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If I had been Judge Luckern, I would have had the following thots:
This is a close case and it can go either way.If I come down on Idcc's side, Nok will immediately have to suspend sales while they appeal and it will be a VERY newsworthy incident. I will be criticized for being an xenophobe. If I am reversed on appeal, I will look especially bad because of the damage I unfairly inflicted on Nok. On the other hand, if I come down on Nok's side against this relatively unknown company,Idcc, there will be few repercussions and my reputation will be enhanced as a strict constructionist on claims.
After the best analysis, stocks like Idcc often move on surprises. Among the possible surprises here are:
1. announcement of a new substantial licensee in the next few weeks
2. a really good earnings report which attracts interest from one or more potential buyers of the company
3. announcement of a new legal action against Nok in one or more courts
4. a management change
The price before the adverse decision by the ALJ was in the 30's so we have come down about 33% in an up market since then. A win after appeal to the ITC was always a very dicey scenario so I never counted on this appeal and I think much of the disappointment over theanticipated negative final determination by the ITC was already baked into the price . I think that once the shock of this event wears off, the stock has room to come back again. It may be a year before a new court decision, which has a good chance of favoring Idcc, is released but the odds are that, even before the decision, the stock price will be much higher at that time then it is today. My frame of mind is that I'm investing in this for the first time and I'm willing to wait for superior results.
In the future, IDCC must conduct mock trials of its handpicked patents and hire skilled patent attornies directed to try their best to shoot them down. Only then should the patents, which have survived this ordeal, be submitted to courts where the ultra sharp attornies hired by infringers will have their chance to attack them. Perhaps we can also hire a COB who is experienced in both telecom technology and patent law to make the final judgement as to which patents should go forward.
The patents submitted to the ITC were rejected by the staff, the ALJ and the full commission. Whoever was responsible for leading with these apparently defective patents should be fired and we should start over with non defective patents rather than continuing with these losers. IMO
We could use some good news tomorrow. Perhaps Harry's retirement? Or is that too much to ask for?
Before selecting the patents to go forward with in any legal action, I would imagine that IDCC would convene a panel of their top management to review the validity, infringement issues, and precision of wording of the selected patents as they apply to the target company in the legal action. Unfortunately, in this process, I would assume the COB of IDCC would be near useless and I'm not so sure about the qualifications of others in upper management. In most companies, there would be a revamping of upper management after the magnitude of failures that have befallen IDCC and a fresh approach installed to aim for a different result down the road. Lets see what happens now, if anything, with IDCC.
I'm not as much concerned with the earnings for NOK in Q3 as I am with market share. The reason is that the handset business, as we have known it, is changing. Handsets are already commodities and white boxes are ready to make their way onto the scene. The future is in services mediated through handsets. This includes messaging, music, media, locationing, banking, etc. etc. Nok has wisely prepared for this new era and can leverage their low cost production and effecive distribution (except in the U.S.) They can keep up their leadership in market share by reducing their ASP if need be and continue improving the service side of the business. They are ahead of their competitors, including Apple, in their ability to do this. The NOK Siemans partnership should also kick in with earnings as the economy and use of mobile technology improves and expands.
Mickey: The worst part of insider selling is that history shows that the price almost always tumbles in the next few weeks after the sales. One could have done well by shorting the stock each time insiders sell. Lets hope this time is one of the few exceptions.
No filing an appeal to the full ITC commission is probably an indication that some sort of a deal has been worked out. IMHO
We have to wait for the Nok episode to play out. If we lose at the end, Idcc should spend its cash in infringement proceedings against at least two tier one infringers. Otherwise we will be a slowly sinking ship while management spends most of its creativity inventing ways to reward themselves with the cash on hand including bonuses or a takeover in which management comes out ok and the shareholders not.
The price will get higher as we approach ITC decision time in the middle of December as it did recently before the ID on 8/14. Until then the shorts may play some games.
I've gone through some changes in my risk tolerance since August 14. I've been selling portions of my stock holdings that have done well but present risks for the future. Prior to August 14, I was advised by a mover to take out insurance on an expensive piece that might be damaged during the move. I declined the insurance but a few days later, I called and said,"I'll take it". I think I have a little PTSD( post traumatic stress syndrome).
Ghors: Presently the Aug 25 Idcc puts are bid at 1.90 and offered at 2.40 for a spread of .45 or 19% of the offering price, I would think this would cut away a large portion of your gains if you wish to cover rather than to take possession of the stock at the strike price. Does this type of scenario give you pause in doing options?
Infinite: I don't think you have taken into account the mind set of NOK. For years, they have been bragging to the other members of MENS that they were going to break this upstart, IDCC and in the meantime, no one should give in to them. Now its become a matter of principle and saving face and they intend to fight IDCC to the end unless or until IDCC eats crow. IMO
NET: I really doubt that the ALJ would look beyond the commission appeal. I suspect he thought it was a close call and welcomed several opinions rather than just his in the final determination.
I think the stock price will get a bump up in October when the full commision accepts the case for appeal. Then it creeps up as decision time grows close in November-December. Then ,if we win, it explodes.
NOK doesn't seem worried to be seen as a serial litigator
iq: The Ericy case presented a similiar problem wherein reference was made to a base station instead of base stations. We need someone who is an expert in english and english grammar as well as in telecom technology to write up these patents and he should be one of the highest paid people in the company.
Jeffrey: We are not talking about integrity here. All judges look at the big picture as they interpret it and factor it into their decisions. That is why you can have a Thurgood Marshall and a Clarence Thomas coming out on opposite sides of almost every decision that is not unanimous, without impugning their integrity.
Whizzer:When will the detailed findings of the judge"s decision be released?
1.Four patents including sixteen claims were presented to the ITC and all were found to be non infringing. Could this have been due to problems with claim constuction in every case? I doubt it.
2.The staff found no violation in the Sam case as well as in the Nok case.We can not know whether the ALJ agreed with the staff in the Sam case since it never came to a decision.
3. Sam settled with Idcc in spite of the Staff's opinion, indicating they questioned that the legal principle that governed the staff's opinion and that the ALJ might disagree.
4.Idcc, in the Nok case, also questioned whether the the Staff and the ALJ would agree on this legal principle.
5.What is this legal principle? I do not know and can only guess that it is a broad one and involves etsi.
6. Many excellent lawyers have considered this legal principle and have either disagreed or been unsure. Now we are about to find out what the lawyers on the full ITC think about it.
Ciciagt: We were going to have to wait anyway, even if Idcc won on the preliminary determination.
O D: great post! I was particularly interested in the 2005-2007 43% altered claim constructions in ITC commision reviews. This almost puts us back to square 1.
I think judge Luckern may have done us a favor. He recognized early on (and said so) that his decision would not be the final one here. In giving his decision, he showed us where we were strong and where our position could be reinforced a bit. We will take these instructions and proceed to use them to our advantage in the challenges ahead.
Even though I disagree with judge Luckern's decision, I admire a guy who can take on such a tough job in his late 80's.Personally I think it was that young "whippersnapper" staff of his that was a bad influence on him.
Good judges(and arbitrators) always like to give something to each side. In this case the judge gave Idcc a positive take on the validity issue and was negative on infringement. I wonder if he had been positive for Idcc on infringement what he could have given to Nok. Since the frand argument did not come into play, what else would there have been to give to Nok?
Appealing to the commision: If I were the attorney for Idcc I would select one patent and make it exceedingly clear, in a simplified manner that a layman could understand, why this patent was infringed by Nok. I would enlist at least a half a dozen experts in the field to fully investigate the patent and the equipment that is infringing on it and rest my case on their testimony
Dndood: On Friday morning, as it became evident the dispute would go to a decision, some people, who were risk averse, sold, causing the price to drop about a point. When it hit 30, a stop loss sale was generated and a large holder sold 145 thousand shares in about a minute . This panicked some others into selling and the price dropped to the low 28's. Seeing this, I was tempted to add to my holdings but fortunately did not since I already had more than enough.
Although I believe that we should appeal this decision to the full commision and beyond if necessary, I do not think we should put all our eggs in one basket. We should consider going after MOT or ERIC as we pursue this case to its conclusion. We badly need a win and we ought to be able to get one as we pursue this. We have cash on hand now and IMO this is the best way to use it.
Please don't blame management. Perhaps they could have chosen a better day for a picnic but other than that they did their best and are probably just as shocked and bewildered at the result as we are. We've lost a huge battle but the war isn't over yet and there will be more battles ahead,hopefully with a better outcome.
Could the no infringement decision be explained by a previously unknown or not well understood agreement between Idcc and Nok that seemed to give Nok the right to use these patents with no payments?
It makes sense that the decision will be made today and announced before the market opens on monday. This would avoid a halt in trading by Idcc and/or Nok although I doubt the decision would much affect the NOK price one way or the other. MO
I think you are referring to stop limit instead of stop loss. In the latter, when it hits your sell point, it becomes a market order.
Loop: a settlement in the mode of QCOM will do nothing to alter NOK's business model. A settlement in the mode of AAPL or SAM at this time when Idcc's case is as strong as its ever been would seal IDCC's fate as a bit player in wireless communications. Who do you think is more likely to compromise here? If you were the judge, whom would you be more frustrated with?
The answer to TC given by BM is about as good an example of double talk as I've seen. Who knows what he means. Personally, I hope Apple is the source of the 77 million because if it is then I'm happily wrong about management making one of the dumbest deals of our times.
It was nice experiencing a positive analysis on cnbc and the consequent rise in the stock price but keep in mind that many here know as much or more about IDCC and its prospects than the analyst. What really matters is the price after the ALJ decision on Friday(which may not be released immediately)What is important now in the midst of this premature celebration is for us and management to keep our cool and not give in to a mediocre settlement prior to the ALJ decision. Lets hope that the decision is positive and then we can all really celebrate.
NOK will use every strategy in their scorched earth attempt to thwart IDCC. I'm sure it has occurred to them that something might happen to the judge to incapacitate him before he issues his opinion. Then they could delay another year or two until a new judge takes over. With this in mind, they would prefer to delay a settlement until the last possible second.
The NOK vs. IDCC fight is more like a war rather than a series of negotiations. We, the shareholders, are the privates in this war and management are the generals. We are on the front lines with our fortunes and may very well suffer serious losses. The generals operate behind the lines and, although they celebrate aong with us in our victories and commiserate in our defeats, they are more proteced from serious injuries in the latter. Like all soldiers in a nasty and dangerous war, we have to have courage and conviction that we are in the right. We understand that should we lose, we will be badly hurt but we have to be optimistic that we will prevail and survive unbroken and stronger.
Revlis: NOK has been trounced by APPL in the smartphone arena. This is mainly a software problem and now that NOK realizes its shortcomings, it will use its considerable muscle to fix the problem and become more competitive in this area. This situation should NOT deter IDCC from insisting on a per unit royalty rate.
ShallowMind: What we ultimately want is for the court to issue an injunction. Royalty rates will not be decided by this court. I have no doubt that if there is a decision which is adverse to the interests of NOK, they will argue that the decision was not really adverse. We do not need further litigation about the judges decision. We simply need an injunction to induce them to make a reasonable settlement. I would not muddy the waters with any complicated agreement such as high low or most favored licensee. You can depend on NOK to use this type of agreement to delay and litigate further.