of common stock. As the principal amount must be paid in cash and only the conversion spread is settled in shares, we only include the net number of incremental shares that would be issued upon conversion. We must calculate the number of shares of our common stock issuable under the terms of the Convertible Notes based on the average market price of our common stock during the applicable reporting period and include that number in the total diluted shares figure for the period.

At the time we issued the Convertible Notes, we entered into the 2024 Call Spread Transactions that together were designed to have the economic effect of reducing the net number of shares that will be issued in the event of conversion of the Convertible Notes by, in effect, increasing the conversion price of the Convertible Notes from our economic standpoint. However, under GAAP, since the impact of the 2024 Note Hedge Transactions is anti-dilutive, we exclude from the calculation of fully diluted shares the number of shares of our common stock that we would receive from the counterparties to these agreements upon settlement.

During periods in which the average market price of our common stock is above the applicable conversion price of the Convertible Notes ($81.29 per share for the 2024 Notes as of March 31, 2021) or above the strike price of the warrants ($109.43 per share for the 2024 Warrant Transactions as of March 31, 2021), the impact of conversion or exercise, as applicable, would be dilutive and such dilutive effect is reflected in diluted earnings per share. As a result, in periods where the average market price of our common stock is above the conversion price or strike price, as applicable, under the if-converted method, we calculate the number of shares issuable under the terms of the Convertible Notes and the warrants based on the average market price of the stock during the period, and include that number in the total diluted shares outstanding for the period.

Under the if-converted method, changes in the price per share of our common stock can have a significant impact on the number of shares that we must include in the fully diluted earnings per share calculation. As described in Note 7, "Obligations," we made the irrevocable election to settle all conversions of the 2024 Notes through combination settlements of cash and shares of our common stock, with a specified dollar amount of $1,000 per $1,000 principal amount of 2024 Notes and any remaining amounts in shares of our common stock ("net share settlement"). Assuming net share settlement upon conversion, the following table illustrates how, based on the $400.0 million aggregate principal amount of the 2024 Notes outstanding as of March 31, 2021, and the approximately 4.9 million warrants related to the 2024 Notes outstanding as of the same date, changes in our stock price would affect (i) the number of shares issuable upon conversion of the Convertible Notes, (ii) the number of shares issuable upon exercise of the warrants subject to the 2024 Warrant Transactions, (iii) the number of additional shares deemed outstanding with respect to the Convertible Notes, after applying the if-converted method, for purposes of calculating diluted earnings per share ("Total If-Converted Method Incremental Shares"), (iv) the number of shares of our common stock deliverable to us upon settlement of the 2024 Note Hedge Transactions and (v) the number of shares issuable upon concurrent conversion of the Convertible Notes, exercise of the warrants subject to the 2024 Warrant Transactions, and settlement of the 2024 Note Hedge Transactions:

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2024 Notes
Market Price Per Share	Shares Issuable Upon Conversion of the 2024 Notes	Shares Issuable Upon Exercise of the 2024 Warrant Transactions	Total If-Converted Method Incremental Shares	Shares Deliverable to InterDigital upon Settlement of the 2024 Note Hedge Transactions	Incremental Shares Issuable (a)
	(Shares in thousands)
$85	215	—	215	(215)	—
$90	476	—	476	(476)	—
$95	710	—	710	(710)	—
$100	921	—	921	(921)	—
$105	1,111	—	1,111	(1,111)	—
$110	1,284	25	1,309	(1,284)	25
$115	1,442	238	1,680	(1,442)	238
$120	1,587	433	2,020	(1,587)	433
$125	1,721	613	2,334	(1,721)	613
$130	1,844	779	2,623	(1,844)	779

______________________________

(a) Represents incremental shares issuable upon concurrent conversion of convertible notes, exercise of warrants and settlement of the hedge agreements.

RESULTS OF OPERATIONS

First Quarter 2021 Compared to First Quarter 2020

Revenues

The following table compares first quarter 2021 revenues to first quarter 2020 revenues (in thousands):

	Three months ended March 31,
	2021		2020		Total Increase/(Decrease)
Variable patent royalty revenue	$	7,096	$	5,946	$	1,150	19	%
Fixed-fee royalty revenue	69,296		66,347		2,949		4	%
Current patent royalties a	76,392		72,293		4,099		6	%
Non-current patent royalties b	3,781		705		3,076		436	%
Total patent royalties	80,173		72,998		7,175		10	%
Current technology solutions revenue a	2,190		3,212		(1,022)		(32)	%
Total revenue	$	82,363	$	76,210	$	6,153	8	%

a.    Recurring revenues are comprised of current patent royalties, inclusive of Dynamic Fixed-Fee Agreement royalties, and current technology solutions revenue.

b.    Non-recurring revenues are comprised of non-current patent royalties, which primarily include past patent royalties and royalties from static agreements, as well as patent sales.

The $6.2 million increase in total revenue was primarily due to a $3.1 million increase in recurring revenue and a $3.1 million increase in non-current patent royalties both primarily driven by five new patent license agreements signed over the last twelve months, including Huawei signed in second quarter 2020. These increases were partially offset by the reduction from the expired LG patent license agreement. In April 2021, LG confirmed that it is exiting the smartphone market.

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In first quarter 2021 and first quarter 2020, 71% and 73% of our total revenue, respectively, was attributable to companies that individually accounted for 10% or more of our total revenue. In first quarter 2021 and first quarter 2020, the following companies accounted for 10% or more of our total revenue:

	Three months ended March 31,
	2021	2020
Apple	34%	37%
Samsung	24%	26%
Huawei	13%	—%
LG	N/A	10%

Operating Expenses

The following table summarizes the changes in operating expenses between first quarter 2021 and first quarter 2020 by category (in thousands):

	Three months ended March 31,
	2021		2020		Increase/(Decrease)
Patent administration and licensing	$	36,574	$	40,108	$	(3,534)	(9)	%
Development	22,583		18,818		3,765		20	%
Selling, general and administrative	11,217		12,603		(1,386)		(11)	%
Total operating expenses	$	70,374	$	71,529	$	(1,155)	(2)	%

Operating expenses decreased to $70.4 million in first quarter 2021 from $71.5 million in first quarter 2020. The $1.2 million decrease in total operating expenses was primarily due to changes in the following items (in thousands):

	Increase/(Decrease)
Patent maintenance	$	(2,486)
Corporate initiatives	(1,952)
Intellectual property enforcement and non-patent litigation	1,247
Personnel-related costs, including performance-based compensation	2,253
Other	(217)
Total decrease in operating expenses	$	(1,155)

The $1.2 million decrease in operating expenses was primarily driven by a $2.5 million decrease in patent maintenance costs due to ongoing efforts to effectively manage our patent portfolio size and a $2.0 million decrease due to first quarter 2020 corporate initiatives as part of ongoing efforts to optimize our cost structure, including the closing of our San Diego office. These decreases were partially offset by a $1.2 million increase in intellectual property enforcement costs, primarily driven by the on-going Lenovo litigation and a $2.3 million increase in personnel-related costs.

Patent Administration and Licensing Expense: The $3.5 million decrease in patent administration and licensing expense primarily resulted from the above-noted decreases related to patent maintenance, as well as reduced travel costs driven by COVID-19 restrictions. These decreases were partially offset by the increase in intellectual property enforcement and non-patent litigation costs discussed above.

Development Expense: The $3.8 million increase in development expense primarily resulted from the above-mentioned increases in personnel-related costs, as well as increases in consulting costs to supplement our research efforts. These increases were partially offset by reduced travel costs driven by COVID-19 restrictions.

Selling, General and Administrative Expense: The $1.4 million decrease in selling, general and administrative expense was primarily due to the corporate initiatives discussed above.

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Non-Operating Expense

The following table compares first quarter 2021 non-operating expense to first quarter 2020 non-operating expense (in thousands):

	Three months ended March 31,
	2021		2020		Change
Interest expense	$	(6,990)	$	(10,545)	$	3,555	34	%
Interest and investment income	553		2,877		(2,324)		(81)	%
Other income, net	171		3,146		(2,975)		(95)	%
Total non-operating expense	$	(6,266)	$	(4,522)	$	(1,744)	(39)	%

The change in non-operating expense between periods was driven by a first quarter 2020 net $4.4 million gain, primarily resulting from observable price changes of one of our long-term strategic investments, $3.1 million of reduced non-cash interest expense due to the removal of the accretion of the debt discount on the 2024 Notes resulting from the adoption of ASU 2020-06, $1.0 million of reduced interest expense due to the repayment of the 2020 Notes in first quarter 2020, and a $1.9 million gain in first quarter 2021 on a contract termination. Additionally, Interest and investment income decreased $2.3 million in the three months ended March 31, 2021 due to reduced rates of return on our short-term investments.

Income taxes

In first quarter 2021 and 2020, we had an effective tax rate of 30.8% and 1,144.7%, respectively. The effective tax rate in both periods was impacted by losses in certain jurisdictions where the Company presently has recorded a valuation allowance against the related tax benefit. Excluding this valuation allowance, our first quarter 2021 and 2020 effective tax rate would have been 12.0% and 65.5%, respectively.

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 certain 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,” “estimate,” “expect,” “project,” “intend,” “plan,” “forecast,” "believe," "could," "would," "should," "if," "may," "might," "future," "target," “goal,” "trend," "seek to," "will continue," "predict," "likely," "in the event," variations of any such words 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:

•Our expectations regarding the potential effects of new accounting standards on our financial position, results of operations or cash flows;

•Our expectation that the amortization of dynamic fixed-fee royalty payments will reduce our March 31, 2021 deferred revenue balance over the next twelve months;

•Our expectations with respect to revenue to be recognized based on contracts signed and committed Dynamic Fixed-Fee Agreement payments as of March 31, 2021;

•Our expectations and estimations regarding the income tax effects, and the impact on the Company, of the Tax Reform Act, including our forecasted net benefit related to our income qualifying as FDII;

•Our expectations with respect to anticipated tax refunds to be received from amending certain tax returns;

•The timing, outcome and impact of, and plans, expectations and beliefs with respect to, our various litigation, arbitration, regulatory and administrative matters;

•Our belief that we have the ability to obtain additional liquidity through debt and equity financings;

•Our expectations with respect to the impact of the Technicolor Acquisitions on our financial statements and our business;

•Our belief that our available sources of funds will be sufficient to finance our operations, capital requirements, debt obligations, existing stock repurchase program and dividend program for the next twelve months;

•Our expectation that we will continue to pay dividends comparable to our quarterly $0.35 per share cash dividend in the future;

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•Our expectations regarding our customers’ ability to continue to pay fixed fee payments owed to us despite the ongoing COVID-19 pandemic; and

•Our expectations regarding the potential effects of the ongoing COVID-19 pandemic on our financial position, results of operations and cash flows.

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 2020 Form 10-K. We undertake no obligation to revise or update publicly 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 2020 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 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 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 March 31, 2021, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS.

See Note 5, “Litigation and Legal Proceedings,” to the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a description of legal proceedings, which is incorporated herein by reference.

Item 1A. RISK FACTORS.

Reference is made to Part I, Item 1A, “Risk Factors” included in our 2020 Form 10-K for information concerning risk factors, which should be read in conjunction with the factors set forth in the 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. There have been no material changes with respect to the risk factors disclosed in our 2020 Form 10-K. You should carefully consider such factors, which could materially affect our business, financial condition or future results. The risks described in the 2020 Form 10-K are not the only risks facing our 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.

Issuer Purchases of Equity Securities

The following table provides information regarding the Company’s purchases of its common stock during the first quarter 2021.

Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs (3)
January 1, 2021 - January 31, 2021	—	$	—	—	$	71,464,670
February 1, 2021 - February 28, 2021	—	$	—	—	$	71,464,670
March 1, 2021 - March 31, 2021	91,167	$	63.05	91,167	$	65,715,055
Total	91,167	$	63.05	91,167	$	65,715,055

(1) Total number of shares purchased during each period reflects share purchase transactions that were completed (i.e., settled) during the period indicated.

(2) Shares were purchased pursuant to the 2014 Repurchase Program, $300 million of which was authorized by the Company’s Board of Directors in June 2014, with an additional $100 million authorized by the Company’s Board of Directors in each of June 2015, September 2017, December 2018, and May 2019, respectively. The 2014 Repurchase Program has no expiration date. The Company may repurchase shares under the 2014 Repurchase Program through open market purchases, pre-arranged trading plans, or privately negotiated purchases.

(3) Amounts shown in this column reflect the amounts remaining under the 2014 Repurchase Program.    

Item 4. MINE SAFETY DISCLOSURES.

Not applicable.

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Item 6. EXHIBITS.

The following is a list of exhibits filed with this Quarterly Report on Form 10-Q:

Exhibit Number	Exhibit Description
10.1	Retirement and Transition Agreement and Release, dated as of March 16, 2021, by and between William Merritt and InterDigital, Inc.
10.2	Offer Letter and Term Sheet, dated as of March 13, 2021, by and between Liren Chen and InterDigital, Inc.
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
32.1+	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.
32.2+	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350.
101.INS	Inline Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline Schema Document
101.CAL	Inline Calculation Linkbase Document
101.DEF	Inline Definition Linkbase Document
101.LAB	Inline Labels Linkbase Document
101.PRE	Inline Presentation Linkbase Document
104	Inline Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101)

______________________________

+ This exhibit will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such exhibit will not be deemed to be incorporated by reference into any filing under the Securities Act or Securities Exchange Act, except to the extent that InterDigital, Inc. specifically incorporates it by reference.

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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: May 6, 2021	/s/ LIREN CHEN
	Liren Chen
	President and Chief Executive Officer
Date: May 6, 2021	/s/ RICHARD J. BREZSKI
	Richard J. Brezski
	Chief Financial Officer

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EX-10.1

RETIREMENT & TRANSITION AGREEMENT AND RELEASE

This Retirement & Transition Agreement and Release (“Agreement”) is made by and between William J. Merritt (“Executive”) and InterDigital, Inc. (the “Company”) (collectively referred to as the “Parties” or individually referred to as a “Party”).

RECITALS

WHEREAS, Executive was employed by the Company as its President and Chief Executive Officer;

WHEREAS, Executive signed a Nondisclosure and Assignment of Ideas Agreement with InterDigital Communications, LLC, on October 15, 2007, which was subsequently assigned to the Company on January 1, 2013 (the “Confidentiality Agreement”);

WHEREAS, Executive signed an Indemnity Agreement with InterDigital Communications Corporation on March 19, 2003, which was subsequently assigned to the Company on July 7, 2007 (“Indemnity Agreement”);

WHEREAS, the Company and Executive have entered into certain stock option agreements granting Executive the option to purchase shares of the Company’s common stock, as well as certain restricted stock unit agreements granting Executive the right to receive shares of the Company’s common stock, both subject to the terms and conditions of the applicable Company equity plan and the stock option agreement or restricted stock purchase agreement applicable to such option grant or restricted stock unit award (collectively the “Stock Agreements”);

WHEREAS, Executive has participated in that certain short-term incentive plan (“STIP”) and Deferred Compensation Plan, effective as of June 12, 2013 (“NQDC”);

WHEREAS, Executive signed an Amended and Restated Employment Agreement with the Company on January 21, 2013, which expired on January 21, 2019, per the Notice of Non-renewal dated October 16, 2018;

WHEREAS, Executive signed a Participation Agreement with the Company accepting participation in the InterDigital, Inc. Executive Severance and Change in Control Policy on October 22, 2018 (“Participation Agreement”);

WHEREAS, Executive is retiring and separating from Executive’s employment with the Company effective as of April 5, 2021 (the “Retirement Date”);

WHEREAS, in order to ensure an orderly transition of responsibilities to successor, Executive has agreed to provide certain Transition Services, as defined herein;

WHEREAS, for years of service and Transition Services, as defined below, the Parties have agreed to a retirement payment comprised of the pro-rata portion of any unvested time-based restricted stock units (“RSUs”) vesting as soon as administratively practical following Retirement Date;

WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that Executive may have against the Company and any of the Releasees as defined below, including, but not limited to, any and all claims arising out of or in any way related to Executive’s employment with or separation from the Company;

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NOW, THEREFORE, in consideration of the mutual promises made herein, the Company and Executive hereby agree as follows:

COVENANTS

1.Consideration. In consideration of Executive’s execution of this Agreement and Executive’s fulfillment of all of its terms and conditions, and provided that Executive does not revoke the Agreement under Section 7 below, the Company agrees as follows:

a.Retirement & Transition Payment. For years of service provided by the Executive and Transition Services, as described below, the Company will provide a pro-rata vesting of unvested time-based RSUs as of Retirement Date.

b.Transition Services. In exchange for a portion of the Retirement & Transition Payment, InterDigital has requested and Executive has agreed to provide limited transition assistance services to the Company (the “Transition Services”) on a part-time basis following the Retirement Date. The Transition Services shall be provided for a period of 100 calendar days after the Retirement Date (the “Transition Period”). For the avoidance of doubt, the Parties agree that a break in service occurred as of the Retirement Date for purposes of the Stock Agreements. The nature, timing, location, and scope for the Transition Services will be (i) mutually determined by the Parties at such time, (ii) within reasonable market practices for such transition services, and (iii) commensurate with Executive’s skills and experience. In no event shall Executive provide Transition Services for more than two (2) calendar days per week. All requests for Transition Services shall be made by the Chairman of the Board of Directors, General Counsel or CEO of the Company.

a.General. Executive acknowledges that without this Agreement, Executive is otherwise not entitled to the Retirement & Transition Payment.

2.Officer Resignations. Effective as of the Retirement Date, Executive agrees to resign from all positions Executive holds in the Company and all of its Related Entities (as defined below in Section 6).

3.Stock. The Parties acknowledge that Exhibit A hereto sets forth and reflects those stock options and restricted stock units held by Executive as of the Retirement Date, but which number shall in all instances be governed by the terms of the applicable Stock Agreements, except as amended by this Agreement. The Parties agree that for purposes of determining the number of shares of the Company’s common stock that Executive is entitled to purchase from the Company pursuant to the exercise of outstanding options, Executive will be considered to have vested only up to the Retirement Date; any unvested stock options shall forfeit immediately upon the Retirement Date (for clarity any stock options scheduled to vest prior to the Retirement Date shall vest in accordance with the terms of the Stock Agreements). The exercise of Executive’s vested options shall continue to be governed by the terms and conditions of the Company’s Stock Agreements. The Stock Agreements provide that Executive’s vested options shall be exercisable for 180 days following the Retirement Date.

4.Benefits. Executive’s health insurance benefits as an employee shall cease on the last day of the month in which the Retirement Date occurs, subject to Executive’s right to continue Executive’s health insurance under COBRA. Executive’s participation in all benefits and incidents of employment, including, but not limited to, vesting in stock options, and the accrual of bonuses, vacation, and paid time off, will cease as of the Retirement Date.

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5.Payment of Salary and Receipt of All Benefits. Executive acknowledges and represents that, other than the consideration set forth in this Agreement, the Company and its agents have paid or provided all salary, wages, bonuses, STIP and LTCP payments, accrued vacation/paid time off, notice periods, premiums, leaves, housing allowances, relocation costs, interest, severance, outplacement costs, fees, reimbursable expenses, commissions, stock, stock options, vesting, and any and all other benefits and compensation due to Executive.

6.Release of Claims. Executive agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to Executive by the Company and its current and former officers, directors, employees, agents, investors, attorneys, shareholders, administrators, affiliates, benefit plans, plan administrators, professional employer organization or co-employer, insurers, trustees, subsidiaries, “Related Entities”, predecessor and successor corporations and assigns (collectively, the “Releasees”). “Related Entities” shall include, but not be limited to, any and all past, present or future entities, which, directly or indirectly, control, are controlled by or are under common control of or with, InterDigital, Inc. Executive, on Executive’s own behalf and on behalf of Executive’s respective heirs, family members, executors, agents, and assigns, hereby and forever releases the Releasees from, and agrees not to sue concerning, or in any manner to institute, prosecute, or pursue, any claim, complaint, charge, duty, obligation, demand, or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Executive may possess against any of the Releasees arising from any omissions, acts, facts, or damages that have occurred up until and including the Effective Date of this Agreement, including, without limitation:

a.    any and all claims relating to or arising from Executive’s employment relationship with the Company and the termination of that relationship;

b.    any and all claims relating to, or arising from, Executive’s right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state or federal law;

c.    any and all claims for wrongful discharge of employment; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract, both express and implied; breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; fraud; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; conversion; and disability benefits;

d.    any and all claims for violation of any federal, state, or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Equal Pay Act; the Fair Labor Standards Act; the Fair Credit Reporting Act; the Age Discrimination in Employment Act of 1967; the Older Workers Benefit Protection Act;the Employee Retirement Income Security Act of 1974; the Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act; the Uniformed Services Employment and Reemployment Rights Act; Delaware Discrimination in Employment Law; Delaware Handicapped Persons Employment Protection Act; Delaware Equal Pay Law; Delaware Whistleblowers' Protection Act; Delaware Minimum Wage Act; Delaware Wage Payment and Collection Act; Pennsylvania Human Relations Act, 43 Pa. Cons. Stat. § 951 et seq.; Pennsylvania Equal Pay Law, as amended, 43 Pa. Cons. Stat. § 336.1 et seq.; Pennsylvania Wage Payment and Collection Law, as amended, 43 Pa. Cons. Stat. § 260.1 et seq.; Pennsylvania Minimum Wage Act of 1968, 43 Pa. Cons. Stat. § 333.101 et seq.; Pennsylvania Worker and Community Right-to-Know Act, 41 Pa. Cons. Stat. § 7301 et seq.;

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e.    any and all claims for violation of the federal or any state constitution;

f.    any and all claims arising out of any other laws and regulations relating to employment or employment discrimination;

g.    any claim for any loss, cost, damage, or expense arising out of any dispute over the non-withholding or other tax treatment of any of the proceeds received by Executive as a result of this Agreement; and

h.    any and all claims for attorneys’ fees and costs.

Executive agrees that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released. This release does not extend to any obligations incurred under this Agreement. This release does not release claims that cannot be released as a matter of law, including any Protected Activity (as defined below). This release does not extend to any right Executive may have to unemployment compensation benefits or workers’ compensation benefits. Executive represents that Executive has made no assignment or transfer of any right, claim, complaint, charge, duty, obligation, demand, cause of action, or other matter waived or released by this Section.

7.Acknowledgment of Waiver of Claims under ADEA. Executive acknowledges that Executive is waiving and releasing any rights Executive may have under the Age Discrimination in Employment Act of 1967 ("ADEA"), and that this waiver and release is knowing and voluntary. Executive agrees that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the Effective Date of this Agreement. Executive acknowledges that the consideration given for this waiver and release is in addition to anything of value to which Executive was already entitled. Executive further acknowledges that Executive has been advised by this writing that: (a) Executive should consult with an attorney prior to executing this Agreement; (b) Executive has twenty-one (21) days within which to consider this Agreement; (c) Executive has seven (7) days following Executive’s execution of this Agreement to revoke this Agreement; (d) this Agreement shall not be effective until after the revocation period has expired; and (e) nothing in this Agreement prevents or precludes Executive from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties, or costs for doing so, unless specifically authorized by federal law. In the event Executive signs this Agreement and returns it to the Company in less than the 21-day period identified above, Executive hereby acknowledges that Executive has freely and voluntarily chosen to waive the time period allotted for considering this Agreement. Executive acknowledges and understands that revocation must be accomplished by a written notification to the undersigned Company representative that is received prior to the Effective Date. The Parties agree that changes, whether material or immaterial, do not restart the running of the 21-day period.

8.No Pending or Future Lawsuits. Executive represents that Executive has no lawsuits, claims, or actions pending in Executive’s name, or on behalf of any other person or entity, against the Company or any of the other Releasees. Executive also represents that Executive does not intend to bring any claims on Executive’s own behalf or on behalf of any other person or entity against the Company or any of the other Releasees.

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9.Trade Secrets and Confidential Information/Company Property. Executive reaffirms and agrees to observe and abide by the Confidentiality Agreement, specifically including the provisions therein regarding nondisclosure of the Company’s trade secrets and confidential and proprietary information, noncompetition and nonsolicitation of Company employees and customers. Executive agrees that the above reaffirmation and agreement with the Confidentiality Agreement shall constitute a new and separately enforceable agreement to abide by the terms of the Confidentiality Agreement, entered and effective as of the Effective Date. Executive specifically acknowledges and agrees that any violation of the Confidentiality Agreement shall constitute a material breach of this Agreement. Executive’s signature below constitutes Executive’s certification under penalty of perjury that Executive has returned all documents and other items provided to Executive by the Company, developed or obtained by Executive in connection with Executive’s employment with the Company, or otherwise belonging to the Company, including, but not limited to, all passwords to any software or other programs or data that Executive used in performing services for the Company.

10.No Cooperation. Executive agrees that Executive will not knowingly encourage, counsel, or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against any of the Releasees, unless under a subpoena or other court order to do so or as related directly to the ADEA waiver in this Agreement. Executive agrees both to immediately notify the Company upon receipt of any such subpoena or court order, and to furnish, within three (3) business days of its receipt, a copy of such subpoena or other court order. If approached by anyone for counsel or assistance in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints against any of the Releasees, Executive shall state no more than that Executive cannot provide counsel or assistance.

11.Nondisparagement. Executive agrees to refrain from any disparagement, defamation, libel, or slander of any of the Releasees, and agrees to refrain from any tortious interference with the contracts and relationships of any of the Releasees. The Company agrees for itself and the Related Entities that it will not encourage, condone or authorize anyone to make any negative comments or disparaging remarks about Executive and it will specifically instruct its Board members and officers not to disparage or otherwise communicate negative statements or opinions about Executive.

12.Breach. In addition to the rights provided in the “Attorneys’ Fees” section below, Executive acknowledges and agrees that any material breach of this Agreement, unless such breach constitutes a legal action by Executive challenging or seeking a determination in good faith of the validity of the waiver herein under the ADEA, or of any provision of the Confidentiality Agreement shall entitle the Company immediately to recover and/or cease providing the consideration provided to Executive under this Agreement and to obtain damages, except as provided by law, provided, however, that the Company shall not recover One Hundred Dollars ($100.00) of the consideration already paid pursuant to this Agreement and such amount shall serve as full and complete consideration for the promises and obligations assumed by Executive under this Agreement, the Surviving Provision, and the Confidentiality Agreement.

13.No Admission of Liability. Executive understands and acknowledges that this Agreement constitutes a compromise and settlement of any and all actual or potential disputed claims by Executive. No action taken by the Company hereto, either previously or in connection with this Agreement, shall be deemed or construed to be (a) an admission of the truth or falsity of any actual or potential claims or (b) an acknowledgment or admission by the Company of any fault or liability whatsoever to Executive or to any third party.

14.Costs. The Parties shall each bear their own costs, attorneys’ fees, and other fees incurred in connection with the preparation of this Agreement.

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15.ARBITRATION. THE PARTIES AGREE THAT ANY AND ALL DISPUTES ARISING OUT OF THE TERMS OF THIS RETIREMENT AGREEMENT, THEIR INTERPRETATION, EMPLOYEE’S EMPLOYMENT WITH THE COMPANY OR THE TERMS THEREOF, OR ANY OF THE MATTERS HEREIN RELEASED, SHALL BE SUBJECT TO ARBITRATION IN PHILADELPHIA, PENNSYLVANIA, BEFORE JUDICIAL ARBITRATION & MEDIATION SERVICES (“JAMS”), PURSUANT TO ITS EMPLOYMENT ARBITRATION RULES & PROCEDURES (“JAMS RULES”). THE ARBITRATOR MAY GRANT INJUNCTIONS AND OTHER RELIEF IN SUCH DISPUTES. THE ARBITRATOR SHALL ADMINISTER AND CONDUCT ANY ARBITRATION IN ACCORDANCE WITH PENNSYLVANIA LAW, INCLUDING THE PENNSYLVANIA RULES OF CIVIL PROCEDURE, AND THE ARBITRATOR SHALL APPLY SUBSTANTIVE AND PROCEDURAL PENNSYLVANIA LAW TO ANY DISPUTE OR CLAIM, WITHOUT REFERENCE TO ANY CONFLICT-OF-LAW PROVISIONS OF ANY JURISDICTION. TO THE EXTENT THAT THE JAMS RULES CONFLICT WITH PENNSYLVANIA LAW, PENNSYLVANIA LAW SHALL TAKE PRECEDENCE. THE DECISION OF THE ARBITRATOR SHALL BE FINAL, CONCLUSIVE, AND BINDING ON THE PARTIES TO THE ARBITRATION. THE PARTIES AGREE THAT THE PREVAILING PARTY IN ANY ARBITRATION SHALL BE ENTITLED TO INJUNCTIVE RELIEF IN ANY COURT OF COMPETENT JURISDICTION TO ENFORCE THE ARBITRATION AWARD. THE PARTIES TO THE ARBITRATION SHALL EACH PAY AN EQUAL SHARE OF THE COSTS AND EXPENSES OF SUCH ARBITRATION, AND EACH PARTY SHALL SEPARATELY PAY FOR ITS RESPECTIVE COUNSEL FEES AND EXPENSES; PROVIDED, HOWEVER, THAT THE ARBITRATOR SHALL AWARD ATTORNEYS’ FEES AND COSTS TO THE PREVAILING PARTY, EXCEPT AS PROHIBITED BY LAW. THE PARTIES HEREBY AGREE TO WAIVE THEIR RIGHT TO HAVE ANY DISPUTE BETWEEN THEM RESOLVED IN A COURT OF LAW BY A JUDGE OR JURY. NOTWITHSTANDING THE FOREGOING, THIS SECTION WILL NOT PREVENT EITHER PARTY FROM SEEKING INJUNCTIVE RELIEF (OR ANY OTHER PROVISIONAL REMEDY) FROM ANY COURT HAVING JURISDICTION OVER THE PARTIES AND THE SUBJECT MATTER OF THEIR DISPUTE RELATING TO THIS AGREEMENT AND THE AGREEMENTS INCORPORATED HEREIN BY REFERENCE. SHOULD ANY PART OF THE ARBITRATION AGREEMENT CONTAINED IN THIS PARAGRAPH CONFLICT WITH ANY OTHER ARBITRATION AGREEMENT BETWEEN THE PARTIES, THE PARTIES AGREE THAT THIS ARBITRATION AGREEMENT SHALL GOVERN.

16.Tax Consequences. The Company makes no representations or warranties with respect to the tax consequences of the payments and any other consideration provided to Executive or made on Executive’s behalf under the terms of this Agreement. Executive agrees and understands that Executive is responsible for payment, if any, of local, state, and/or federal taxes on the payments and any other consideration provided hereunder by the Company and any penalties or assessments thereon. Executive further agrees to indemnify and hold the Company harmless from any claims, demands, deficiencies, penalties, interest, assessments, executions, judgments, or recoveries by any government agency against the Company for any amounts claimed due on account of (a) Executive’s failure to pay, or Executive’s delayed payment of, federal or state taxes, or (b) damages sustained by the Company by reason of any such claims, including attorneys’ fees and costs.

17.Authority. The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and conditions of this Agreement. Executive represents and warrants that Executive has the capacity to act on Executive’s own behalf and on behalf of all who might claim through Executive to bind them to the terms and conditions of this Agreement. Each Party warrants and represents that there are no liens or claims of lien or assignments in law or equity or otherwise of or against any of the claims or causes of action released herein.

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18.Protected Activity. Executive understands that nothing in this Agreement shall in any way limit or prohibit Executive from engaging for a lawful purpose in any Protected Activity. For purposes of this Agreement, “Protected Activity” shall mean filing a charge, complaint, or report with, or otherwise communicating with, cooperating with or participating in any investigation or proceeding that may be conducted by, any federal, state or local government agency or commission, including the Securities and Exchange Commission, the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, and the National Labor Relations Board (“Government Agencies”). Executive understands that in connection with such Protected Activity, Executive is permitted to disclose documents or other information as permitted by law, and without giving notice to, or receiving authorization from, the Company. Notwithstanding the foregoing, Executive agrees to take all reasonable precautions to prevent any unauthorized use or disclosure of any information that may constitute Company confidential information under the Confidentiality Agreement or the Surviving Provision to any parties other than the relevant Government Agencies. Executive further understands that “Protected Activity” does not include the disclosure of any Company attorney-client privileged communications, and that any such disclosure without the Company’s written consent shall constitute a material breach of this Agreement.

19.No Representations. Executive represents that Executive has had an opportunity to consult with an attorney and has carefully read and understands the scope and effect of the provisions of this Agreement. Executive has not relied upon any representations or statements made by the Company that are not specifically set forth in this Agreement.

20.Severability. In the event that any provision or any portion of any provision hereof or any surviving agreement made a part hereof becomes or is declared by a court of competent jurisdiction or arbitrator to be illegal, unenforceable, or void, this Agreement shall continue in full force and effect without said provision or portion of provision.

21.Attorneys’ Fees. Except with regard to a legal action challenging or seeking a determination in good faith of the validity of the waiver herein under the ADEA, in the event that either Party brings an action to enforce or effect its rights under this Agreement, the prevailing Party shall be entitled to recover its costs and expenses, including the costs of mediation, arbitration, litigation, court fees, and reasonable attorneys’ fees incurred in connection with such an action.

22.Entire Agreement. This Agreement represents the entire agreement and understanding between the Company and Executive concerning the subject matter of this Agreement and Executive’s employment with and separation from the Company and the events leading thereto and associated therewith, and supersedes and replaces any and all prior agreements and understandings concerning the subject matter of this Agreement and Executive’s relationship with the Company, including the Participation Agreement, with the exception of the Confidentiality Agreement, the Indemnity Agreement and the Stock Agreements.

23.No Oral Modification. This Agreement may only be amended in a writing signed by Executive and the Company’s General Counsel.

24.Governing Law. This Agreement shall be governed by the laws of the Commonwealth of Pennsylvania, without regard for choice-of-law provisions. Executive consents to personal and exclusive jurisdiction and venue in the Commonwealth of Pennsylvania.

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25.Effective Date. Executive understands that this Agreement shall be null and void if not executed by Executive, and returned to the Company, within the twenty-one (21) day period set forth above. Executive has seven (7) days after Executive signs this Agreement to revoke it. This Agreement will become effective on the later of (a) the eighth (8th) day after Executive signed this Agreement, so long as it has been signed by the Parties and has not been revoked by Executive before that date, or (b) the date it has been signed by both Parties (the “Effective Date”).

26.Counterparts. This Agreement may be executed in counterparts and each counterpart shall be deemed an original and all of which counterparts taken together shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned. The counterparts of this Agreement may be executed and delivered by facsimile, photo, email PDF, Docusign/Echosign or a similarly accredited secure signature service, or other electronic transmission or signature. This Agreement may be executed in one or more counterparts, and counterparts may be exchanged by electronic transmission (including by email), each of which will be deemed an original, but all of which together constitute one and the same instrument.

27.Section 409A. It is intended that this Agreement comply with, or be exempt from, Code Section 409A and the final regulations and official guidance thereunder (“Section 409A”) and any ambiguities herein will be interpreted to so comply and/or be exempt from Section 409A. The separation payment set forth in Section 1.c is intended to constitute deferred compensation for purposes of Section 409A and comply with Section 409A pursuant to Treasury Regulation Section 1.409A-3(i)(1). Each payment and benefit to be paid or provided under this Agreement is intended to constitute a series of separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations. The Company and Executive will work together in good faith to consider either (i) amendments to this Agreement; or (ii) revisions to this Agreement with respect to the payment of any awards, which are necessary or appropriate to avoid imposition of any additional tax or income recognition prior to the actual payment to Executive under Section 409A. In no event will the Company reimburse Executive for any taxes that may be imposed on Executive as a result of Section 409A.

28.Voluntary Execution of Agreement. Executive understands and agrees that Executive executed this Agreement voluntarily, without any duress or undue influence on the part or behalf of the Company or any third party, with the full intent of releasing all of Executive’s claims against the Company and any of the other Releasees. Executive acknowledges that:

(a)    Executive has read this Agreement;

(b)    Executive has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of Executive’s own choice or has elected not to retain legal counsel;

(c)    Executive understands the terms and consequences of this Agreement and of the releases it contains; and

(d)    Executive is fully aware of the legal and binding effect of this Agreement.

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.

	WILLIAM J. MERRITT, an individual
Date: March 16, 2021	/s/ William J. Merritt
	William J. Merritt
	INTERDIGITAL, INC.
Date: March 16, 2021	/s/ Richard Gulino
	Richard Gulino
	Chief Legal Officer

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EX-10.2

March 13, 2021

Liren Chen

Dear Liren:

On behalf of InterDigital, Inc. (“InterDigital”), I am pleased to offer you the opportunity to join InterDigital as President & Chief Executive Officer. You will be a member of the InterDigital Board of Directors. You will report to our Board of Directors.

Start Date: Your start date will be April 5, 2021. You agree to devote your full business time, attention and best efforts to the performance of your duties and to the furtherance of InterDigital’s interest.

Location: You will be primarily based in an InterDigital facility to be mutually agreed upon; subject, however, to reasonable business travel to or work in other countries or regions consistent with your duties as President & Chief Executive Officer of InterDigital.

Remuneration: Your annual base salary will be $690,000, which will be paid in bi-weekly installments, less taxes and other deductions as required by law or elected by you for benefits coverage, 401(k) participation, etc. You have been identified as an exempt employee and you will be paid in accordance with InterDigital’s standard payroll cycle, which occurs every other Friday.

Sign-on Cash Bonus: You will receive a sign-on cash bonus in the amount of $1,500,000, less taxes and other deductions as required by law, payable in three (3) equal installments as follows:

1/3 upon Start Date (with first paycheck)

1/3 upon 6-month anniversary of Start Date

1/3 upon 1-year anniversary of Start Date

You must be employed at the time of payment to receive the installment, provided, however, that if you are involuntarily terminated without Cause (as defined in the Term Sheet attached hereto as Appendix A), resign for Good Reason (as defined in the attached Term Sheet), die or become disabled, then payment of the remaining installment(s), as applicable, shall be made as soon as practicable (but in no event later than 14 days) following your termination.

Annual Incentive: You will be eligible to participate in InterDigital’s annual bonus plan (currently referred to as the InterDigital Short-Term Incentive Plan (“STIP”))1. Your target STIP amount will be 100% of your annual base salary and your maximum STIP payout will be 200% of your annual base salary. Payouts under the STIP are determined based upon a combination of personal and company performance and are contingent upon your continued employment through the end of the calendar year to which the bonus relates. The STIP performance goals and payouts for the 2021 calendar year are set forth on Appendix B hereto.

Long Term Incentive: You will be eligible to participate in InterDigital’s Long Term Compensation Program (“LTCP”), pursuant to the terms and conditions of the 2017 InterDigital Stock Plan, as amended. For the 2021

1 InterDigital reserves complete and sole discretion to determine whether any bonuses will be paid and if so, to set any eligibility criteria, the amount of bonuses (if any) and the timing of bonus payments (if any).

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LTCP Cycle2, you will receive equity awards with a target value of $3,300,000, allocated as follows and as further detailed (including as to vesting schedule and treatment on termination of employment) in the attached Term Sheet:

1/3 granted in time-based Restricted Stock Units (“RSUs”)

1/3 granted in performance based Restricted Stock Units (“PSUs”)

1/3 granted in performance-based options

The number of RSUs and PSUs will each be determined by dividing $1,100,000 by the 10 trading-day average closing price of InterDigital’s common stock for the period that ends on the last trading day before the date of this offer letter (the “Conversion Price”). The number of performance-based options will be determined in accordance with InterDigital’s usual equity award valuation methodology, but assuming for this purpose a fair market value per share of InterDigital common stock equal to the Conversion Price.

New Hire Equity Award: You will receive a new hire equity award pursuant to the terms and conditions of the 2017 InterDigital Stock Plan, as amended, with a value of $7,500,000, allocated as follows:

$3,500,000 time-based RSUs, that will vest in 3 equal installments on the anniversary of the Start Date, subject to continued employment through the vest date and as further described in the attached Term Sheet;

$2,000,000 performance based RSUs vesting, if at all, based on achievement of the Diversified Revenue Platform Goals, as described in the attached Term Sheet and Appendix C hereto (the “Diversified Revenue Platform Goals”), and continued employment through the vest date and as further described in the attached Term Sheet;

$2,000,000 in performance-based options with a 10 year term, vesting, if at all, based on the achievement of the Diversified Revenue Platform Goals, and continued employment through the vest date and as further described in the attached Term Sheet.

New hire equity awards will be granted the later of the 15th of the month of commencement of employment or 3 days post-employment commencement. The attached Term Sheet describes additional terms of the sign-on equity award, including relating to treatment on termination of employment. The number of time-based RSUs will be determined by dividing $3,500,000 by the Conversion Price, the number of performance-based RSUs will be determined by dividing $2,000,000 by the Conversion Price, and the number of performance-based options will be determined in accordance with InterDigital’s usual equity award valuation methodology, but assuming a fair market value per share of InterDigital common stock equal to the Conversion Price.

Relocation: You will receive relocation assistance through InterDigital’s relocation service provider, Global Mobility Solutions, when needed to have your primary place of residence located within commuting distance of an agreed InterDigital facility.

Severance: You will be eligible to participatein Executive Severance & Change in Control Plan pursuant to the terms and conditions thereof, with such modified terms as further described in the attached Term Sheet.

2 LTCP participation target and allocation among components is approved annually by the Compensation Committee of InterDigital, Inc.

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InterDigital Deferred Compensation Plan: InterDigital will make a discretionary Company contribution to the InterDigital Deferred Compensation Plan within 10 days of your start date in the amount of $3,000,000, which will vest $1,500,000 on your start date, and $500,000 on each of January 1, 2022, January 1, 2023, and January 1, 2024, subject to accelerated vesting as outlined on the attached Term Sheet.

Documentation confirming distribution from current employer’s deferred compensation program upon separation required prior to contribution by InterDigital.

Employee Benefits: As a regular, full-time employee, you will be eligible to participate in the company’s health and welfare benefit programs in effect from time to time as are made available to other similarly situated employees of InterDigital, and in accordance with and subject to the terms and conditions of such plans and programs.

Paid Time Off: In addition, you will be eligible to accrue 25 days of paid time off (PTO) per year (exclusive of regular holidays). Accrued but unused PTO will carry over from year-to-year and will be cashed out in full upon your termination for any reason.

Employment at Will: Your employment with InterDigital is “at-will” and may be terminated by you or InterDigital at any time, for any reason or for no reason at all, and with or without prior notice, subject, if applicable, to the terms of the InterDigital Executive Severance and Change of Control Plan and the attached Term Sheet. An Executive Severance and Change in Control Policy Participation Agreement will be provided for your execution.

Pre-Employment Requirements: This offer of employment is contingent upon the following:

1.Verification of your right to work in the United States, as demonstrated by your completion of the I-9 form upon hire and your submission of acceptable documentation (as noted on the I-9 form) verifying your identity and work authorization within three days of starting employment.

2.Your completion of the attached Export Control Questionnaire.

3.Your execution of our Non-Disclosure and Assignment of Ideas Agreement (“NDAIA”). During your employment with InterDigital, you will have access to confidential and proprietary information, therefore, in order to have access to such information, you are required to sign our NDAIA. A copy of the NDAIA is enclosed for your review.

4.Your acknowledgment of InterDigital’s Code of Ethics. A copy of the Code of Ethics is enclosed for your review.

This offer will be withdrawn if any of the above conditions are not satisfied.

The appendices hereto are incorporated herein by reference in their entirety and made a part hereof.

By accepting this offer, you confirm that you (i) are able to accept this job and carry out the work that it would involve without breaching any legal restrictions on your activities, such as restrictions imposed by a current or former employee, and (ii) have not taken any actions which could give rise to any claims by your current or any former employer against InterDigital. You also confirm that you will inform InterDigital about any such restrictions and provide InterDigital with as much information about them as possible, including any agreements between you and your current or former employer describing such restrictions on your activities.

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InterDigital does not want to benefit from any proprietary or other information, in any form, that you are under a duty not to use or divulge, whether it be from your current employer or any other person or entity. Therefore, you further confirm that you will not remove or take any documents or proprietary data or materials of any kind, electronic or otherwise, with you from your current or former employer to InterDigital without written authorization from your current or former employer, nor will you use or disclose any such confidential information during the course and scope of your employment with InterDigital. Therefore, if you have any questions about the ownership of particular documents or other information, discuss such questions with your former employer before removing or copying the documents or information. We further urge you to contact the appropriate officials at your current employer as soon as possible in order that they can determine the appropriate security measures pertaining to your access to company information (if they so desire) to assure themselves regarding any unauthorized use or disclosure of information.

We are excited at the prospect of you joining our organization and look forward to your acceptance of this offer. If you accept the terms of this offer, please sign below.

Sincerely,

/s/ Melissa Leneis

InterDigital, Inc.

Melissa Leneis

Chief Human Resources Officer

I have read and understood the provisions of this offer of employment, and I accept the above offer.

SIGNED: /s/ Liren Chen                  Date: 3/13/2021

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Appendix A

Term Sheet

{Attached}

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Chief Executive Officer Terms of Employment
Name	Liren Chen (“Executive”)
Employing Entity	InterDigital, Inc.
Title	President and Chief Executive Officer
Board of Directors	Member of Board of Directors of InterDigital, Inc.
Start Date	April 5, 2021
Principal Place of Employment	An InterDigital facility to be mutually agreed upon.
Base Salary	$690,000
Short Term Incentive Plan (“STIP”)	Annual Bonus (“STIP”) target of at least 100% annual base salary; payouts under the STIP are determined based upon a combination of personal and company performance and are contingent upon your continued employment through the end of the calendar year. Maximum bonus payout is 200% of target based on superior achievement.
Sign-on Cash Bonus	$1,500,000 payable in three (3) equal installments as follows: 1/3 upon start date (with first paycheck) 1/3 upon 6-month anniversary of start date 1/3 1-year anniversary of start date Must be employed at time of payment to receive installment, provided, however, that if Executive is involuntarily terminated without Cause (defined below), resigns for Good Reason (defined below), dies or becomes disabled, then payment of the remaining installment (if applicable) shall be made upon Executive’s termination.

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Participation in the Long-Term Compensation Plan (“LTCP”)

A 2021 Long Term Incentive target of $3,300,000, allocated as follows*: 1/3 granted in time-based RSUs that will vest in three (3) equal installments, on the anniversary of grant date; 1/3 granted in performance-based RSUs, vesting, if at all, based on achievement of the 2021 LTCP Goal(s) and continued employment with InterDigital through vest date; and 1/3 granted in performance-based stock options with a 10-year term, vesting, if at all, based on achievement of the 2021 LTCP Goal(s) and continued employment with InterDigital through vest date; additionally, shares acquired upon exercise must be held for a period of 2 years following the date of vesting. Goal achievement for performance based RSUs and options at threshold will result in 50% payout; at target will result in 100% payout; and at maximum will result in 200% payout; achievement between the threshold and target or target and maximum will result in a payout determined by linear interpolation. 2021 LTCP Goal(s) will be finalized in Q1-2021 and will measure achievement of performance goals on December 31, 2023 and/or December 31, 2025; long-term compensation goals typically have a 3 to 5 year performance period and vest by March 15 of the year following the end of the performance period. In the event of termination without Cause (defined below), for Good Reason (defined below), death or disability, annual LTCP awards will vest as follows3: Time-based RSUs will vest on a pro-rated basis; and Performance-based RSUs and options will vest on a pro-rated basis, if termination without Cause, resignation for Good Reason, death or disability occurs during the last year of the performance period, based on actual achievement. In the event of termination without Cause (defined below), for Good Reason (defined below), death or disability, in connection with or during 24 months following a change in control, annual LTCP awards will vest as follows: Time-based RSUs will vest in full; and Performance-based RSUs and options will vest in full, with performance deemed satisfied at the greater of “target” or actual achievement (as measured on the date of termination).

3 Each grant is subject to the terms and conditions of the accompanying Award Agreement and 2017 InterDigital Stock Plan.

7

InterDigital Deferred Compensation Plan

Discretionary Company Contribution to the InterDigital Deferred Compensation Plan in the amount of $3,000,000, which will vest $1,500,000 on your start date, and $500,000 on each of January 1, 2022, January 1, 2023, and January 1, 2024; provided, however that vesting will accelerate in full the event of termination without Cause (defined below), for Good Reason (defined below), death or disability. Contribution invested in investment options eligible as part of the InterDigital Deferred Compensation Program which are similar to those under our 401(k) plan and subject to the terms and conditions of the InterDigital Deferred Compensation Program. Company stock is not an available investment option included in the Deferred Compensation Program.

New Hire Equity Award

Equity award of $7,500,000, allocated as follows: $3,500,000 time-based RSUs, that will vest in 3 equal installments on the anniversary of start date; $2,000,000 performance based RSUs vesting, if at all, based on achievement of the Diversified Revenue Platform Goals (as described in the attached) and continued employment through the vest date; $2,000,000 in performance-based options with a 10-year term, vesting, if at all, based on the achievement of the Diversified Revenue Platform Goals and continued employment through the vest date; additionally, shares acquired upon exercise must be held for a period of 2 years following the date of vesting. New Hire equity awards will be granted the later of the 15th of the month of commencement of employment or 3 days post-employment commencement. In the event of termination without Cause (defined below), for Good Reason (defined below), death or disability, new hire time-based RSUs will vest in full upon termination date. In the event of termination without Cause (defined below), for Good Reason (defined below), death or disability, in connection with or during 24 months following a change in control, New Hire equity awards will vest as follows: Time-based RSUs will vest in full; and Performance-based RSUs and options will vest in full, with performance deemed satisfied at the greater of “target” or actual achievement (as measured on the date of termination).

8

Relocation	You will receive relocation assistance through InterDigital’s relocation service provider, Global Mobility Solutions, when needed to have your primary place of residence located within commuting distance of an agreed upon InterDigital facility.
Benefits	You will be eligible to participate in health and welfare benefit programs in effect from time to time as are made available to other similarly situated employees of InterDigital and in accordance with and subject to the terms and conditions of such plans or programs.
Severance	Participation in Executive Severance & Change in Control Plan with the following modified terms: If your employment is terminated without Cause or for Good Reason during the first twelve (12) months of employment with InterDigital, you will receive: •Lump sum payment equal to 300% (300% if such termination occurs within 24 months following Change in Control) of sum of base salary and STIP Target; •18 months (24 months if such termination occurs within 24 months following Change in Control) COBRA premium reimbursement for self and family; •Accelerated vesting of outstanding equity awards as provided in individual award agreements. If your employment is terminated without Cause or for Good Reason between the first and second anniversary of your start date, you will receive: •Lump sum payment equal to 200% (250% if such termination occurs within 24 months following Change in Control) of sum of base salary and STIP Target; •18 months (24 months if such termination occurs within 24 months following Change in Control) COBRA premium reimbursement for self and family; •Accelerated vesting of outstanding equity awards as provided in individual award agreements. If your employment is terminated without Cause or for Good Reason after the second anniversary of your start date, you will receive: •Lump sum payment equal to 200% (250% if such termination occurs within 24 months following Change in Control) of base salary; •18 months (24 months if such termination occurs within 24 months following Change in Control) COBRA premium reimbursement for self and family; •Accelerated vesting of outstanding equity awards as provided in individual award agreements.

9

Definitions: For purposes of this term sheet: “Cause” means (i) acts or omissions constituting gross negligence, recklessness or willful misconduct on the part of Executive with respect to Executive’s obligations to the Company, in each case which results in material harm to the business or reputation of the Company; (ii) Executive’s willful and material breach of his Nondisclosure and Assignment of Ideas Agreement (“NDAIA”); or (iii) Executive’s conviction or entry of a plea of nolo contendere for fraud, misappropriation or embezzlement, any felony, or any crime of moral turpitude; or (iv) the Executive’s willful neglect of duties as determined in the sole and exclusive discretion of the Board of Directors. “Good Reason” means Executive’s termination of his employment in accordance with the next sentence after the occurrence of one or more of the following events without Executive’s express written consent: (i) a material diminution in Executive’s base salary or target bonus opportunity under the incentive plan as in effect for the year in which the termination occurs; (ii) a material diminution in Executive’s title, authority, duties or responsibilities; (iii) a material failure to comply with payment of Executive’s compensation; (iv) relocation of Executive’s primary office more than 50 miles from Executive’s then-current office; or (v) any other action or inaction that constitutes a material breach by the Company of the Executive Severance Policy or NDAIA Good Reason shall only exist if Executive provides a notice of termination for Good Reason to the Company within ninety (90) days after the initial existence of such grounds and the Company has had thirty (60) days from the date on which such notice is provided to cure such circumstances. If the Executive does not terminate his employment for Good Reason within ninety (60) days following the end of such sixty (60) day period within which the Company was entitled to remedy the course of conduct constituting Good Reason but failed to do so, then Executive shall be deemed to have waived his right to terminate for Good Reason with respect to such grounds.

* InterDigital LTCP awards are discretionary and require annual approval from the Compensation Committee. Each grant is subject to the terms and conditions of the accompanying Award Agreement and 2017 InterDigital Stock Plan.

10

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Liren Chen, 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: May 6, 2021	/s/ Liren Chen
	Liren Chen
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Richard J. Brezski, 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: May 6, 2021	/s/ Richard J. Brezski
	Richard J. Brezski
	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 March 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Liren Chen, 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: May 6, 2021	/s/ Liren Chen
	Liren Chen
	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 March 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard J. Brezski, 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: May 6, 2021	/s/ Richard J. Brezski
	Richard J. Brezski
	Chief Financial Officer

XML

Cover Page - shares	3 Months Ended
	Mar. 31, 2021	May 04, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2021
Document Transition Report	false
Entity File Number	1-33579
Entity Registrant Name	INTERDIGITAL, INC.
Entity Incorporation, State or Country Code	PA
Entity Tax Identification Number	82-4936666
Entity Address, Address Line One	200 Bellevue Parkway
Entity Address, Address Line Two	Suite 300
Entity Address, City or Town	Wilmington
Entity Address, State or Province	DE
Entity Address, Postal Zip Code	19809-3727
City Area Code	302
Local Phone Number	281-3600
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	IDCC
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		30,772,057
Entity Central Index Key	0001405495
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
CURRENT ASSETS:
Cash and cash equivalents	$ 396,156	$ 473,474
Short-term investments	488,559	453,173
Accounts receivable	12,502	16,008
Prepaid and other current assets	87,663	84,224
Total current assets	984,880	1,026,879
PROPERTY AND EQUIPMENT, NET	15,626	16,630
PATENTS, NET	407,732	418,343
DEFERRED TAX ASSETS	82,216	80,380
OTHER NON-CURRENT ASSETS, NET	71,420	74,043
Total non-current assets	576,994	589,396
TOTAL ASSETS	1,561,874	1,616,275
CURRENT LIABILITIES:
Accounts payable	8,592	10,979
Accrued compensation and related expenses	21,527	32,413
Deferred revenue	192,422	219,935
Dividends payable	10,766	10,786
Other accrued expenses	19,927	21,649
Total current liabilities	253,234	295,762
LONG-TERM DEBT	419,396	367,992
LONG-TERM DEFERRED REVENUE	112,153	108,069
OTHER LONG-TERM LIABILITIES	44,518	47,886
TOTAL LIABILITIES	829,301	819,709
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Preferred Stock, $0.10 par value, 14,399 shares authorized, 0 shares issued and outstanding	0	0
Common Stock, $0.01 par value, 100,000 shares authorized, 71,476 and 71,389 shares issued and 30,812 and 30,816 shares outstanding	714	714
Additional paid-in capital	738,619	738,481
Retained earnings	1,358,380	1,413,969
Accumulated other comprehensive loss	(254)	(184)
TOTAL SHAREHOLDERS’ EQUITY	2,097,459	2,152,980
Treasury stock, 40,664 and 40,573 shares of common held at cost	1,385,361	1,379,611
Total InterDigital, Inc. shareholders’ equity	712,098	773,369
Noncontrolling interest	20,475	23,197
Total equity	732,573	796,566
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 1,561,874	$ 1,616,275

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2021	Dec. 31, 2020
SHAREHOLDERS’ EQUITY:
Preferred stock, par value (in USD per share)	$ 0.10	$ 0.10
Preferred stock, shares authorized (in shares)	14,399,000	14,399,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in USD per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	71,476,000	71,389,000
Common stock, shares outstanding (in shares)	30,812,000	30,816,000
Treasury stock, shares of common held at cost (in shares)	40,664,000	40,573,000

XML

Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
REVENUES	$ 82,363	$ 76,210
OPERATING EXPENSES:
Patent administration and licensing	36,574	40,108
Development	22,583	18,818
Selling, general and administrative	11,217	12,603
Total Operating expenses	70,374	71,529
Income from operations	11,989	4,681
INTEREST EXPENSE	(6,990)	(10,545)
OTHER INCOME, NET	724	6,023
Income before income taxes	5,723	159
INCOME TAX PROVISION	(1,765)	(1,820)
NET INCOME (LOSS)	3,958	(1,661)
Net loss attributable to noncontrolling interest	(1,613)	(1,777)
NET INCOME ATTRIBUTABLE TO INTERDIGITAL, INC.	$ 5,571	$ 116
NET INCOME PER COMMON SHARE — BASIC (in USD per share)	$ 0.18	$ 0
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC (in shares)	30,836	30,722
NET INCOME PER COMMON SHARE — DILUTED (in USD per share)	$ 0.18	$ 0
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED (in shares)	31,195	30,920
Patent licensing royalties
REVENUES	$ 80,173	$ 72,998
Technology solutions
REVENUES	$ 2,190	$ 3,212

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 3,958	$ (1,661)
Unrealized gain (loss) on investments, net of tax	(70)	32
Comprehensive income (loss)	3,888	(1,629)
Comprehensive loss attributable to noncontrolling interest	(1,613)	(1,777)
Total comprehensive income attributable to InterDigital, Inc.	$ 5,501	$ 148

XML

Condensed Consolidated Statements of Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	Common Stock	Additional Paid-In Capital	Retained Earnings	Retained Earnings Cumulative Effect, Period of Adoption, Adjustment	Accumulated Other Comprehensive Loss	Treasury Stock	Non-Controlling Interest
Beginning balance (in shares) at Dec. 31, 2019			71,268					40,567
Beginning balance at Dec. 31, 2019	$ 786,281		$ 712	$ 727,402	$ 1,412,779		$ (74)	$ (1,379,262)	$ 24,724
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income attributable to InterDigital, Inc.	116				116
Net loss attributable to noncontrolling interest	(1,777)								(1,777)
Net change in unrealized loss on short-term investments	32						32
Dividends declared ($0.35 per share)	(10,763)			84	(10,847)
Exercise of common stock options (in shares)			27
Exercise of common stock options	778		$ 1	777
Issuance of common stock, net (in shares)			27
Issuance of common stock, net	(725)			(725)
Amortization of unearned compensation	2,003			2,003
Repurchase of common stock (in shares)								6
Repurchase of common stock	(349)							$ (349)
Ending balance (in shares) at Mar. 31, 2020			71,322					40,573
Ending balance at Mar. 31, 2020	775,596		$ 713	729,541	1,402,048		(42)	$ (1,379,611)	22,947
Beginning balance (in shares) at Dec. 31, 2020			71,389					40,573
Beginning balance at Dec. 31, 2020	796,566	$ (50,184)	$ 714	738,481	1,413,969	$ (50,184)	(184)	$ (1,379,611)	23,197
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income attributable to InterDigital, Inc.	5,571				5,571
Net loss attributable to noncontrolling interest	(1,613)								(1,613)
Noncontrolling interest distribution	(1,109)								(1,109)
Net change in unrealized loss on short-term investments	(70)						(70)
Dividends declared ($0.35 per share)	(10,766)			210	(10,976)
Exercise of common stock options (in shares)			32
Exercise of common stock options	737		$ 0	737
Issuance of common stock, net (in shares)			55
Issuance of common stock, net	(2,962)			(2,962)
Amortization of unearned compensation	2,153			2,153
Repurchase of common stock (in shares)								91
Repurchase of common stock	(5,750)							$ (5,750)
Ending balance (in shares) at Mar. 31, 2021			71,476					40,664
Ending balance at Mar. 31, 2021	$ 732,573		$ 714	$ 738,619	$ 1,358,380		$ (254)	$ (1,385,361)	$ 20,475

XML

Condensed Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Statement of Stockholders' Equity [Abstract]
Dividends declared (in USD per share)	$ 0.35	$ 0.35
Accounting Standards Update [Extensible List]	iidc:AccountingStandardsUpdate202006Member

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ 3,958	$ (1,661)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	19,861	19,160
Non-cash interest expense, net	1,819	4,637
Non-cash change in fair-value	0	(5,501)
Change in deferred revenue	(23,429)	(39,512)
Deferred income taxes	(1,817)	(751)
Share-based compensation	2,153	2,003
Other	0	1,108
(Increase) decrease in assets:
Receivables	3,507	2,664
Deferred charges and other assets	631	(1,658)
Increase (decrease) in liabilities:
Accounts payable	(291)	(2,477)
Accrued compensation and other expenses	(16,234)	(4,897)
Net cash used in operating activities	(9,842)	(26,885)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments	(173,120)	(110,378)
Sales of short-term investments	137,174	23,701
Purchases of property and equipment	(387)	(1,603)
Capitalized patent costs	(9,602)	(6,256)
Long-term investments	(1,091)	0
Net cash used in investing activities	(47,026)	(94,536)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from exercise of stock options	737	778
Payments on long-term debt	0	(94,909)
Repurchase of common stock	(5,750)	(349)
Non-controlling interest distribution	(1,109)	0
Taxes withheld upon restricted stock unit vestings	(2,962)	(725)
Dividends paid	(10,786)	(10,747)
Net cash used in financing activities	(19,870)	(105,952)
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(76,738)	(227,373)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD	477,663	757,098
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	$ 400,925	$ 529,725

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

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. (individually and/or collectively with its subsidiaries referred to as “InterDigital,” the “Company,” “we,” “us” or “our,” unless otherwise indicated) as of March 31, 2021, the results of our operations for the three months ended March 31, 2021 and 2020 and our cash flows for the three months ended March 31, 2021 and 2020. The accompanying unaudited, condensed consolidated financial statements have been prepared in accordance with the instructions to 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 United States generally accepted accounting principles (“GAAP”). The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP for year-end financial statements. Therefore, these financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (our “2020 Form 10-K”) as filed with the Securities and Exchange Commission (“SEC”) on February 18, 2021. Definitions of capitalized terms not defined herein appear within our 2020 Form 10-K. 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 GAAP 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.

InterDigital has analyzed the impact of the ongoing Coronavirus pandemic (“COVID-19”) on its financial statements as of March 31, 2021.  InterDigital has determined that the changes to its significant judgments and estimates as a result of COVID-19 did not have a material impact on its financial statements.  The potential impact of COVID-19 will continue to be analyzed going forward.

Change in Accounting Policies

There have been no material changes or updates to our existing accounting policies from the disclosures included in our 2020 Form 10-K, except as indicated below in "New Accounting Guidance".

Reclassifications

Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

Supplemental Cash Flow Information

The following table presents additional supplemental cash flow information for the three months ended March 31, 2021 and 2020 (in thousands):

	FOR THE THREE MONTHS ENDED MARCH 31,
SUPPLEMENTAL CASH FLOW INFORMATION:	2021		2020
Interest paid	$	—	$	712
Income taxes paid, including foreign withholding taxes	4,328		2,228
Non-cash investing and financing activities:
Dividend payable	10,766		10,762
Accrued capitalized patent costs and property and equipment	2,096		(1,288)
Unsettled repurchase of common stock	1,994		—

New Accounting Guidance

Accounting Standards Update: Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes" ("ASU 2019-12"). The amendments in this ASU are intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 with early adoption allowed. We adopted this guidance as of January 1, 2021 and the adoption did not have a material impact on our consolidated financial statements.

Accounting Standards Update: Simplifying the Accounting for Convertible Instruments

In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”). The amendments in this ASU are intended to simplify accounting for convertible debt instruments and convertible preferred stock by removing certain accounting models which separate the embedded conversion features from the host contract. ASU 2020-06 also amends certain guidance in ASC 260 on the computation of earnings per share for convertible instruments and contracts on an entity’s own equity. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, and early adoption is permitted for fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective methods of transition. We elected to early adopt this standard on a modified retrospective approach as of January 1, 2021.

This adoption increased Long-term debt by $50.2 million at January 1, 2021, which was comprised of $51.6 million of unamortized interest discount and was partially offset by a net increase of $1.4 million equity component of deferred financing costs. This was due to the standard no longer requiring bifurcation of the embedded conversion feature from the host contract on the 2024 Notes, as defined in Note 7, "Obligations." This adoption also reduced non-cash interest expense starting in 2021 due to the removal of the accretion of the debt discount on the 2024 Notes.

Lastly, the adoption requires the use of the if-converted method of calculating diluted earnings per share rather than the treasury stock method for convertible instruments and requires the inclusion of the potential effect of shares settled in cash or shares in the diluted earnings per share calculation. Due to the reduction in non-cash interest expense, this adoption increased both basic and diluted earnings per share by $0.09 for the three months ended March 31, 2021.

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Revenue

3 Months Ended

Mar. 31, 2021

Revenue from Contract with Customer [Abstract]

REVENUE

REVENUE

Disaggregated Revenue

The following table presents the disaggregation of our revenue for the three months ended March 31, 2021 and 2020 (in thousands):

	Three months ended March 31,
	2021		2020		Increase/(Decrease)
Variable patent royalty revenue	$	7,096	$	5,946	$	1,150	19	%
Fixed-fee royalty revenue	69,296		66,347		2,949		4	%
Current patent royalties a	76,392		72,293		4,099		6	%
Non-current patent royalties b	3,781		705		3,076		436	%
Total patent royalties	80,173		72,998		7,175		10	%
Current technology solutions revenue a	2,190		3,212		(1,022)		(32)	%
Total revenue	$	82,363	$	76,210	$	6,153	8	%

a.    Recurring revenues are comprised of current patent royalties, inclusive of Dynamic Fixed-Fee Agreement royalties, and current technology solutions revenue.

b.    Non-recurring revenues are comprised of non-current patent royalties, which primarily include past patent royalties and royalties from static agreements, as well as patent sales.

During the three months ended March 31, 2021, we recognized $62.7 million of revenue that had been included in deferred revenue as of the beginning of the period. As of March 31, 2021, we had contract assets of $9.4 million and $8.9 million included within "Accounts receivable" and "Other non-current assets, net" in the condensed consolidated balance sheet, respectively. As of December 31, 2020, we had contract assets of $9.7 million and $8.9 million included within "Accounts receivable" and "Other non-current assets, net" in the condensed consolidated balance sheet, respectively.

Contracted Revenue

Based on contracts signed and committed as of March 31, 2021, we expect to recognize the following revenue from Dynamic Fixed-Fee Agreement payments over the term of such contracts (in thousands):

	Revenue
Remainder 2021	$	207,482
2022	238,057
2023	44,469
2024	89
2025 and beyond	—
Total Revenue	$	490,097

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Income Taxes

3 Months Ended

Mar. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

In the three months ended March 31, 2021 and 2020, the Company had an effective tax rate of 30.8% and 1,144.7%, respectively. The effective tax rate in both periods was impacted by losses in certain jurisdictions where the Company presently has recorded a valuation allowance against the related tax benefit. Excluding this valuation allowance, our first quarter 2021 and 2020 effective tax rate would have been 12.0% and 65.5% respectively. During the first quarter 2021 and 2020, the Company recorded discrete net expense of $0.3 million primarily related to share-based compensation.

The effective tax rate reported in any given year will continue to be influenced by a variety of factors, including timing differences between the recognition of book and tax revenue, the level of pre-tax income or loss, the foreign vs. domestic classification of the Company’s customers, and any discrete items that may occur.

During the three months ended March 31, 2021 and 2020, the Company paid approximately $3.6 million and $2.0 million, respectively, in foreign source creditable withholding tax.

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Net Income (Loss) Per Share

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

NET INCOME (LOSS) PER SHARE

NET INCOME (LOSS) PER SHARE

Basic Earnings Per Share ("EPS") is calculated by dividing net income or loss available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if options or other securities with features that could result in the issuance of common stock were exercised or converted to common stock or resulting from the unvested outstanding RSUs. The following tables reconcile the numerator and the denominator of the basic and diluted net income per share computation (in thousands, except for per share data):

	Three months ended March 31,
	2021		2020
Net income applicable to InterDigital, Inc.	$	5,571	$	116
Weighted-average shares outstanding:
Basic	30,836		30,722
Dilutive effect of stock options, RSUs, convertible securities and warrants	359		198
Diluted	31,195		30,920
Earnings per share:
Basic	$	0.18	$	—
Dilutive effect of stock options, RSUs, convertible securities and warrants	—		—
Diluted	$	0.18	$	—

Shares of common stock issuable upon the exercise or conversion of certain securities have been excluded from our computation of EPS because the strike price or conversion rate, as applicable, of such securities was greater than the average market price of our common stock and, as a result, the effect of such exercise or conversion would have been anti-dilutive. Set forth below are the securities and the weighted average number of shares of common stock underlying such securities that were excluded from our computation of EPS for the periods presented (in thousands):

	Three months ended March 31,
	2021	2020
Restricted stock units and stock options	120	260
Convertible securities(a)	—	6,268
Warrants	4,921	6,268
Total	5,041	12,796

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(a)As of December 31, 2020, we made the irrevocable election to settle all conversions of the 2024 Notes through combination settlements of cash and shares of our common stock, with a specified dollar amount of $1,000 per $1,000 principal amount of 2024 Notes and any remaining amounts in shares of our common stock.

Convertible Notes and Warrants

Refer to Note 7, "Obligations," for information about the Company's convertible notes and warrants and related conversion and strike prices. During periods in which the average market price of the Company's common stock is above the applicable conversion price of the Company's convertible notes, or above the strike price of the Company's outstanding warrants, the impact of conversion or exercise, as applicable, would be dilutive and such dilutive effect is reflected in diluted EPS. As a result, in periods where the average market price of the Company's common stock is above the conversion price or strike price, as applicable, under the if-converted method, the Company calculates the number of shares issuable under the terms of the convertible notes and the warrants based on the average market price of the stock during the period, and includes that number in the total diluted shares outstanding for the period.

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Litigation and Legal Proceedings

3 Months Ended

Mar. 31, 2021

Litigation Settlement [Abstract]

LITIGATION AND LEGAL PROCEEDINGS

LITIGATION AND LEGAL PROCEEDINGS

COURT PROCEEDINGS

Lenovo

UK Proceeding

On August 27, 2019, the Company and certain of its subsidiaries filed a claim in the UK High Court against Lenovo Group Limited and certain of its subsidiaries. The claim, as amended, alleges infringement of five of the Company's patents relating to 3G and/or 4G/LTE standards: European Patent (U.K.) Nos. 2,363,008; 2,421,318; 2,485,558; 2,557,714; and 3,355,537.

The UK High Court held case management conferences on October 6, 2020 and December 16, 2020, a disclosure hearing on January 19, 2021 and pre-trial review hearings for the first trial on January 28, 2021 and February 8, 2021. At those hearings, the UK High Court entered a schedule for the technical and non-technical FRAND proceedings. Two technical trials were scheduled for March 2021 and June 2021 and the non-technical FRAND trial is scheduled in January 2022. There are additional technical trials scheduled for the remaining patents following the FRAND trial. The first technical trial was completed, and the Company is awaiting the court’s decision regarding the merits.

District of Delaware Patent Proceeding

On August 28, 2019, the Company and certain of its subsidiaries filed a complaint in the United States District Court for the District of Delaware (the "Delaware District Court") against Lenovo Holding Company, Inc. and certain of its subsidiaries alleging that Lenovo infringes eight of InterDigital's U.S. patents—U.S. Patent Nos. 8,085,665; 8,199,726; 8,427,954; 8,619,747; 8,675,612; 8,797,873; 9,203,580; and 9,456,449—by making, using, offering for sale, and/or selling Lenovo wireless devices with 3G and/or 4G LTE capabilities. As relief, InterDigital is seeking: (a) a declaration that InterDigital is not in breach of its relevant FRAND commitments with respect to Lenovo; (b) to the extent Lenovo does not agree to negotiate a worldwide patent license, does not agree to enter into binding international arbitration to set the terms of a FRAND license, and does not agree to be bound by the FRAND terms to be set by the UK High Court in the separately filed UK proceedings described above, an injunction prohibiting Lenovo from continued infringement; (c) damages, including enhanced damages for willful infringement and supplemental damages; and (d) attorneys’ fees and costs.

On September 16, 2020, the Delaware District Court entered a schedule for the case, setting a patent jury trial for December 5, 2022.On March 8, 2021, the Delaware District Court held a claim construction hearing. The ruling is pending.

District of Delaware Antitrust Proceeding

On April 9, 2020, Lenovo (United States) Inc. and Motorola Mobility LLC filed a complaint in the Delaware District Court against the Company and certain of its subsidiaries. The complaint alleges that the Company defendants have violated Sections 1 and 2 of the Sherman Act in connection with, among other things, their licensing of 3G and 4G standards essential patents ("SEPs"). The complaint further alleges that the Company defendants have violated their commitment to the ETSI with respect to the licensing of 3G and 4G SEPs on FRAND terms and conditions. The complaint seeks, among other things (i) rulings that the Company defendants have violated Sections 1 and 2 of the Sherman Act and are liable for breach of their ETSI FRAND commitments, (ii) a judgment that the plaintiffs are entitled to a license with respect to the Company's 3G and 4G SEPs on FRAND terms and conditions, and (iii) injunctions against any demand for allegedly excessive royalties or enforcement of the Company defendants' 3G and 4G U.S. SEPs against the plaintiffs or their customers via patent infringement proceedings.

On June 22, 2020, the Company filed a motion to dismiss Lenovo's Sherman Act claims with prejudice, and to dismiss Lenovo's breach of contract claim with leave to re-file as a counterclaim in the Company's legal proceeding against Lenovo in the Delaware District Court discussed above. Oral argument on the Company's motion to dismiss was held on October 27, 2020.

On March 24, 2021, the court ruled on the Company’s motion to dismiss. The court dismissed the Sherman Act Section 1 claim without prejudice, denied the motion to dismiss the Sherman Act Section 2 claim, and consolidated the Section 2 and breach of contract claims with Company’s patent proceeding against Lenovo in the Delaware District Court discussed above.

China Proceeding

On April 10, 2020, Lenovo (Beijing) Ltd. and certain of its affiliates filed a complaint against the Company and certain of its subsidiaries in the Beijing Intellectual Property Court (Beijing IP Court) seeking a determination of the FRAND royalty rates payable for the Company's Chinese 3G, 4G and 5G SEPs. On February 20, 2021, the Company filed an application challenging the jurisdiction of the Beijing IP Court to take up Lenovo’s complaint. The jurisdiction challenge remains pending.

Xiaomi

China Proceeding

On August 5, 2020, the Company was informed in writing by Xiaomi Corporation ("Xiaomi") that, on June 3, 2020, Xiaomi Communication Technology Co., Ltd. and certain of its affiliates filed a complaint against the Company and one of its subsidiaries in the Wuhan Intermediate People's Court (the "Wuhan Court") seeking for the Wuhan Court to determine a global FRAND rate for a license to the Company's 3G and/or 4G/LTE SEPs. The Company was informed on September 25, 2020 that the Wuhan Court held an ex parte hearing on or about September 23, 2020 and issued an order that, among other things, enjoins the Company from seeking a preliminary and permanent injunction against Xiaomi and certain of its subsidiaries for infringement of certain of the Company's patents related to 3G and/or 4G/LTE standards in the Company's case in the Delhi High Court discussed below, or elsewhere. The Wuhan Court ordered a fine of up to one million yuan per day if the Company were to violate the order. The Company contends that it has not yet been properly served with Xiaomi's complaint or the Wuhan Court's anti-suit injunction order. On October 13, 2020, the Company filed an application challenging the jurisdiction of the Wuhan Court to take up Xiaomi’s complaint. On March 12, 2021, the Company’s Chinese counsel was orally informed by the Court that the Company’s application challenging jurisdiction of the Wuhan Court had been rejected. The Company has not yet received the written decision but is challenging the decision at the IP Tribunal of the SPC.

On September 30, 2020, the Company filed a preliminary conditional response seeking reconsideration of the Wuhan Court's anti-suit injunction. In a decision dated December 4, 2020, the Wuhan Court dismissed the Company’s reconsideration petition. The Company is challenging that decision at the SPC.

India Proceeding

On July 29, 2020, the Company and certain of its subsidiaries filed two patent infringement actions in the Delhi High Court in New Delhi, India (the "Delhi High Court") against Xiaomi and certain of its subsidiaries. The first complaint alleges infringement of five of the Company's patents related to 3G and/or 4G/LTE standards: Indian Patent Nos. 262910; 295912; 298719; 313036; and 320182. The second complaint alleges infringement of three of the Company's patents related to H.265/HEVC standards: Indian Patent Nos. 242248; 299448; and 308108. In these proceedings, the Company is seeking compensatory and punitive damages for Xiaomi's infringement of the asserted patents. The Company is further seeking, among other remedies, interim and permanent injunctive relief to prevent further infringement of the litigated patents in India, unless Xiaomi elects to take a license on terms determined to be FRAND by the Delhi High Court. The Company’s application for interim injunctive relief remains pending.

On September 29, 2020, the Company filed an anti-anti-suit injunction application against Xiaomi in the Delhi High Court, seeking, among other things, to enjoin Xiaomi from enforcing the Wuhan Court's September 23, 2020 anti-suit injunction order described above. On October 9, 2020, the Delhi High Court granted the Company's motion and issued an ad interim injunction restraining Xiaomi from enforcing the anti-suit injunction order issued by the Wuhan Court, pending further consideration of the Company's application for an anti-anti-suit injunction at a hearing on November 25, 2020. On May 3, 2021, in an oral pronouncement by the Delhi High Court, the interim anti-anti-suit injunction was made permanent throughout the pendency of the Indian cellular case. Furthermore, the Delhi High Court stated that, if any orders or other measures are passed by the Wuhan Court related to the anti-suit injunction that result in the Company incurring a monetary penalty, then Xiaomi must deposit a corresponding, equal amount with the Delhi High Court for the Company's benefit within one week.

German Proceeding

On October 30, 2020, the Company filed an anti-anti-suit injunction application against Xiaomi in the Munich District Court, seeking to enjoin Xiaomi from continuing to pursue the Wuhan Court's September 23, 2020 anti-suit injunction order described above with respect to Germany. On November 11, 2020, the Munich District Court granted the Company's motion and issued an ex parte injunction restraining Xiaomi from enforcing pursuing the anti-suit injunction. The Company filed penalty requests for non-compliance with said court order. Xiaomi opposed the injunction and requested stay of enforcement, and an oral hearing was held on January 28, 2021. At the hearing, the Munich District Court dismissed the request for stay of enforcement. On February 25, 2021 the Munich District Court confirmed its earlier ex parte anti-anti-suit injunction against Xiaomi. This judgment was appealed by Xiaomi to the Higher Regional Court Munich.

On April 27, the Company was informed that the Munich Regional Court commenced service of three patent infringement actions filed in Germany against Xiaomi by a subsidiary of the Company. The complaints involve infringement of the Company's German patents related to 3G and 4G cellular handsets (Patent Nos. EP 2,421,318; EP 2,485,558; and EP 3,355,537). The Company is seeking injunctive relief to prevent further infringement of the asserted patents in Germany.

OTHER

We are party to certain other disputes and legal actions in the ordinary course of business, including arbitration and legal proceedings with licensees regarding the terms of their agreements and the negotiation thereof. We do not currently believe that these matters, even if adversely adjudicated or settled, would have a material adverse effect on our financial condition, results of operations or cash flows. None of the preceding matters have met the requirements for accrual or disclosure of a potential range as of March 31, 2021.

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Cash, Concentration of Credit Risk and Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

CASH, CONCENTRATION OF CREDIT RISK AND FAIR VALUE OF FINANCIAL INSTRUMENTS

CASH, CONCENTRATION OF CREDIT RISK AND FAIR VALUE OF FINANCIAL INSTRUMENTS

Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash currently consists of money market and demand accounts. The following table provides a reconciliation of total cash, cash equivalents and restricted cash as of March 31, 2021, December 31, 2020 and March 31, 2020 to the captions within the condensed consolidated balance sheets and condensed consolidated statements of cash flows (in thousands):

	March 31,		December 31,		March 31,
	2021		2020		2020
Cash and cash equivalents	$	396,156	$	473,474	$	515,793
Restricted cash included within prepaid and other current assets	3,688		3,108		12,851
Restricted cash included within other non-current assets	1,081		1,081		1,081
Total cash, cash equivalents and restricted cash	$	400,925	$	477,663	$	529,725

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 and contract assets are derived principally from patent license and technology solutions agreements. As of March 31, 2021 and December 31, 2020, five licensees comprised 50% and 53%, respectively, of our net accounts receivable balance. We perform ongoing credit evaluations of our licensees, who generally include large, multinational, wireless telecommunications equipment manufacturers. We believe that the book values of our financial instruments approximate their fair values.

Fair Value Measurements

We use various valuation techniques and assumptions when measuring the fair value of our assets and liabilities. We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. This guidance established a hierarchy that prioritizes fair value measurements based on the types of input used for the various valuation techniques (market approach, income approach and cost approach). The levels of the hierarchy are described below:

Level 1 Inputs — Level 1 includes financial instruments for which quoted market prices for identical instruments are available in active markets.

Level 2 Inputs — Level 2 includes financial instruments for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets with insufficient volume or infrequent transactions (less active markets) or model-driven valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data, including market interest rate curves, referenced credit spreads and pre-payment rates.

Level 3 Inputs — Level 3 includes financial instruments for which fair value is derived from valuation techniques including pricing models and discounted cash flow models in which one or more significant inputs are unobservable, including the Company’s own assumptions. The pricing models incorporate transaction details such as contractual terms, maturity and, in certain instances, timing and amount of future cash flows, as well as assumptions related to liquidity and credit valuation adjustments of marketplace participants.

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.

Recurring Fair Value Measurements

Our financial assets are generally included within short-term investments on our condensed consolidated balance sheets, unless otherwise indicated. Our financial assets and liabilities that are accounted for at fair value on a recurring basis are presented in the tables below as of March 31, 2021 and December 31, 2020 (in thousands):

	Fair Value as of March 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market and demand accounts (a)	$	386,825	$	—	$	—	$	386,825
Commercial paper (b)	—		274,108		—		274,108
U.S. government securities	—		155,752		—		155,752
Corporate bonds, asset backed and other securities	—		72,799		—		72,799
Total	$	386,825	$	502,659	$	—	$	889,484

	Fair Value as of December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Money market and demand accounts (a)	$	397,522	$	—	$	—	$	397,522
Commercial paper(b)	—		285,242		—		285,242
U.S. government securities	—		166,223		—		166,223
Corporate bonds, asset backed and other securities	—		81,849		—		81,849
Total	$	397,522	$	533,314	$	—	$	930,836

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(a)Primarily included within cash and cash equivalents.

(b)As of March 31, 2021 and December 31, 2020, $14.1 million and $80.1 million, respectively, of commercial paper was included within cash and cash equivalents.

Non-Recurring Fair Value Measurements

Investments in Other Entities

During the three months ended March 31, 2020, we recognized a $5.5 million gain resulting from observable price changes of one of our long-term strategic investments, which was included within “Other Income, Net” in the condensed consolidated statement of income.

Lease Assets

During the three months ended March 31, 2020, we recognized a $1.1 million impairment, comprised of $0.8 million of Property, Plant, and Equipment, and $0.3 million of Right of Use Asset related to the abandonment of one of our leased properties, which was included within “Operating Expense” in the condensed consolidated statement of income.

Fair Value of Long-Term Debt

2024 Senior Convertible Notes

The principal amount, carrying value and related estimated fair value of the Company's senior convertible debt reported in the condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020 was as follows (in thousands). The aggregate fair value of the principal amount of the senior convertible long-term debt is a Level 2 fair value measurement.

	March 31, 2021						December 31, 2020
	Principal Amount		Carrying Value		Fair Value		Principal Amount		Carrying Value		Fair Value
Senior Convertible Long-Term Debt	$	400,000	$	394,404	$	422,000	$	400,000	$	343,821	$	418,760

Technicolor Patent Acquisition Long-term Debt

The carrying value and related estimated fair value of the Technicolor Patent Acquisition long-term debt reported in the condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020 was as follows (in thousands). The aggregate fair value of the Technicolor Patent Acquisition long-term debt is a Level 3 fair value measurement.

	March 31, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
Technicolor Patent Acquisition Long-Term Debt	$	24,992	$	26,762	$	24,171	$	27,016

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Obligations

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

OBLIGATIONS

OBLIGATIONS

Technicolor Patent Acquisition Long-Term Debt

On July 30, 2018, we completed our acquisition of the patent licensing business of Technicolor SA ("Technicolor"), a worldwide technology leader in the media and entertainment sector (the "Technicolor Patent Acquisition"). In conjunction with the Technicolor Patent Acquisition we assumed Technicolor’s rights and obligations under a joint licensing program with Sony Corporation ("Sony") relating to digital televisions and standalone computer display monitors, which commenced in 2015 and is referred to as the "Madison Arrangement." An affiliate of CPPIB Credit Investments Inc. ("CPPIB Credit"), a wholly owned subsidiary of Canada Pension Plan Investment Board, is a third-party investor in the Madison Arrangement. CPPIB Credit has made certain payments to Technicolor and Sony and has agreed to contribute cash to fund certain capital reserve obligations under the arrangement in exchange for a percentage of future revenues, specifically through September 11, 2030 in regard to the Technicolor patents.

Upon our assumption of Technicolor’s rights and obligations under the Madison Arrangement, our relationship with CPPIB Credit meets the criteria in ASC 470-10-25 - Sales of Future Revenues or Various Other Measures of Income ("ASC 470"), which relates to cash received from an investor in exchange for a specified percentage or amount of revenue or other measure of income of a particular product line, business segment, trademark, patent, or contractual right for a defined period. Under this guidance, we recognized the fair value of our contingent obligation to CPPIB Credit, as of the acquisition date, as long-term debt in our condensed consolidated balance sheet. This initial fair value measurement was based on the perspective of a market participant and included significant unobservable inputs which are classified as Level 3 inputs within the fair value hierarchy. The fair value of the long-term debt as of March 31, 2021 and December 31, 2020 is disclosed within Note 6, "Cash, Concentration of Credit Risk and Fair Value of Financial Instruments." Our repayment obligations are contingent upon future royalty revenues generated from the Madison Arrangement and there are no minimum or maximum payments under the arrangement.

Under ASC 470, amounts recorded as debt are amortized under the interest method. At each reporting period, we will review the discounted expected future cash flows over the life of the obligation. The Company made an accounting policy election to utilize the catch-up method when there is a change in the estimated future cash flows, whereby we will adjust the carrying amount of the debt to the present value of the revised estimated future cash flows, discounted at the original effective interest rate, with a corresponding adjustment recognized as interest expense within “Interest Expense” in the condensed consolidated statements of income. The effective interest rate as of the acquisition date was approximately 14.5%. This rate represents the discount rate that equates the estimated future cash flows with the fair value of the debt as of the acquisition date, and is used to compute the amount of interest to be recognized each period based on the estimated life of the future revenue streams. During the three months ended March 31, 2021 and 2020, we recognized $0.8 million and $0.7 million, respectively, of interest expense related to this debt. This was included within “Interest Expense” in the condensed consolidated statements of income. Any future payments made to CPPIB Credit, or additional proceeds received from CPPIB Credit, will decrease or increase the long-term debt balance accordingly.

2024 Senior Convertible Notes, and Related Note Hedge and Warrant Transactions

On June 3, 2019 we issued $400.0 million in aggregate principal amount of 2.00% Senior Convertible Notes due 2024 (the "2024 Notes"). The net proceeds from the issuance of the 2024 Notes, after deducting the initial purchasers' transaction fees and offering expenses, were approximately $391.6 million. The 2024 Notes (i) bear interest at a rate of 2.00% per year, payable in cash on June 1 and December 1 of each year, commencing on December 1, 2019, and (ii) mature on June 1, 2024, unless earlier converted or repurchased. The effective interest rate of the 2024 Notes is 2.02%.

The 2024 Notes are convertible into cash, shares of our common stock or a combination thereof, at our election, at an initial conversion rate of 12.3018 shares of our common stock per $1,000 principal amount of 2024 Notes (which is equivalent to an initial conversion price of approximately $81.29 per share), as adjusted pursuant to the terms of the indenture governing the 2024 Notes (the "Indenture"). The conversion rate of the 2024 Notes, and thus the conversion price, may be adjusted in certain circumstances, including in connection with a conversion of the 2024 Notes made following certain fundamental changes and under other circumstances set forth in the Indenture. As of December 31, 2020, we made the irrevocable election to settle all conversions of the 2024 Notes through combination settlements of cash and shares of our common stock, with a specified dollar amount of $1,000 per $1,000 principal amount of 2024 Notes and any remaining amounts in shares of our common stock.

The 2024 Notes are senior unsecured obligations of the Company and rank equally in right of payment with any of our current and any future senior unsecured indebtedness. The 2024 Notes are effectively subordinated to all of our future secured indebtedness to the extent of the value of the related collateral, and the 2024 Notes are structurally subordinated to indebtedness and other liabilities, including trade payables, of our subsidiaries.

On May 29 and May 31, 2019, in connection with the offering of the 2024 Notes, we entered into convertible note hedge transactions (collectively, the "2024 Note Hedge Transactions") that cover, subject to customary anti-dilution adjustments, approximately 4.9 million shares of common stock, in the aggregate, at a strike price that initially corresponds to the initial conversion price of the 2024 Notes, subject to adjustment, and are exercisable upon any conversion of the 2024 Notes. On May 29 and May 31, 2019, we also entered into privately negotiated warrant transactions (collectively, the "2024 Warrant Transactions" and, together with the 2024 Note Hedge Transactions, the "2024 Call Spread Transactions"), whereby we sold warrants to acquire, subject to customary anti-dilution adjustments, approximately 4.9 million shares of common stock at an initial strike price of approximately $109.43 per share, subject to adjustment.

There have been no material changes regarding the 2024 Notes and 2024 Call Spread Transactions from the disclosures included in Note 10, "Obligations" within the Notes to the Consolidated Financial Statements included in Part II, Item 8 of the 2020 Form 10-K.

2020 Senior Convertible Notes

On March 11, 2015, we issued $316.0 million in aggregate principal amount of 1.50% Senior Convertible Notes due 2020 (the "2020 Notes"). The 2020 Notes bore interest at a rate of 1.50% per year and matured on March 1, 2020. On the maturity date, the outstanding balance of $94.9 million under the 2020 Notes was repaid in full.

The following table reflects the carrying value of our Long-Term Debt as of March 31, 2021 and December 31, 2020 (in thousands):

	March 31, 2021		December 31, 2020
Principal	$	400,000	$	400,000
Less:
Unamortized interest discount(a)	—		(51,567)
Deferred financing costs(a)	(5,596)		(4,612)
Net carrying amount of the 2024 Notes	$	394,404	$	343,821

______________________________

(a)Due to the adoption of ASU 2020-06 on January 1, 2021, the unamortized interest discount was reclassified back to the carrying value of the 2024 Notes. Refer to Note 1, "Basis of Presentation", for further information regarding this adoption.

The following table presents the amount of interest cost recognized, which is included within "Interest Expense" in our condensed consolidated statements of income, for the three months ended March 31, 2021 and March 31, 2020 relating to the contractual interest coupon, accretion of the debt discount, and the amortization of deferred financing costs of the 2024 Notes and 2020 Notes (in thousands):

	Three months ended March 31,
	2021		2020
	2024 Notes		2024 Notes		2020 Notes		Total
Contractual coupon interest	$	2,000	$	2,000	$	237	$	2,237
Accretion of debt discount(a)	—		3,222		669		3,891
Amortization of deferred financing costs	398		288		70		358
Total	$	2,398	$	5,510	$	976	$	6,486

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Variable Interest Entities

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

VARIABLE INTEREST ENTITIES

VARIABLE INTEREST ENTITIES

As further discussed below, we are the primary beneficiary of three variable interest entities. As of March 31, 2021, the combined book values of the assets and liabilities associated with these variable interest entities included in our condensed consolidated balance sheet were $56.4 million and $6.1 million, respectively. Assets included $18.9 million of cash and cash equivalents, $2.4 million of accounts receivable and prepaid assets, and $35.1 million of patents, net. As of December 31, 2020, the combined book values of the assets and liabilities associated with these variable interest entities included in our condensed consolidated balance sheet were $62.0 million and $5.8 million, respectively. Assets included $24.5 million of cash and cash equivalents, $2.3 million of accounts receivable and prepaid assets, and $35.2 million of patents, net.

Chordant

On January 31, 2019, we launched the Company’s Chordant™ business as a standalone company. The spinout of the unit, which now includes an affiliate of Sony as an investor along with the Company, gives Chordant added independence and flexibility in driving into its core operator and smart city markets. Chordant is a variable interest entity and we have determined that we are the primary beneficiary for accounting purposes and consolidate Chordant.  For the three months ended March 31, 2021 and 2020, we have allocated approximately $0.1 million and $0.3 million, respectively, of Chordant's net loss to noncontrolling interests held by other parties.

Convida Wireless

Convida Wireless was launched in 2013 and most recently renewed in 2018 to combine Sony's consumer electronics expertise with our pioneering IoT expertise to drive IoT communications and connectivity.  Based on the terms of the agreement, the parties will contribute funding and resources for additional research and platform development, which we will perform.  SCP IP Investment LLC, an affiliate of Stephens Inc., is a minority investor in Convida Wireless.

Convida Wireless is a variable interest entity. Based on our provision of research and platform development services to Convida Wireless, we have determined that we remain the primary beneficiary for accounting purposes and will continue to consolidate Convida Wireless.  For each of the three months ended March 31, 2021 and 2020, we have allocated approximately $1.5 million of Convida Wireless's net loss to noncontrolling interests held by other parties.

Signal Trust for Wireless Innovation

During 2013, we announced the establishment of the Signal Trust for Wireless Innovation (the “Trust”), the goal of which was to monetize a patent portfolio primarily related to 3G cellular infrastructure. In response to a request from Signal Trust, in first quarter 2021 we provided our consent, as major beneficiary, to dissolve Signal Trust.

The Trust has been accounted for as a variable interest entity. Based on the terms of the trust agreement, we determined that we are the primary beneficiary for accounting purposes and have included the Trust in our consolidated financial statements. Pending the dissolution of the Trust, we will continue to consolidate the Trust in our consolidated financial statements.

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Other Income, Net

3 Months Ended

Mar. 31, 2021

Other Income and Expenses [Abstract]

OTHER INCOME, NET

OTHER INCOME, NET

The amounts included in "Other income, net" in the condensed consolidated statements of income for the three months ended March 31, 2021 and 2020 were as follows (in thousands):

	Three months ended March 31,
	2021		2020
Interest and investment income	$	553	$	2,877
Other	171		3,146
Other income, net	$	724	$	6,023

The decrease in Other income, net between periods was primarily driven by a net $4.4 million gain in the three months ended March 31, 2020, primarily resulting from observable price changes of one of our long-term strategic investments, partially offset by a $1.9 million gain in the three months ended March 31, 2021 on a contract termination. Additionally, Interest and investment income decreased $2.3 million in the three months ended March 31, 2021 due to lower rates of return on our short-term investments.

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Prepaid and Other Current Assets

3 Months Ended

Mar. 31, 2021

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

PREPAID AND OTHER CURRENT ASSETS

PREPAID AND OTHER CURRENT ASSETS

The amounts included in "Prepaid and other current assets" in the consolidated balance sheet as of March 31, 2021 and December 31, 2020 were as follows (in thousands):

	March 31, 2021		December 31, 2020
Tax receivables	$	70,334	$	69,592
Prepaid assets	12,045		10,899
Unsettled repurchase of common stock	1,994		—
Operating lease receivable	—		817
Other current assets	3,290		2,916
Total Prepaid and other current assets	$	87,663	$	84,224

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Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

The accompanying unaudited, condensed consolidated financial statements have been prepared in accordance with the instructions to 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 United States generally accepted accounting principles (“GAAP”). The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP for year-end financial statements. Therefore, these financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (our “2020 Form 10-K”) as filed with the Securities and Exchange Commission (“SEC”) on February 18, 2021. Definitions of capitalized terms not defined herein appear within our 2020 Form 10-K. 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.

Estimates

The preparation of financial statements in conformity with GAAP 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.

Reclassifications

Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

New Accounting Guidance

Accounting Standards Update: Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes" ("ASU 2019-12"). The amendments in this ASU are intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 with early adoption allowed. We adopted this guidance as of January 1, 2021 and the adoption did not have a material impact on our consolidated financial statements.

Accounting Standards Update: Simplifying the Accounting for Convertible Instruments

In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”). The amendments in this ASU are intended to simplify accounting for convertible debt instruments and convertible preferred stock by removing certain accounting models which separate the embedded conversion features from the host contract. ASU 2020-06 also amends certain guidance in ASC 260 on the computation of earnings per share for convertible instruments and contracts on an entity’s own equity. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, and early adoption is permitted for fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective methods of transition. We elected to early adopt this standard on a modified retrospective approach as of January 1, 2021.

This adoption increased Long-term debt by $50.2 million at January 1, 2021, which was comprised of $51.6 million of unamortized interest discount and was partially offset by a net increase of $1.4 million equity component of deferred financing costs. This was due to the standard no longer requiring bifurcation of the embedded conversion feature from the host contract on the 2024 Notes, as defined in Note 7, "Obligations." This adoption also reduced non-cash interest expense starting in 2021 due to the removal of the accretion of the debt discount on the 2024 Notes.

Lastly, the adoption requires the use of the if-converted method of calculating diluted earnings per share rather than the treasury stock method for convertible instruments and requires the inclusion of the potential effect of shares settled in cash or shares in the diluted earnings per share calculation. Due to the reduction in non-cash interest expense, this adoption increased both basic and diluted earnings per share by $0.09 for the three months ended March 31, 2021.

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Basis of Presentation (Tables)

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of supplemental cash flow information

The following table presents additional supplemental cash flow information for the three months ended March 31, 2021 and 2020 (in thousands):

	FOR THE THREE MONTHS ENDED MARCH 31,
SUPPLEMENTAL CASH FLOW INFORMATION:	2021		2020
Interest paid	$	—	$	712
Income taxes paid, including foreign withholding taxes	4,328		2,228
Non-cash investing and financing activities:
Dividend payable	10,766		10,762
Accrued capitalized patent costs and property and equipment	2,096		(1,288)
Unsettled repurchase of common stock	1,994		—

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Revenue (Tables)

3 Months Ended

Mar. 31, 2021

Revenue from Contract with Customer [Abstract]

Schedule of disaggregation of revenue

The following table presents the disaggregation of our revenue for the three months ended March 31, 2021 and 2020 (in thousands):

	Three months ended March 31,
	2021		2020		Increase/(Decrease)
Variable patent royalty revenue	$	7,096	$	5,946	$	1,150	19	%
Fixed-fee royalty revenue	69,296		66,347		2,949		4	%
Current patent royalties a	76,392		72,293		4,099		6	%
Non-current patent royalties b	3,781		705		3,076		436	%
Total patent royalties	80,173		72,998		7,175		10	%
Current technology solutions revenue a	2,190		3,212		(1,022)		(32)	%
Total revenue	$	82,363	$	76,210	$	6,153	8	%

a.    Recurring revenues are comprised of current patent royalties, inclusive of Dynamic Fixed-Fee Agreement royalties, and current technology solutions revenue.

b.    Non-recurring revenues are comprised of non-current patent royalties, which primarily include past patent royalties and royalties from static agreements, as well as patent sales.

Schedule of contracted revenue

Based on contracts signed and committed as of March 31, 2021, we expect to recognize the following revenue from Dynamic Fixed-Fee Agreement payments over the term of such contracts (in thousands):

	Revenue
Remainder 2021	$	207,482
2022	238,057
2023	44,469
2024	89
2025 and beyond	—
Total Revenue	$	490,097

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Net Income (Loss) Per Share (Tables)

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Schedule of numerator and the denominator of the basic and diluted

The following tables reconcile the numerator and the denominator of the basic and diluted net income per share computation (in thousands, except for per share data):

	Three months ended March 31,
	2021		2020
Net income applicable to InterDigital, Inc.	$	5,571	$	116
Weighted-average shares outstanding:
Basic	30,836		30,722
Dilutive effect of stock options, RSUs, convertible securities and warrants	359		198
Diluted	31,195		30,920
Earnings per share:
Basic	$	0.18	$	—
Dilutive effect of stock options, RSUs, convertible securities and warrants	—		—
Diluted	$	0.18	$	—

Schedule of excluded from our computation of EPS

Set forth below are the securities and the weighted average number of shares of common stock underlying such securities that were excluded from our computation of EPS for the periods presented (in thousands):

	Three months ended March 31,
	2021	2020
Restricted stock units and stock options	120	260
Convertible securities(a)	—	6,268
Warrants	4,921	6,268
Total	5,041	12,796

______________________________

(a)As of December 31, 2020, we made the irrevocable election to settle all conversions of the 2024 Notes through combination settlements of cash and shares of our common stock, with a specified dollar amount of $1,000 per $1,000 principal amount of 2024 Notes and any remaining amounts in shares of our common stock.

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Cash, Concentration of Credit Risk and Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Schedule of cash and cash equivalents

The following table provides a reconciliation of total cash, cash equivalents and restricted cash as of March 31, 2021, December 31, 2020 and March 31, 2020 to the captions within the condensed consolidated balance sheets and condensed consolidated statements of cash flows (in thousands):

	March 31,		December 31,		March 31,
	2021		2020		2020
Cash and cash equivalents	$	396,156	$	473,474	$	515,793
Restricted cash included within prepaid and other current assets	3,688		3,108		12,851
Restricted cash included within other non-current assets	1,081		1,081		1,081
Total cash, cash equivalents and restricted cash	$	400,925	$	477,663	$	529,725

Schedule of restricted cash and cash equivalents

The following table provides a reconciliation of total cash, cash equivalents and restricted cash as of March 31, 2021, December 31, 2020 and March 31, 2020 to the captions within the condensed consolidated balance sheets and condensed consolidated statements of cash flows (in thousands):

	March 31,		December 31,		March 31,
	2021		2020		2020
Cash and cash equivalents	$	396,156	$	473,474	$	515,793
Restricted cash included within prepaid and other current assets	3,688		3,108		12,851
Restricted cash included within other non-current assets	1,081		1,081		1,081
Total cash, cash equivalents and restricted cash	$	400,925	$	477,663	$	529,725

Schedule of fair value on a recurring basis

Our financial assets and liabilities that are accounted for at fair value on a recurring basis are presented in the tables below as of March 31, 2021 and December 31, 2020 (in thousands):

	Fair Value as of March 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market and demand accounts (a)	$	386,825	$	—	$	—	$	386,825
Commercial paper (b)	—		274,108		—		274,108
U.S. government securities	—		155,752		—		155,752
Corporate bonds, asset backed and other securities	—		72,799		—		72,799
Total	$	386,825	$	502,659	$	—	$	889,484

	Fair Value as of December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Money market and demand accounts (a)	$	397,522	$	—	$	—	$	397,522
Commercial paper(b)	—		285,242		—		285,242
U.S. government securities	—		166,223		—		166,223
Corporate bonds, asset backed and other securities	—		81,849		—		81,849
Total	$	397,522	$	533,314	$	—	$	930,836

______________________________

(a)Primarily included within cash and cash equivalents.

(b)As of March 31, 2021 and December 31, 2020, $14.1 million and $80.1 million, respectively, of commercial paper was included within cash and cash equivalents.

Schedule of aggregate fair value

The aggregate fair value of the principal amount of the senior convertible long-term debt is a Level 2 fair value measurement.

	March 31, 2021						December 31, 2020
	Principal Amount		Carrying Value		Fair Value		Principal Amount		Carrying Value		Fair Value
Senior Convertible Long-Term Debt	$	400,000	$	394,404	$	422,000	$	400,000	$	343,821	$	418,760

The aggregate fair value of the Technicolor Patent Acquisition long-term debt is a Level 3 fair value measurement.

	March 31, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
Technicolor Patent Acquisition Long-Term Debt	$	24,992	$	26,762	$	24,171	$	27,016

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Obligations (Tables)

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Schedule of carrying value of the 2024 Notes and 2020 Notes

The following table reflects the carrying value of our Long-Term Debt as of March 31, 2021 and December 31, 2020 (in thousands):

	March 31, 2021		December 31, 2020
Principal	$	400,000	$	400,000
Less:
Unamortized interest discount(a)	—		(51,567)
Deferred financing costs(a)	(5,596)		(4,612)
Net carrying amount of the 2024 Notes	$	394,404	$	343,821

______________________________

(a)Due to the adoption of ASU 2020-06 on January 1, 2021, the unamortized interest discount was reclassified back to the carrying value of the 2024 Notes. Refer to Note 1, "Basis of Presentation", for further information regarding this adoption.

Schedule of accretion of the debt discount, and the amortization of financing costs

The following table presents the amount of interest cost recognized, which is included within "Interest Expense" in our condensed consolidated statements of income, for the three months ended March 31, 2021 and March 31, 2020 relating to the contractual interest coupon, accretion of the debt discount, and the amortization of deferred financing costs of the 2024 Notes and 2020 Notes (in thousands):

	Three months ended March 31,
	2021		2020
	2024 Notes		2024 Notes		2020 Notes		Total
Contractual coupon interest	$	2,000	$	2,000	$	237	$	2,237
Accretion of debt discount(a)	—		3,222		669		3,891
Amortization of deferred financing costs	398		288		70		358
Total	$	2,398	$	5,510	$	976	$	6,486

______________________________

(a)Due to the adoption of ASU 2020-06, there is no longer accretion of the debt discount starting January 1, 2021. Refer to Note 1, "Basis of Presentation", for further information regarding this adoption.

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Other Income, Net (Tables)

3 Months Ended

Mar. 31, 2021

Other Income and Expenses [Abstract]

Schedule of other income expense, net

The amounts included in "Other income, net" in the condensed consolidated statements of income for the three months ended March 31, 2021 and 2020 were as follows (in thousands):

	Three months ended March 31,
	2021		2020
Interest and investment income	$	553	$	2,877
Other	171		3,146
Other income, net	$	724	$	6,023

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Prepaid and Other Current Assets (Tables)

3 Months Ended

Mar. 31, 2021

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Prepaid and Other Current Assets

The amounts included in "Prepaid and other current assets" in the consolidated balance sheet as of March 31, 2021 and December 31, 2020 were as follows (in thousands):

	March 31, 2021		December 31, 2020
Tax receivables	$	70,334	$	69,592
Prepaid assets	12,045		10,899
Unsettled repurchase of common stock	1,994		—
Operating lease receivable	—		817
Other current assets	3,290		2,916
Total Prepaid and other current assets	$	87,663	$	84,224

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Basis of Presentation - Narrative (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2021 USD ($) segment $ / shares	Mar. 31, 2020 USD ($) $ / shares	Jan. 01, 2021 USD ($)	Dec. 31, 2020 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of reportable segments | segment	1
Debt Instrument [Line Items]
Net catch up amortization	$ 1,819	$ 4,637
Net income per common share: basic (in USD per share) | $ / shares	$ 0.18	$ 0
Net income per common share, Diluted (in USD per share) | $ / shares	0.18	$ 0
Accounting Standards Update 2020-06
Debt Instrument [Line Items]
Net income per common share: basic (in USD per share) | $ / shares	$ 0.09
Senior Convertible Long-Term Debt
Debt Instrument [Line Items]
Unamortized discount	$ 0			$ 51,567
Senior Convertible Long-Term Debt | Accounting Standards Update 2020-06
Debt Instrument [Line Items]
Long-term debt			$ (50,200)
Unamortized discount			51,600
Debt issuance costs equity component			$ 1,400

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Basis of Presentation - Schedule of Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	$ 0	$ 712
Income taxes paid, including foreign withholding taxes	4,328	2,228
Non-cash investing and financing activities:
Dividend payable	10,766	10,762	$ 10,786
Accrued capitalized patent costs and property and equipment	2,096	(1,288)
Unsettled repurchase of common stock	$ 1,994	$ 0

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Revenue - Disaggregated Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Disaggregation of Revenue [Line Items]
Revenue	$ 82,363	$ 76,210
Increase/(decrease) in disaggregated revenue	$ 6,153
Percentage increase/(decrease) in disaggregated revenue	8.00%
Total patent royalties
Disaggregation of Revenue [Line Items]
Revenue	$ 80,173	72,998
Increase/(decrease) in disaggregated revenue	$ 7,175
Percentage increase/(decrease) in disaggregated revenue	10.00%
Total patent royalties | Current revenue
Disaggregation of Revenue [Line Items]
Revenue	$ 76,392	72,293
Increase/(decrease) in disaggregated revenue	$ 4,099
Percentage increase/(decrease) in disaggregated revenue	6.00%
Total patent royalties | Non-current revenue
Disaggregation of Revenue [Line Items]
Revenue	$ 3,781	705
Increase/(decrease) in disaggregated revenue	$ 3,076
Percentage increase/(decrease) in disaggregated revenue	436.00%
Technology solutions
Disaggregation of Revenue [Line Items]
Revenue	$ 2,190	3,212
Increase/(decrease) in disaggregated revenue	$ (1,022)
Percentage increase/(decrease) in disaggregated revenue	(32.00%)
Variable patent royalty revenue
Disaggregation of Revenue [Line Items]
Revenue	$ 7,096	5,946
Increase/(decrease) in disaggregated revenue	$ 1,150
Percentage increase/(decrease) in disaggregated revenue	19.00%
Fixed-fee royalty revenue
Disaggregation of Revenue [Line Items]
Revenue	$ 69,296	$ 66,347
Increase/(decrease) in disaggregated revenue	$ 2,949
Percentage increase/(decrease) in disaggregated revenue	4.00%

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Revenue - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue recognized that had been included in deferred revenue as of the beginning of the period	$ 62.7
Contract assets, current	9.4	$ 9.7
Contract assets, non-current	$ 8.9	$ 8.9

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Revenue - Remaining Performance Obligation (Details) $ in Thousands	Mar. 31, 2021 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 207,482
Revenue, remaining performance obligation, expected timing of satisfaction, period	9 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 238,057
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 44,469
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 89
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 0
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 490,097
Revenue, remaining performance obligation, expected timing of satisfaction, period

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Income Tax Contingency [Line Items]
Effective tax rate	30.80%	1144.70%
Effective tax rate before valuation allowance is included (as percent)	12.00%	65.50%
Discrete tax expense (benefit)	$ 300
Income taxes paid, including foreign withholding taxes	4,328	$ 2,228
Foreign Country
Income Tax Contingency [Line Items]
Income taxes paid, including foreign withholding taxes	$ 3,600	$ 2,000

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Net Income (Loss) Per Share - Numerator and Denominator of Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Earnings Per Share [Abstract]
Net income applicable to InterDigital, Inc.	$ 5,571	$ 116
Weighted-average shares outstanding:
Weighted-average shares outstanding: basic (in shares)	30,836	30,722
Dilutive effect of stock options, RSUs, convertible securities and warrants (in shares)	359	198
Weighted-average shares outstanding: diluted (in shares)	31,195	30,920
Earnings per share:
Net income per common share: basic (in USD per share)	$ 0.18	$ 0
Dilutive effect of stock options, RSUs, convertible securities and warrants (in USD per share)	0	0
Net income per common share: diluted (in USD per share)	$ 0.18	$ 0

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Net Income (Loss) Per Share - Antidilutive Securities Excluded from Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	5,041	12,796
Restricted stock units and stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	120	260
Convertible securities
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	0	6,268
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	4,921	6,268

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Litigation and Legal Proceedings (Details)	Aug. 05, 2020 CNY (¥)	Jul. 29, 2020 patent	Aug. 28, 2019 patent	Aug. 27, 2019 patent
Xiaomi
Loss Contingencies [Line Items]
Court fine per day | ¥	¥ 1,000,000
Pending Litigation | U.K. Proceedings
Loss Contingencies [Line Items]
Loss contingency, number of patents alleged infringement				5
Pending Litigation | District Of Delaware Proceedings
Loss Contingencies [Line Items]
Loss contingency, number of patents alleged infringement			8
Pending Litigation | India Proceedings
Loss Contingencies [Line Items]
Loss contingency, number of patents alleged infringement		2
Pending Litigation | India Proceedings One
Loss Contingencies [Line Items]
Loss contingency, number of patents alleged infringement		5
Pending Litigation | India Proceedings Two
Loss Contingencies [Line Items]
Loss contingency, number of patents alleged infringement		3

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Cash, Concentration of Credit Risk and Fair Value of Financial Instruments - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020	Dec. 31, 2019
Fair Value Disclosures [Abstract]
Cash and cash equivalents	$ 396,156	$ 473,474	$ 515,793
Restricted cash included within prepaid and other current assets	3,688	3,108	12,851
Restricted cash included within other non-current assets	1,081	1,081	1,081
Total cash, cash equivalents and restricted cash	$ 400,925	$ 477,663	$ 529,725	$ 757,098

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Cash, Concentration of Credit Risk and Fair Value of Financial Instruments - Narrative (Details) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2021	Mar. 31, 2020 USD ($) property	Dec. 31, 2020
Concentration Risk [Line Items]
Unrealized gain		$ 5.5
Lease asset impairment		1.1
Lease property, plant and equipment impairment		0.8
Lease right of use asset impairment		$ 0.3
Number of abandoned leased properties | property		1
Accounts Receivable | Licensee Concentration Risk | Five Largest Licensees
Concentration Risk [Line Items]
Accounts receivable percentage	50.00%		53.00%

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Cash, Concentration of Credit Risk and Fair Value of Financial Instruments - Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020	Dec. 31, 2019
Assets:
Total	$ 889,484	$ 930,836
Amount of commercial paper included in cash and cash equivalents	400,925	477,663	$ 529,725	$ 757,098
U.S. government securities
Assets:
Securities	155,752	166,223
Corporate bonds, asset backed and other securities
Assets:
Securities	72,799	81,849
Commercial Paper
Assets:
Amount of commercial paper included in cash and cash equivalents	14,100	80,100
Money market and demand accounts
Assets:
Cash and cash equivalents	386,825	397,522
Commercial Paper
Assets:
Cash and cash equivalents	274,108	285,242
Level 1
Assets:
Total	386,825	397,522
Level 1 | U.S. government securities
Assets:
Securities	0	0
Level 1 | Corporate bonds, asset backed and other securities
Assets:
Securities	0	0
Level 1 | Money market and demand accounts
Assets:
Cash and cash equivalents	386,825	397,522
Level 1 | Commercial Paper
Assets:
Cash and cash equivalents	0	0
Level 2
Assets:
Total	502,659	533,314
Level 2 | U.S. government securities
Assets:
Securities	155,752	166,223
Level 2 | Corporate bonds, asset backed and other securities
Assets:
Securities	72,799	81,849
Level 2 | Money market and demand accounts
Assets:
Cash and cash equivalents	0	0
Level 2 | Commercial Paper
Assets:
Cash and cash equivalents	274,108	285,242
Level 3
Assets:
Total	0	0
Level 3 | U.S. government securities
Assets:
Securities	0	0
Level 3 | Corporate bonds, asset backed and other securities
Assets:
Securities	0	0
Level 3 | Money market and demand accounts
Assets:
Cash and cash equivalents	0	0
Level 3 | Commercial Paper
Assets:
Cash and cash equivalents	$ 0	$ 0

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Cash, Concentration of Credit Risk and Fair Value of Financial Instruments - Fair Value of Long-Term Debt (Details) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Technicolor Patent Acquisition Long-Term Debt
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Carrying Value	$ 24,992,000	$ 24,171,000
Fair Value	26,762,000	27,016,000
Senior Convertible Long-Term Debt
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Principal	400,000,000	400,000,000
Carrying Value	394,404,000	343,821,000
Fair Value	$ 422,000,000	$ 418,760,000

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Obligations - Technicolor Patent Acquisition Long-Term Debt (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Business Acquisition [Line Items]
Interest debt expense		$ 6,486
Technicolor
Business Acquisition [Line Items]
Effective interest rate acquisition percentage	14.50%
Interest debt expense	$ 800	$ 700

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Obligations - 2024 and 2020 Senior Convertible Notes, and Related Note Hedge and Warrant Transactions (Details) $ / shares in Units, shares in Millions		12 Months Ended
	Jun. 03, 2019 USD ($) $ / shares	Dec. 31, 2020 USD ($)	Mar. 31, 2021	Mar. 01, 2020 USD ($)	May 31, 2019 $ / shares shares	Mar. 11, 2015 USD ($)
Debt Instrument [Line Items]
Initial strike price (in USD per share) | $ / shares					$ 109.43
Convertible Notes 2020
Debt Instrument [Line Items]
Unamortized debt discount and issuance costs				$ 94,900,000
Convertible Debt | Convertible Notes 2024
Debt Instrument [Line Items]
Aggregate principal amount	$ 400,000,000.0
Debt instrument interest rate, stated percentage	2.00%
Transaction fees and offering expenses	$ 391,600,000
Debt instrument interest rate, effective percentage			2.02%
Initial conversion rate	12.3018
Debt conversion converted instrument amount	$ 1,000	$ 1,000
Initial conversion price (in USD per share) | $ / shares	$ 81.29
Convertible note hedge (in shares) | shares					4.9
Anti-dilution adjustments of common stock (in shares) | shares					4.9
Convertible Debt | Convertible Notes 2020
Debt Instrument [Line Items]
Aggregate principal amount						$ 316,000,000.0
Debt instrument interest rate, stated percentage						1.50%

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Obligations - Carrying Value of 2024 Notes and 2020 Notes (Details) - Convertible Debt - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Principal	$ 400,000,000	$ 400,000,000
Less:
Unamortized interest discount(a)	0	(51,567,000)
Deferred financing costs(a)	(5,596,000)	(4,612,000)
Net carrying amount of the 2024 Notes	$ 394,404,000	$ 343,821,000

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Obligations - Accretion of Debt Discount and Amortization of Financing Costs (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Debt Instrument [Line Items]
Contractual coupon interest		$ 2,237
Accretion of debt discount(a)		3,891
Amortization of deferred financing costs		358
Total		6,486
Convertible Debt | Convertible Notes 2024
Debt Instrument [Line Items]
Contractual coupon interest	$ 2,000	2,000
Accretion of debt discount(a)	0	3,222
Amortization of deferred financing costs	398	288
Total	$ 2,398	5,510
Convertible Debt | Convertible Notes 2020
Debt Instrument [Line Items]
Contractual coupon interest		237
Accretion of debt discount(a)		669
Amortization of deferred financing costs		70
Total		$ 976

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Obligations - Additional Information (Details)	May 31, 2019
Technicolor
Business Acquisition [Line Items]
Receive future cash receipts percentage	42.50%

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Variable Interest Entities (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2021 USD ($) variable_interest_entity	Mar. 31, 2020 USD ($)	Dec. 31, 2020 USD ($)
Variable Interest Entity [Line Items]
Assets	$ 1,561,874		$ 1,616,275
Liabilities	829,301		819,709
Cash and cash equivalents	396,156	$ 515,793	473,474
Patents, net	407,732		418,343
Accounts receivable	12,502		16,008
Noncontrolling interests	(1,613)	(1,777)
Chordant
Variable Interest Entity [Line Items]
Noncontrolling interests	(100)	300
Convida
Variable Interest Entity [Line Items]
Noncontrolling interests	$ (1,500)	$ (1,500)
Primary Beneficiary
Variable Interest Entity [Line Items]
Number of variable interest entities | variable_interest_entity	3
Assets	$ 56,400		62,000
Liabilities	6,100		5,800
Cash and cash equivalents	18,900		24,500
Accounts receivable and prepaid assets	2,400
Patents, net	$ 35,100		35,200
Accounts receivable			$ 2,300

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Other Income, Net - Other Income, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Other Income and Expenses [Abstract]
Interest and investment income	$ 553	$ 2,877
Other	171	3,146
Other income, net	$ 724	$ 6,023

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Other Income, Net - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Other Income and Expenses [Abstract]
Gain from observable price changes in orderly transactions of a long-term strategic investment	$ 1.9	$ 4.4
Reduction in interest and investment income	$ (2.3)

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Prepaid and Other Current Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Tax receivables	$ 70,334	$ 69,592
Prepaid assets	12,045	10,899
Unsettled repurchase of common stock	1,994	0
Operating lease receivable	0	817
Other current assets	3,290	2,916
Total Prepaid and other current assets	$ 87,663	$ 84,224