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"After this failed negotiation, the waters were muddied by Nokia with their petulant rantings and allegations of insider trading by IDCC management. Sounds like the desperation efforts of a company trapped by an ironclad contract." IMO this charge by Nokia was the first shot in an effort to portray Idcc management as unethical and to nullify Ericy as a trigger on the basis that the setttlement with Idcc was part of a fraudulent effort to stick it to Nok by putting a low royalty rate on the infrastructure and a high rate on the handsets. In a odd way, the decision of the judge to reverse vacatur(and eventually, I'm sure, to make the rulings available to the arbitrators) will show the rational for Idcc having to give Ericy a lower rate for infrastructure, which was hurt by the rulings than for the handsets, which came out better under the rulings.
The Ericy lawsuit was not just about money but also about recognition and now the Nok arbitration is about the same. If we do not win the Nok arbitration, we may get this recognition through a win in the Lucent case or we may need to get it through a suit against LG or some other major infringer. I do not see us signing another tier one OEM until we get it. IMO this is where our assets should be put to use, not in stock buybacks. I know that this policy involves risk. However, assuming our IPR is as good as it is billed to be, this may be our best shot.
The judge has taken the interesting position that the Idcc-Ericy settlement was on the basis of a joint agreement to petition for vacatur rather than the actual granting of vacatur. Therefore her reversal should not affect the settlement. I also think she was mislead by Nokia which stated that "the erroneous vacatur unjustly prevented Nok from arguing before the arbitration panel that the court's Markman and summary judgment rulings affect Nokia's obligations under the license agreement". To the contrary, Nok had already signed a license and the issues in dispute are whether the royalty rate has been triggered by Ericy and whether the rate Ericy agreed to pay should be Nok's rate as the contract seemed to state. Arbitration is about the royalty rate, not the validity of patents and claims that the court was dealing with in the Ericy case. I doubt that our lawyers made this clear to the judge.
osoesq: Do you believe that now that Judge Lynn has reversed herself on the vacated rulings, the arbitrators would reach a decision without seeing those rulings?
If Idcc had handed over the documents and rulings to the arbitrators at the start of arbitration, it might be over by now. It looks like we'll have to do it anyway so why don't we do it now. If this introduces too great a risk that we might lose, lets negotiate and get what we can and get out.
In the case of Qcomm, by allowing them to sublicense, Idcc essentially sold the patent to them instead of just licensing it.
"Even if there is an appeal, I do not think anybody wants any further delay (other than perhaps Nok), so the arbitration may still go ahead in Jan. '05 even if an appeal is pending" Idcc could produce the vacated rulings for the arbitrators even while the appeal is pending. Nok would claim that the issue had become moot but Idcc could point to the ramifications beyond this specific arbitration.
the May 21, 2002 Order granting Ericsson's Motion for Summary Judgment of non-infringement based on the Single Base Station Limitation may explain why Idcc was willing to accept a lower rate for infrastructure than for handsets.
I used to think Idcc's future lay entirely in the hands of the Nok arbitrators. Since Sanyo, I'm not so sure. Best to keep some powder dry until the resolution of arbitration. If Idcc wins, try to jump in quick and pay 5 to 10 points more before the rocket really takes off. If Idcc loses, wait until the big gap down and buy many more shares for the same cash. Win or lose, Idcc is going to be here for a long time.
Jim: Yes. I taped that interview with M.G. and I still have it
Now that we have new board members, does each of them get to be given a treat right away with the same goodies that Roath got or do they have to wait around a bit?
Management is pursuing a hard line with potential licensees and rightly so. Unfortunately, this involves risk. Management would rather be awarded stock thru options or RSU's and then sell, guaranteeing that whatever happens, they will come out on top. Management of this relatively small company should be fairly compensated. For exceptional compensation they should await exceptional growth of the company which would also reward the shareholders. This would be the proper "alignment of interests" that they have advocated.
"Yup, the institutions. My guess is that they will vote for Mr. Roath. If they have an issue with the RSU they can bring it to the attention of management directly. They don't need to use protest votes to get a company's attention."
Institutions already brought it to management's attention when they voted against additional options. Management ignored them. Now they have to vote against Mr. Roath if they wish to have any input at all.
Delay of the arbitration decision into 2006 would be tantamount to a win for Nok. If there is a reasonable possibility of this happening, Idcc should initiate a 3G infringement suit against a major OEM immediately, testing their most important IPR. This is a crucial time for Idcc.
O.T. The case against Grasso as outlined by Spitzer is essentially about conflicts of interest and inappropriate awarding of compensation by a board neglectful of its duties. Spitzer says that if this is an example of how boards behave, then the whole system of corporate governance needs to be reformed.
Prior to announcement of the Ericy settlement, Nok had totally ignored Idcc, making no mention of their contract and pretending Idcc didn't exist. Meanwhile Idcc kept a low profile, not objecting to this treatment. Idcc's claiming that Nok now owed substantial sums was Idcc's way of announcing that the game had changed and Idcc was coming out from underground. If anyone was remiss in that episode it was Nok for the way they handled Idcc. In retrospect, I doubt that Nok would have paid without being forced to regardless of what Idcc said.
Recent actions of management in rewarding themselves while the stock is going down involve more than just monetary considerations. They reach into the areas of their fiduciary responsibilities and ethics IMO.
Ronny, the answer is that Idcc does not want to risk a Motorola style loss in court on the most important of its patents. It would prefer to depend on the arbitrators to come up with a fair resolution which would then induce others to sign or at least serve to impress a jury in subsequent court cases if needed.
Jai, In response to" So why wait 9 months while LG drags their heels hoping Nokia wins. We got cash and Fullbright so I'd go after them now" I have long suspected that Idcc has an informal agreement with Ericy that they will sign for 3G if and when Nok pays for 2G, thus validating that Ericy is a trigger for the Nok contract. This way, Ericy will not be at a competitive disadvantage with Nok for 2G or 3g. I believe that if Idcc thought there was a significant chance they would lose the Nok arbitration, they would have already started suit with Ericy or other major OEM's over 3G. They expect that when Ericy signs and Nok pays, others will follow. If I am wrong and Ericy still won't sign, then we would need to sue.
Loop, I disagree when you say" I will vote my shares at the last possible moment in order to allow time for any watershed announcements which would justify the compensation he has received over the last 6 years."
I feel that regardless of what happens in the next few weeks, it is time for Mr. Roath to go and I so voted. I also believe that W.S. would applaud this and the stock would be lifted a bit.
The good earnings news for Q1 04 should have canceled out the poor report for Q4 03 This leaves the delay in the anticipated arbitration decision date from July 04 to shortly after Jan 05 as the only thing that has changed since the CC in March The chances for a favorable decision are the same now as they were in March. The price of the stock has changed from 27 to 16 now. This seems unwarranted even taking into account a dip in the Nasdaq since then.
I gave in. I just bot some more.
When guidance came up a week ago. the price popped up over a point. Now that we beat guidance and a good year ahead was predicted, the price is down. I know the market is dragging us down but this is unreal. I've got so much of this stock that it would be imprudent to buy more but I'm sorely tempted.
When Merrit predicted new licensees in Q4 03, I beleve he had Lu in mimd. Obviously this is not the case now. I wonder who management has in mind this time. "We also expect to
conclude additional patent license agreements during 2004"
When H.G. said at the last CC that he was not upset at the delay in arbitration but pleased that the arbitrators were taking their time, perhaps he was alluding to this.
Sjratty: I have a different view on this issue."That said, I reiterate that I think it is more likely than not that the panel will ask for the documents (to be overinclusive in their review of the case, rather than underinclusive) and I would not take that request as a bad sign. Rather, the request I would take as a neutral sign (while no request would be a positive sign)." IMO there are two things the arbitrators have to decide:
1. Is Ericy a trigger?
2. if so, how much does Idcc get paid?
The contract with Nok deals with 1. The Ericy documents deal with 2. I hope the arbitrators will want to see the documents.
We will probably get another kick up of a point or so on May 10 when we come in at the high end of recent guidance.(depending somewhat on future guidance at the CC on May 10) It will take another 2 months before anticipation of a forthcoming arbitration decision really begins heating this stock up. After the decision, there will be an explosion either to the upside or the downside. Right now I'm favoring the upside although I can't understand the delay of a decision in the absence of pacer confirmation of the arbitrators reqesting the Ericy documents from judge Lynn.
The main reason that Idcc is dropping is not because of changing fundamentals but because W.S. does not believe or trust management. We need some staight talk and evidence that the interests of management are "aligned" with those of shareholders.
Apparently the arbitration board has not yet asked Judge Lynn for the documents from the Idcc Ericy case.(nothing on pacer) This means that either the board is not interested in the documents or that Idcc has volunteered to hand over the documents without Nok having to go through the court to get them.(I would assume with the agreement of Ericy) If the documents are not being looked at, I can't imagine why the arbitration is taking so long. Perhaps this delay could be with the consent of both Idcc and Nok so they have time to look at the 2G and 3G landscape and work out a settlement.
We can relax and let events take their course. We are making our way thru the jungle and are about to emerge at the water's edge, from which point we can grab our boats and have some smooth sailing. We WILL NOT walk away from the Nok arbitration empty handed. What's important is that we made it to this point thru some pretty impenetrable terrain and some vicious predators. 3G is now arriving and it looks favorable for us to get our share. The exact amount that we get from the arbitration and some of managements peccadillos are less important than the 3G royalties that are really close now. Let's not abandon ship while we are coming into port.
"even if there is any wiggle-room for NOK to claim that a court-litigated decision was presupposed, not an out-of-court settlement...well, that makes for a lawyers' feast and very poor arb result for IDCC" If this were the case, why would Idcc have settled the case with Ericy for the little they got rather than rolling the dice in court? Also, if Idcc won in court, would they have had to wait until appeals were exhausted before the Nok deal was triggered? Would not F and J have read the contract and given their opinion not to settle? If a court decision rather than a settlement were necessary, would this now also be the case with the Lucent suit over 3G? Perhaps some of these questions could be answered at the ASM
I am less worried about the inappropriate awards of options and restricted stock to H.C. than I am about the future of this company. I think it is time for H.C. to go and to allow a person who is experienced and respected in the Telecom community to take the helm. I think H.C. has taken us to the point where we can attract a new leader to take us to the next level and I thank him for that.
Captains log: Ericy settled with Idcc a year ago without a licence for 3G. I have felt that the reason that Idcc did not initiate a suit with Ericy for 3G before now is that Idcc has an informal agreement with Ericy that Ericy will licence for 3G after the Nok arbitration concludes that Ericy is a trigger for 2G( thus demonstrating that Ericy would also be a trigger for 3G for Nok,who is their largest competitor,)In fact, after the Idcc-Ericy settlement, H.G. made a comment to the effect that Ericy was an ethical company. If Ericy still refuses to pay for 3G after a positive arbitration result, then H.G. will have made a grievous error.
eneerg; AWESOME ARTICLE I hope that the JPO and Idcc take note
"It is no exaggeration to say that for Fujitsu and other firms that own intellectual property, technology represents corporate value. Claiming the ownership of the property is not only a precondition for our existence but also justifiable behavior in accordance with the rules of international competition.
We have learned from our legal dispute with IBM that the most important thing is to stand firm in asserting our rights"
Old Dog: I believe that the NOK contract named ERICY OR ITS SUCCESSORS as a trigger and that the arguments that NOK has introduced into arbitration to nullify their contract with IDCC are without merit. I therefore have concluded that the likelihood is that IDCC will win in this arbitration. This makes IDCC a very good arbitrage for the next year and, taking into account the arrival of 3G, a very good investment for the future, IMHO.
Lets assume the worst case scenario: Idcc loses the arbitration and Nokia pays nothing nor does Samsung. Idcc gross revenues drop precipitously after 2006. The Lucent suit is not resolved until well after 2006, esp. with appeals. Idcc is forced to initiate new suits while cash in the bank is being depleted. Management commences selling its shares . We drop into the low single digits.
Lets assume a best case scenario: Idcc wins the arbitration and Nokia is forced to pay hundreds of millions of dollars. Samsung is also made to pay significant sums. Other OEM's become licencees . Ericy pays for 3G as do Nok and others. The stock price of Idcc goes to 50 in a few months and 100 in a year.
"Japanese firms have come to possess patents of global importance". Maybe now the Japanese patent office will finally get around to looking at and approving Idcc patents that have been pending for over 4 years.
S/E wants to wait to see if their signing for 2G is a trigger to induce Nok to pay for 2G. IMO, if it turns out that they are a trigger, S/E will sign for 3G. If they still don't sign, I would anticipate that Idcc would initiate a suit. This time it won't take 10 years because Idcc will be pushing it along. Also if Lu signs and that triggers Nok, I believe that S/E will sign.
Jai I agree. By December, we should breathing heavy with expectations on the NOK arbitration results.