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Possible Ericy 3G licence
I have awaited announcement of this licence. I expected this to happen in March when Ericy agreed to pay for 2G. When H.G. referred to Ericy as a company with integrity, I figured their signing up for 3G, where we were stronger than in 2G, was just a matter of time. When it did not happen in March, I assumed the parties needed a few months to work out the details. When Merritt mentioned that a new licence would be with a name company, I saw Ericy as prime candidate. If Ericy does not sign, I would really like to know why.
Wall st. logic
D.D. thank you for that lucid and convincing letter, but Wall st. has a logic of its own. The price determines who is right. If we get the licensees that we have been lead to believe were about to make their entrance on the scene and the price goes up, then the article was dead wrong. To Wall st., this is the proof which will settle the dispute much better than even the best reasoned argument.
Idcc has always been the land of the wink and the nod. Merritt built up a lot of trust with the Sharp license prediction. The mention at the CC about new licensees in 2003 was undoubtedly done with the approval and probably the suggestion of top management. I still expect them to produce.
JeffreyHF
You mentioned "Often it has seemed curious that the IDCC boards have been festooned with ant-Qualcomm sentiment, evidenced by gleefully posted negative articles referencing Qualcomm. I still don`t understand how "bad for Qualcomm" is "good for Interdigital"
Qualcom has advertised to the wireless world that they are a one stop shop, impying that Idcc patents are irrelevant. We even thought that Qcom was the indemnifier until the Forbes article told us otherwise.(Can we believe anything that was in that article?) Unfortunately Qcom is part of the problem wherein the biggies would like to snuff us out. Thus the negative feelings.
In my view, the validity of the patents is not a propper subject for arbitration. Nok signed a license. In dispute are whether the Ericy license is a trigger and if so what the rate should be. It would be quite a burden for Nok to show that the Ericy license was a fraud designed to hurt Nok. In the absence of such evidence, Ericy is obviously a trigger and the panel has to look at the rate to see whether it is fair. While Nok tries to stall, asking for the sealed documents, which in their opinion show fraud, the panel can resolve the rate problem. Nok would like to go to court for repeated hearings as an end unto itself. The panel can and should put a reasonable limit on that. This could go faster than you think.
orientbull: good idea re Tantivity
If CDMA2000 licensing were not real close, would it make sense for Idcc to double the Tantivity staff from 10 to 20? This would be the kind of 3G licensing we have been waiting for.
Jim, regarding the show me mode:
You said "Talked to Marsala today and like Carpenter and us we are all in the show me mode." I personally am not in the show me mode, having put my money on the line. With so many in the show me mode, a 3G license, which would trigger Nok payments, would cause an explosion on the upside of the variety not seen here since 1999 IMO. I believe it will happen sooner or later and now would be just fine.
Nok Idcc dispute was backround for Forbes article
Forbes reporter spoke with Idcc CEO and a relatively low level Nok spokesman. She was evidently in awe of the goliath Nok and chose to buy their version of the dispute. I can understand that it might give one a feeling of more comfort to align onesself with goliath rather than with David. I notice she didn't attack another goliath, Qcom, who has a similiar business model and was a David less than a decade ago when they had to fight to get paid for their IPR.
The good news from the Forbes article.
The article was written by a reporter not an analyst.
The reporter has obviously done a sketchy rather than an in depth analysis.
Idcc is attracting attention, sufficient to merit a story in Forbes. We're playing with the big boys now.
Some of the statements in the article such as the one about the consortium of EOM's wanting to cap royalty rates are so one sided and obviously self serving that even a casual observer can see through them.
Summary: If we have to have a negative review, it is good to have one as poorly done as this.
The Forbes article has many errors:
This would seem to be an ideal opportunity to refute these errors, announce our new licensee(s) and unveil the mysterious indemnifier(s)and how we plan to deal with them. I hope that Idcc is heard from on Monday or Tuesday.
Danny: I suspect that Howard Goldberg did say something close to what was quoted. What was probably meant was that if OEM's want to go out of their way to design around Idcc patents with some Rube Goldberg (no relative I'm sure) contraptions, they would wind up with products that would not pass muster, and definitely not conform to 3G standards. The reporter took this out of context and made it look as though our 3G patents were not essential. I agree that Idcc needs to explain this ASAP.
Monday morning would be an excellent time for Merritt to release the news of the new licensee(s) to counteract the slanted information in the Forbes article.
Forbes article was a hatchet job
Just look at the loaded language.
"Howard Goldberg wants every cell phone to use InterDigital's chip technology. He's got a BIZARRE way of wooing customers."
"Virtually all of its $33 million profit for the first nine months has come from DRAGGING customers like Ericsson and NEC Corp. through legal disputes over patents."
"insiders started DUMPING shares"
"Given that a mystery company--Qualcomm says it's not the one--will now protect companies from InterDigital's LITIGIOUSNESS, that eliminates much of the FEAR OF SHUNNING Goldberg.
" InterDigital needed a LAWSUIT SAVANT, and Goldberg fit the bill."
" Four handset manufacturers--Nokia, Siemens, NTT Docomo and Ericsson--are SICK of patent disputes.
Future interviews with reporters bent on a hatchet job should be conducted by the public relations department IMO.
The Forbes article neglects to mention that Nok signed a license with Idcc in 1999. It also does not mention that Nok paid millions to Idcc to help develop TDD. It does not mention the Infineon chip deal. It does say that Qualcomm is not the indemnifier, which is interesting.
Nok arbitration may hold up dual mode licenses
Prospective licensees for dual mode products may be OK on paying the 3G part but hesitant on the 2G part until Nok agrees to pay for 2G. I would anticipate that after resolution of arbitration, Idcc would have success in signing up licensees for dual mode. This arbitration is not just about cash for 2G. Its about lots more including Idcc's image with the OEM's. Idcc can't afford to back down in a mediocre settlement. This dispute will probably be decided by the panel.
Merritt asserted that a licensee, who was well known, would be announced by the end of the year. This kind of assertion is dangerous if negotiations are still going on because it gives leverage to the potential licensee. Therefore I think that the contract had been signed at the time of the CC and only a technicality such as the receipt of a check remained before the final press release. Otherwise the credibility of Merritt takes a significant hit.
GE Jim: you signed off "IMO"
I am sure this is your opinion at the current time but I believe it will change when you get back in as a long. A win over NOK in a reasonable time frame, which seems to be a likely event, and one or two more major licensees, which now also seem likely might make you rethink your position as a trader rather than an investor.
Meritt's predictions in the CC have got to have been planned and were not spontaneous. The last time he predicted that Sharp would sign, it happened within a month. I believe that he has a new licensee just about signed and ready to go. He was able to delay announcement since the Q3 earnings report was good enough to stand on its own and the CC was not in dire need of more good news at that time. The final licensee announcement will occur soon and will counter possible disappointment if Judge Lynn decides not to make her decision at the time of the hearing on Monday.
Htlnd,
Nok wants to look at the documents to see if they can find something they can use in an MFL argument to delay royalty payments. They have no intention of negotiating in good faith but want to gain whatever leverage they can in 2G and especially in 3G. They know that time works for them. Letting them have the documents simply opens up other potential avenues where they might be able to delay.
Nok and Idcc have similiar interests
Nok has announced to the world that they intend to keep royalty rates low. Idcc has made it clear that they are willing to play the role of a discount patent company. In the long run, it is in Nok's interests to support Idcc in this role.
mschere, about the tantivy patents
My take from the CC was that for CDMA 2000, some of the Tantivy patents, which appied to specific applications, went well when combined with IDCC patents which were foundational and in this case the whole might be more than the sum of the parts.
Marchma, NOK's claim that their obligation under the contract has been discharged refers to development payments, not patent royalty payments.
Reasons why board has gone downhill lately
IMO the main reason is that a rash of messages from board members, which are harsh and personally insulting to another board member, has turned off some of our best contributors. Usually the insulter and insultee both tend to cease messaging and the board is the loser. Another reason is that IDCC is so withholding of information, much of which belongs in the public realm, that there is often very little to discuss. Although we are apparently unable to influence IDCC to be more open, at least we can be civil to each other and help the board in that way.
Norfolk: sorry to hear about your Dad
He will probably need one or more coronary stents or a bypass. If the stents are used, the new DES coated stents are superior to the older non coated stents because they have a much lower restenosis rate. Their price is, however, 2 or 3 times more to the hospital than the non coated stents. The FDA approved stent is the CYPHER made by J and J. It might be worth asking your Dad's doctor's about this. I don't mean to be intrusive but I thought I would pass this along.
Rip's smiling is nice but:
I'm more impressed by Bill Nagovitz of Heartland spending over $200 thousand of his own cash to buy Idcc stock.
sailfree:good question
you wrote "If there is nothing damaging or possibly damaging why is IDCC resisting turning over the sealed doc" I wonder about that myself. Possibly Idcc suspects Nok would seize upon some obscure document which they would use as a basis for further complaint and delay. Clearly Nok has no intention of paying just because the documents look OK. If they can find anything the least bit arguable, they will use it for their purposes.
Sailfree
If a contract calls for binding arbitration and one of the parties refuses to arbitrate, I believe the other party can petition the court for a settlement according to its own terms.
It has been seven months since the March court date Idcc was to have had with Ericy and, yes, the expected appeals from that case would still be going on. We have not started arbitration which usually takes about a year so I am not sure which would have been concluded first, the present path to arbitration or an Ericy appeal. The rewards of a court win over Ericy would, I believe, have been far greater than what we received in our settlement with Ericy and Nok would then have had to pay us much more than they will have to pay even if we win this arbitration. Additionally Nok would not have had a chance to rat out as they did.
As far as Idcc not wanting to reveal what is in the sealed documents, I have no idea what that is all about. I personally feel there is nothing damaging there and that Nok is on a fishing and delaying trip.
TC
If the 1999 contract with Nok had contained the following clauses, I would be more comfortable with the assumption that Nok agreed to the essentiality of the patents.
1. "In any event the royalty rate will not be less than .1%"
2. "In any event the royalty payments will start not later than 1/1/03"
I'm sure that these clauses were discussed and rejected by Nok in 1999 and Idcc AGREED to go ahead without them. Now binding arbitration has been successfully stalled by Nok for 4 months without even the selection of a panel. Since Idcc has apparently not sued to start arbitration, must we assume that they AGREE to this delay? We can guess that if and when judge Lynn disallows the unsealing of the Ericy documents in the hearing on 11/24/03, Nok will appeal. Will Idcc sue to start the binding arbitration or AGREE to further delay?
Recent events have confirmed my old impression that a court decision against Ericy was necessary to empower Idcc and even if Ericy went bankrupt as a result and never paid Idcc, Idcc would still have been better off in the long run. I am now thinking that we still need that decisive court decision. We better not spend our precious cash reserves with stock buy backs in the meantime.
Sailfree
The "license" with Nok came out of a dispute about essentiality. The parties decided to let the Idcc-Ericy suit solve the dispute and they left the rate up in the air with the possibility that it could be zero if Ericy won big. When Ericy lost, Nok began looking for ways to rat out of the agreement. In retrospect, it was a deal Idcc never should have made. A suit against Nok would have been better although Idcc may have felt they did not have the assets to pursue two major suits at once at that time.
Sophist
I have had the feeling that the important decisions in this small company are made right at the top. I recall that M. Gercenstein, who was really knowledgable and experienced in the technology area and also had a lot of management experience was shot out of the company, like from a canon, when he didn't fit in. The person with the detonator at that time was the same guy who, for better or worse, is still calling the shots, perhaps now with some probably conservative (maybe too conservative) advice from his number two. With all due respect to lawyers, they are better at telling you what not to do rather than what to do.
Sophist
You wrote" I believe current management has a better feel for the industry they are in, with exponentially more contacts with industry insiders (both friendly allies and competitive foes) than the entire bunch of posters on this board combined."
When you mentioned current management,were you refering to H.C. or H.G. or both?
Additional goal of Nok in dispute with Idcc
6. to weaken Idcc and then buy it cheaply
I agree that the interests of the shareholders demand an aggressive posture at this time. If we fail against Nok, management can do OK with IDCC continuing as it has in the past, richly rewarding itself amidst partial disclosures and hopefull predictions, but we, the shareholders, would be best served by a change in management or even a sale of the company. I believe we have the "engine and the transmission" but now we need a gas pedal.
Nok goals in arbitration with Idcc
Nok would like a low rate or no rate for 2G AND for 3G. I have thought of the strategies that that they might pursue to achieve these ends by a decision of the arbitration board or even better by a favorable settlement without such a decision. Some of the strategies they may be using:
1.Nok brings to public awareness Idcc insider trading issues, which may be uncomfortable for Idcc management.
2.Nok wants vacated PSJ of Judge Sanders to be opened.
3.Nok wants to see if there might be ILLEGAL collusion between Idcc and Ericy against the interests of Nok.
4.Nok wants to slow Idcc momentum hoping that other payors to Idcc will balk and thereby force Idcc to accept a low rate for 3G. They do not want Idcc to become another Qualcom that they might have to deal with.
5.They will stall as much as they can and in any way they can, figuring that they have nothing to loose and delay may bring on events that could force a favorable settlement from Idcc.
Weakening of the concept of arbitration
Regardless of what happens on 11/24/03, the concept of arbitration as an efficient proceedure for settling disputes has been weakened by the recent moves by NOK. NOK has succeeded in demonstrating a technique whereby arbitration can be delayed, possibly indefinitely, by requesting that the courts make various rulings BEFORE arbitration begins. This takes away the main advantage of arbitration and suggests that it might be just as well for disputes to be brought directly to the courts.
Arms, this may be short term momentum trading
When the market was way up this morning, momentum traders may have been disappointed with the relatively small run up in the price of Idcc. When the tide turned, these traders sold their long postions and may have shorted, figuring the next move was down. We will see if this extends into tomorrow. Whether it does or not, it has nothing to do with the long term value of Idcc IMO.
Petersimon, my take on the hearing date is
Judge Lynn wanted to give Samsung time to file court papers and then she wanted to handle both Nok and Samsung requests at same time. I believe she will deny the requests to unseal and will present well thought out and convincing reasons which may make an appeal by Nok and Samsung look like a transparent delaying tactic. The November 24 date which is about when I expected it to be may present a real win for Idcc although there may be some further delay before she announces her decision.
The arbitration panel could proceed with the understanding that if the judge rules in favor of unsealing the documents, the arbitration could be suspended pending the receipt of the documents. In the meantime, all issues not related to the documents could be dealt with. If the judge rules against opening the documents, the proceedings could be brought to a close in a reasonably short time.
Jai, I think you make sense
I think that more litigation is on the horizon. I did not like the Idcc stock buyback. I felt then and still do that the cash should be used to project financial strength and support litigation. The future of Idcc depends less on right and more on might. I believe we have both but we may have to stress the latter.
Idcc Samsung Arbitration called for Samsung to get the SAME benefits as Nok under its licenece with Idcc. I did not take this to mean that because the Nok royalty rate for the period after 1/1/02 was as yet undetermined, Samsung would be entitled to pay NOTHING for this period until such time as the Nok rate was determined. I see that most posters are convinced that Samsung DOES have this entitlement. I'm still unsure on this point.