Why is Mar. 24 so important? I share the pain of many of you about the history of the price of the stock, decisions made in the past, and the fortunes made by former members of management through stock options and shares while we suffered. But come Mar. 24, that won't matter. If you are invested in this stock, it is important to grasp why Mar. 24 is so important. To do that, you have to distinguish between IDCC's 2G litigation in the past and 3G litigation in the ITC.
2G--The value of IDCC's 2G technology was never validated by a jury or court in the US. When the Motorola jury rendered its verdict against IDCC, IDCC's ability to leverage the strength of its 2G technology against other alleged infringers was severely devasted. It was able to settle with Ericy and parlay that into two lump sum arbitration awards against Nokia and Samsung. It was also able to license with others who chose not to fight. The problem, however, for valuation purposes was that the awards were all lump sum, and did not provide a steady annual earnings figure against which a multiple could be provided. Instead, for valuation purposes, you could take the earnings from those licensees who were licensed on an annual basis, and then factor in some amount for the likelihood of sucess against Nokia or Samsung for those lump sum awards. That is why, even today, the Samsung arbitration award probably would only add a few dollars to the stock's price once it is paid.
3G and the ITC--The ITC is different from a Court because of the power of its injunction. During IDCC's 2G lawuit, all Ericy had to worry about was how much it would end up paying. Although a court could have issued an injunction if Ericy lost in the end, as a practical matter, if Ericy took it all the way to the jury, all they would end up doing is paying money. Likewise, the carriers using Ericy's phones did not have to worry about an injunction impacting their networks' use of Ericy's phones. With respect to Nokia and Samsung in 2G, they never had to worry about an injuntion impacting their sales. It was (and is for Samsung) all about delaying the final resolution as long as possible, and their only cost is/was legal fees, which they evidently view as a cost of doing business.
The ITC is a whole different environment. You have a staff and administrative law judge who are technically proficient, unlike a jury. And, if IDCC's patents are found valid and infringed, I firmly believe that an injunction will issue. This injunction would not just impact Nokia and Samsung, but the carriers that are utilizing their phones. Yes, Nokia or Samsung could appeal, but their is no guarantee to them that the injunction would be stayed during appeal. Unlike a civil case where you can post a bond to avoid paying a judgment, if the ITC issues an injunction and you appeal, there is no guarantee that the Federal Circuit Court of Appeals will stay the injunction during the appeal. As an example, when the ITC found that Qcom infringed Broadcom's patents and entered an exclusion order, the Federal Circuit refused to stay the injunction. Also, an ITC finding of the validity of IDCC's patents would also impact any future products by Nokia or Samsung that infringed the same patents. The ITC can issue preliminary injunctions against importation prior to the conclusion of a case. Let's say that IDCC wins against Nokia and/or Samsung as to their current products. If an injunction issues and they tried to import different products that infringed against the same patents, IDCC could seek a speedy injunction hearing to ban those products, as the validity of the patents had already been determined and the only issue would be one of infringement, which the technically savy ITC would be well suited to handle on a speedy basis.
So, if the staff agrees on Mar. 24, that IDCC's patents are valid and infringed, what happens. There still will be a trial with a final decision probably issued in the fall. That could be appealed, but if IDCC won, the injunction would issue and, in my opinion, probably would not be stayed during appeal. Would Nokia and Samsung sacrifice sales and market share or would they license after an injunction? And how about the wireless cariers that use Nokia and Samsung phones for their systems? If there is a strong risk that the sale of those products could be enjoined in the near future and that future products that infringe IDCC's technology could also be banned, what do you think the carriers would do, especially with regard to future promotions and plans to utilize those phones. I would think there would be pressure to settle or to make arrangements with phone providers who had licenses with IDCC.
This is why Mar. 24 is so important. If the staff agrees that Nokia and Samsung products infringe valid IDCC patents, then a strong message will be sent. . . it will be sent to all those manufacturers who infringe on IDCC's technology and import into the US and to those carriers who use those products. Yes, Samsung and Nokia could hold off on settling with IDCC and take the case through an ITC trial to the fall. But remember, there is no guarantee that the terms available today, will be offered after sucess, not only to Samsung and Nokia, but to all of the others like Motorola, Sony/Ericy, etc. A favorable decision on Mar. 24, would be the first step in bringing in all of those who haven't licensed 3G and import into this country, and, based on the license fee that will be paid, the first step in this stock marching to much higher valuations. IMHO
AI
