Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies

Commitments and Contingencies

12. Commitments and Contingencies

Litigation

We continually evaluate uncertainties associated with litigation and record a charge equal to at least the minimum estimated liability for a loss contingency when both of the following conditions are met: (i) information available prior to issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and (ii) the loss or range of loss can be reasonably estimated. If we determine that a loss is possible and a range of the loss can be reasonably estimated, we disclose the range of the possible loss in the Notes to the Consolidated Financial Statements. We evaluate, on a quarterly basis, developments in our legal matters that could affect the amount of liability that has been previously accrued, if any, and the matters and related ranges of possible losses disclosed, and make adjustments and changes to our disclosures as appropriate. Significant judgment is required to determine both likelihood of there being and the estimated amount of a loss related to such matters. Until the final resolution of such matters, there may be an exposure to loss, and such amounts could be material. For legal proceedings for which there is a reasonable possibility of loss (meaning those losses for which the likelihood is more than remote but less than probable), we have determined we do not have material exposure on an aggregate basis at this time.

Patent Claim

We received a letter in August 2019 from BlackBerry Corp. asserting that our products and software infringe BlackBerry’s patents, and that we should license its portfolio. We retained counsel and evaluated BlackBerry’s letter, as well as potential counterclaims against BlackBerry. BlackBerry sent a second letter in March 2020 asserting that our products and software infringe additional BlackBerry patents, although BlackBerry did not specify its infringement theories or make a demand for damages in the March 2020 letter. The parties have attempted to negotiate, and we accrued an immaterial amount related to the matter in 2019. However, through the date of the filing of this Quarterly Report on Form 10-Q, these discussions have not been resolved.

To protect our rights, we filed a lawsuit against BlackBerry in the United States District Court for the Northern District of California on April 27, 2020. The case is MobileIron, Inc. v. BlackBerry Corp. and BlackBerry Ltd. The lawsuit asserts that BlackBerry’s products infringe MobileIron patents, that MobileIron’s products and software do not infringe BlackBerry’s patents, and that BlackBerry has engaged in certain unlawful activities related to its licensing program for its patent portfolio. We intend to vigorously assert our claims and defend against any claims or lawsuits that BlackBerry may assert against us. The amount of damages that could be awarded in the lawsuit is unknown at this time.

Indemnification

Under the indemnification provisions of our standard sales related contracts, we agree to defend and/or settle claims brought by third parties against our customers and channel partners alleging that our software or the customer’s use thereof infringes the third-party’s intellectual property right, such as a patent right. These indemnification obligations are typically not subject to limitation; however if we believe such a claim is reasonably likely to occur and if it is commercially impractical for us to either procure the right for the customer to continue to use our software or modify our software so that it’s not infringing, we can terminate the customer agreement and refund the customer a portion of the license fees paid (prorated over the three year period from initial delivery for software licensed on a perpetual basis). We also on occasion indemnify our customers for other types of third-party claims. In addition, we indemnify our officers, directors, and certain key employees while they are serving in such capacities in good faith. Through June 30, 2020, we have not received any material written claim for indemnification.