I hope IDCC lets Judge Luckern decide Nokia
It appears to me that since the MOT debacle, IDCC's strategy has been to never risk another adverse decision. They have gone to the "court house steps" a number of times and walked away with what I found to be very disappointing results. The company apparently views the settlements differently, as each time money has rained down on management. I guess any time they don't lose a decision they view it as a big win. I hope management revisits that approach, as circumstances have changed.
After MOT, IDCC was in survival mode. They needed to do whatever they could to get money coming in the door. Things are different now. They have half the market under license. They have a strong cash position and no liquidity worries for years to come even if they sign nothing else. The time has come for IDCC to make their case and get a decision that will give them some leverage. Nokia and the rest of MENS now believe that IDCC will cave, so they will not give in. IDCC is going to have to show the willingness to go the distance to ever have a chance to get a good settlement.
IDCC is in as good a position as it will ever have with the Nokia ITC hearing. They have a judge who is smart and experienced in the area. He has and will spend the time to understand the issues. He knows the issues and the games Nokia has played. IDCC has had a dress rehearsal with Samsung and has learned from the experience. If IDCC has at least one valid and infringed patent, and there is no implied license, then he will rule in their favor. At that point, IDCC will have the hammer. Delay will become a severe problem for Nokia as they will not be able to sell in the US. With that leverage, IDCC should be able to get a good contract. Not FRANDly? Well, Nokia, we can litigate that for a couple of years while you sit out of the US market.
The Nokia contract will be the benchmark for all others, like Ericcson and MOT, as well as for the relicensing of LG, Samsung and others because Nokia is the big dog. The only way IDCC is going to get a favorable license is if they have some sort of court win to compel Nokia to pay or shut down. This will make a difference of hundreds of millions of dollars over the next five years, which will all drop go to the bottom line, less bonuses and taxes. QCOM could've followed IDCC's strategy of appeasement when their patents were under fire and easily achieved a 10 bagger. They went to the mat and the price exploded. IDCC is not in QCOMs position, but I think a win at the ITC will result in a share price at least double what a pre-decision settlement will bring.
What if they lose? That is possible and it would be worse than another mediocre settlement. However it would not be the end of the road. Losing the ITC case just means that we have to go back to court. A long and very unappealing process, but the ALJ's decision is not binding on the court. It would mean a couple years of no Nokia revenue, and it would be a big delay and weaken IDCC's position with the other licensees. So it is obviously a risk. However given the licenses, cash flow and earnings locked in right now and the current share price, the downside is small compared to the upside with a win.
I believe that IDCC has a good case and a reasonable chance of winning. If they win I see the stock price going well over 50 by 2010, and if they can resign others at increasing rates they will show growth that will generate a higher than average PE. If IDCC has essential patents, then they should get paid, and the only way it will happen is with a decision. If they don't, then they will have to settle for the much cheaper licenses like they signed with Samsung.
All the above is IMO. I am not an attorney nor knowledgeable about patents, so I am not competent to judge the merits of their case. I am assuming that IDCC has at least a 40% chance of winning when I say they should go to a decision. If management and the legal team sees at least that good a chance, I sincerely hope they make a stand with Nokia before the ITC.
