Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Sjratty:
Isn't it quite likely that Idcc alleged infingement by Ericy not only on many claims that were central to their case but also on some peripheral claims that might be less sustainable . If this were the case then it would follow that the rejected claims were likely to have been in the more questionable group to begin with. This would be in line with Idcc's assertion that they were in good shape after the partial summary judgements.
Sjratty:
My take on the issue of the claims that were eliminated by Judge Sanders is this:
Unless and until these claims are thrown out in a final court decree in some future litigation, Nok is on the hook for them. Do you disagree with this?
Apparently some patent claims were disallowed by judge Sanders in PSJ while others were allowed. If Idcc never had occasion to appeal these PSJ due to the settlement, how could this be used against Idcc? If Nok wanted to challenge these claims it could have gone the litigation route with Idcc but it elected instead to sign a license agreement with them with just the royalty rate to be decided.
Don't blame Marsala. He has taken a hit and is doing the best he can to recover. The important point that may be being missed in all of this is that Marsala doesn't know anymore about this stock than we do. In fact I have a hunch that many of us who have been around Idcc lots longer than he has may have a better feel for this stock than he does. If his bailing out causes the stock to crash, then we can buy more at a cheaper price. His downgrade is what I would categorize as soft bad news rather than hard bad news, which has a direct effect on earnings. Unfortunately the Nok decision not to pay promptly did qualify as hard bad news, but we have already paid the price and perhaps more than we should have for that.
Idcc has already priced in a long delay due to the arbitration. Another few points down and we'll have priced in a loss in arbitration. If you believe that Idcc will lose in arbitration, it makes sense to sell. Since I don't believe that, I will be buying still more.
Ge Jim:
It is my understanding that Nok was asking not only for the court documents in the Ericy case but for arbitration notes as well as notes from previos litigations and arbitrations. I doubt that Ericy would have agreed regardless of what Idcc wanted. It really sounded like a fishing expedition and a stall to me. I doubt that releasing these documents would have induced Nok to pay voluntarily anyway. Idcc had only one choice; to go to arbitration. This is a classic case IMO where arbitration can bring a dispute to a timely close.
GE Jim: Could you be more specific about what you mean by:
"Lawsuit city if they been playing" I assume you're talking about collusion between Idcc and Ericy. I suppose I'm naive but I just don't see how Nok could produce any evidence of collusion even if the court documents they are seeking were opened for them. `
Nok decided to arbitrate for 3 reasons:
1. It wanted to demonstrate that it was just as tough as Ericy and Mot and back up their publicly announced bid to be a leader in keeping telecom royalty rates down.
2. It was genuinely upset, and perhaps with some reason, about how Idcc handled the announcement of the "trigger" being in effect.
3. It figured it could ring some kind of concession from Idcc.
They've shown how tough they are and IMO have made themself look a little assanine in doing so. They've let out their anger which I think had more to do with disrespect for Idcc than anything else. They hardly ever in the over 3 years their agreement was in place said anything kind about Idcc or even mentioned their name. The concession they're going to get is the 20% discount for prompt payment.
In the Nok filing to the district court in Dallas, they state:"it is in Ericsson,s interest to acquiesce in Interdigital's attempt to impose high costs on a competitor." This statement should put to rest the question as to whether Ericy is an important enough oem to trigger the rate setting. Either Ericy is or is not an important oem and Nok clearly states that it is.
Marchma:
" have heard that Nokia had essentially agreed to the rate settlement and had sent IDCC draft papers to that affect. Allegedly, there was a problem with one aspect of the draft that IDCC did not agree with and sent it back to Nokia for revision. Nokia’s top leadership then met with Samsung’s top leader and suddenly had an about change of face. All of a sudden in apparent collusion with Samsung, Nokia decided to fight the contract with everything that they could muster. Nokia sent back the draft with so many changes and alterations from the original draft that IDCC could not possibly accept it, and then all hell broke loose"
If what you have heard is true, then this sequence of events would certainly be introduced during arbitration discussions. The question would have to be asked of Nok,"why did you do such a sudden about face?' The answer would be interesting.
Nok will probably see this through at least until judge Lynn rules on the opening of the documents. If this goes against Nok, I would not be surprised to see a three way meeting betweeen Nok, Samsung, and Idcc to put an end to the arbitration in return for a 20% discount on the rate. This would help the reputation of Nok and Samsung and reconstruct their working relationship.
sjratty:
"The second argument COULD be very strong, depending on what the contract says. I understand that it lists ERICY as a trigger company, but one example of how that may not mean much is if the contract says the MFL clause is tied to the license of another major manufacturer, which CURRENTLY includes ERICY, etc..... Interestingly, this second issue does NOT require any docs from the IDCC/ERICY case to resolve"
Although the 1999 Nok-Idcc agreement did not refer exclusively to Ericy, it is clear that the determination of the Idcc-Ericy suit is what both parties had in mind primarily. It would seem most likely that Idcc would not allow a clause in the Nok agreement to nullify the affect of a win over Ericy if Ericy dropped out of the category of a major manufacturer.
Spencer
As a ball park estimate, figure judge Lynn will rule on whether Nok can access the documents from IDCC-Ericy by end of September. Arbitration usually takes a year. I don't believe the Tantivy aquisition had anything to do with recent market action.
To the attorneys. Nok-Idcc agreement specified that Idcc must pursue the litigation with Ericy. What does the word pursue mean? Does it mean that it must be pursued to a jury verdict?
Loop I agree with you on Nok. Rough business practices are expected and accepted but Nok has really gone beyond. They have attacked management personally and may have inflicted grave harm on them personally. This will be remembered by managements of other companies long after the other details of the dispute with Idcc are forgotten. The word will be out that it is dangerous on a PERSONAL as well as on a business level to do deals with Nok.
Notes on Nok-Idcc imbroglio
-Nok and Idcc have been negotiating for 4 months without an agreement. From what Merrill said at the CC I surmise that A deal to give Nok concessions on 2G in return for a 3G deal was on the table but Nok probably wanted to rape us on 3G too.
-Management foolishly painted itself into a corner on 3/17 when they announced how much Nok was going to pay.
-Management was foolish to hype the Ericy deal on 3/17 and then sell into the rally. IMO some top management has lost credibility and unless they can pull a rabbit out of a hat they may have to go. Middle management just followed the crowd in the selling and they are not so deeply involved.
-The threatening by Nok to get management in trouble and then actually doing it is reckless on their part, esp since it is so plain for everyone to see. It is just barely possible that they could get into trouble with the law over this type of extortion.
-There is still a decent chance for a settlement in the next month or two, esp if Nok loses its bid for the documents, which I give a 50% chance of happening.
-If we lose this arbitration, there is little doubt that the company will have to be sold or the whole structure will come crashing down. In this scenario, 3G IPR will still be valuable but Idcc will have been weakened too much to pull it off.
-I suspect that we will be treated to good news at the 8/13 CC. Management will pull out all the stops to make that happen.
ams13 sag, perhaps either you or lawyers would know the answer to the following
Would an arbitration panel or a court decide on the propriety of commencing arbitration proceedings? If the court were the one to decide why wouldn't any reluctant party to an arbitration dream up some legal issues and ask a court to decide whether arbitration should start? If the panel were the one to decide and if they decided that arbitration would not proceed, would that affect the right of the requesting party to rerequest arbitration at a later date?
GE JIM
As one who is very long in IDCC, I realize there are several reasons to make overly optimistic posts. One prominent one is the unconscious desire to believe you are doing the right thing. Another is not to make a post that might harm your position. A third might be to cheer up your similiarly thinking "teammates". Another might be to keep in the good graces of management so that they will answer your calls and E-mails. A more sinister reason would be, if you trade, which I do not, to drive the price up so that can sell at a profit. If you are short, there are plenty of reasons to make overly pessimistic posts, some of which are the reverse of the reasons I have given for the longs. Lets face it, this board is mainly useful when you screen out most if not all of the opinions and learn about facts you otherwise wouldn't have known. If you pay too much attention to any opinions here, you are very naive. Even the opinions of analysts should not be paid much attention to as has been recently demonstrated. I value your posts when you remind me of negative facts(such as the existance of an indeminifier) which I would otherwise tend to suppress. I believe you bring a balance to this board which I think it needs and I am glad to see your posts. When and if the day comes when I decide to sell, posters like yourself will have been of help. Criticizing your motives is no more valid than criticizing the motives of us longs, esp none of us really know enough about each other enough to be sure about our motives.
GE JIM
If the indemnifier were allowed legally to do this, which IMO is very unlikely, we would still have our patents and would be bought out by a company with enough resources to indemnify against the indemnifier. This kind of activity would be an anathema to small patent companies and I can not see it as something that anti-trust laws would permit.
What is worst case scenario for IDCC?
Lets assume the worst. We lose the arbitration with Nok. We'd still have potential in 3G. We'd still be worth about $9/share, given the money we have in the bank and our patents and our paying licensees and our almost debt free situation. I understand people being anxious and even depressed, but this is not the time to throw in the towel. The best case scenario is worth a hell of a lot more on the upside than what we have to lose on the downside. IMHO
Loop
I believe that with this much money involved, Nok is looking for whatever concessions it can get and will make whatever arguments it can, specious or not, towards that goal.
You stated:
" I still believe that Nok is seeking to get a free ride for 2002. I just do not believe that they are upset with the royalty rates in the Ericy licenses. I must qualify that last sentence with an "if IDCC has essential patent claims in TDMA/GSM". My own take on this is that the essentiality of Idcc patent claims was affimed when Ericy decided to pay and the arbitration does not involve that issue.
The Idcc Nok arbitration proceedings offer a forum where the parties can continue negotiations. Idcc wants arbitration because it inserts a timetable for the dispute. Nok, being the payor would probably not opt for it if they didn't have to participate. Idcc has a choice. They can either hang tough or not. Based on past performances, they will probably make some concessions and settle. Nok will use delaying tactics as much as the panel allows them to, feeling that the delay puts more pressure on Idcc. Success in 3G licensing would certainly lessen the pressure on Idcc to make concessions in the Nok dispute. I don't think we longs should focus on the time that arbitration might take but rather on our success in getting new licensees, esp 3G. I agree with Loop that if Ericy will not pay us for their use of 3G IPR we need to start suit against them sooner rather than later. If the settlement with Nok includes a 3G license, then we would probably be able to quickly settle the 3G suit with Ericy.
Vtem you make a good point.
Nok had over 3 years to decide on a fair royalty rate through face to face negotiations with Idcc. They chose to take the alternative route of having the settlement determined by a third party which would agree to a deal with Idcc, this latter route being outside of their control. When the rate recently was established via the Ericy-Idcc deal, they did not like the result. Now they want to return to their original option of having the rate settled in face to face negotiations through the vehicle of arbitration. They would like to project themselves as an injured party. They can't have it both ways.
Nok is not interested in Ericy court case. This case dealt with using Idcc patents which Ericy has decided to pay for. What NOK really wants is information as to how the rates that Ericy agreed to pay Idcc were reached. They would like to find evidence that there was collusion between the two against them. Such evidence would not be found in court papers but in the direct negotiations between Idcc and Ericy. These negotiations are probably not filed with the court and are doubtless covered by confidentiality clauses and would require the consent of BOTH Idcc and Ericy to be revealed. Ericy is not a party to the Nok-Idcc arbitration proceedings and would probably balk at this. Idcc would not have the option of opening up these papers, assuming they exist at all. Recently we have seen QCOM sue TI for revealing confidential information and attempt to get their whole agreement nullified because of this infraction.
Was there a minimum royalty rate that IDCC had the right to choose to accept(ie like .1%) written into the 1999 NOK contract to be invoked even in the absence of other licensees? I don't believe I have ever heard this question asked of management. Without this clause, there was always the possibility that the rate could be zero. In that case, I would not consider the NOK deal to be a real license and it never should have been advertised as such. I hope that at the next CC this question will be asked. If management declines to answer, I would take that as a no.
Sometimes I muse about the possiblity that NOK might be stalling the arbitration in order to get time to make an offer to purchase IDCC instead of paying it. Recently Roche was being sued by IGEN in a licensing dispute. IGEN claimed that ROCHE, a licensee was abusing their license. Roche lost the case in court, appealed in an apparent play for time and then bot the company at a 65% premium. I'm not saying that it will happen here and a 65% premium wouldn't be all that great but it is interesting to see something like this happen. I don't follow either stock but I noticed the announcement.
If NOK succeeds in stalling arbitration until all requested papers are received including papers held confidential by past arbitration panels and courts, it would be a blow to the whole concept of arbitration. One of the main purposes of arbitration is to provide a timely resolution of disputes. The NOK motion, if allowed by the arbitration panel, could postpone arbitration for years as it works its way through the courts with appeals. NOK, in order to have their motion upheld, would have to show serious evidence of misdoing rather than just a suspicion. Otherwise this case could be used as a precedent which could damage the practice of arbitration.
Osoesq I think you mean canon ball instead of canon fodder. We're the canon fodder. But, seriously, I agree and I think that endless delay becomes their last canon ball at that time. If we can blunt this last weapon with a discount, they might deal then.
The spirit of the 1999 NOK contract was that payment would begin in Jan 2002 with the royalty rate set by the market or negotiated between the two parties in good faith. NOK chose to violate the spirit of the contract and pay nothing at that time,holding out the possibility that they might never have to pay anything(ie if we lost to Ericy). Idcc chose not to tell anyone about this until recently in 2003, thereby compounding the problem of a poorly crafted contract with lack of disclosure of what was really material information. We do not even know to this day why they finally chose to release it at the time that they did. This was information that should have been released to the investing public right away but was withheld for over a year.
Broken lets look at some positives: Ericy is finally on board, albeit at a reduced price. NOK will probably be resolved within a year and possibly much sooner. It highly unlikely that we will suffer a complete loss. We are operating in the black with plenty of cash to litigate if we choose to. We have an excellent 3G patent portfolio and enough experience not to make the mistakes we made with 2G. We are better positioned to license 3G than we were with 2G altho I must admit that I am concerned about the slow pace thus far. Our deal with Infineon should bear fruit within a year. We have analysts on our side and a better image than we've had for years. I have bought in the after market on Tuesday and I will continue to buy on the dips.
Litigation is often settled at the courthouse door. Wouldn't it be interesting if the NOK IDCC dispute was settled at the arbitration door?
Since we license to OEM's, we should have some products that we ourselves manufacture, even if its a small part of our business.. Aside from the profit motive, it will give us more credibility and help us understand things from the manufacturers point of view.
Assuming IDCC patents are viable, tthe biggest mistake we have made in recent years was to use MFL contracts. To correct this we need to stop using MFL contracts but to let our rates be determined by:
1. how early the lessee signed on
2. the volume of his business
3. the promptness of his payment
Like it or not, this is a litiginous business. Companies do not like to pay for patent rights. Even after signing, they don't like to pay. If we do not have two or three cases in litigation at any given time, we probably are not doing our job. New hires should emphasize lawyers rather than engineers. I look forward to seeing some announcements of new litigation at the August CC on Q2 earnings.
QCOM sueing TI. Lets join in and initiate some lawsuits ourselves.
IDCC received notice of NOK request for arbitration on Friday, July 18 and did not issue a press release until after 3 PM on Tuesday, July 22. I wonder whether last minute negotiations delayed the release of this important information. I believe this posturing by NOK is part of the ongoing negotiation process, which could be resolved at any time.
NOK is saying they owe nothing and that they want to see all sorts of documents. Arbitration is in some ways like litigation. First you stake out your most extreme position.Then in discovery you try to fish around for anything related or unrelated that might be of some help.Then you zero in on your real nitty gritty arguments and objectives. In this case NOK wants concessions on the royalty rate or the years involved in which they must pay. The arbitrators may give them some relief on one or both of these. In the end they will be a paying licensee.
2G arbitration vs 3G licenses
We're all hung up about NOK arbitration and how long it will take. A far more important issue is getting paid for 3G. We need new licensees and evidence of getting paid for 3G. Is ERICY going to pay or not and if not what are we going to do about it? Same goes for NOK. Please don't talk about patience any more. We now know that doesn't work. If this company gets paid for 3G, its future will be diamonds and if not its future will be dust, REGARDLESS OF WHAT HAPPENS IN THE ARBITRATION. If IDCC sits back and waits, it is inviting oblivion.
Loophole
Your post brings to mind the old saw: "If a guy owes you a little money, he's got a problem; if he owes you a lot of money, you've got a problem." Best that we take action NOW against infringers before they owe us a LOT of money. We've learned many lessons in 2G and we need to put them to work in 3G or suffer the same consequences. The coming year will be crucial for IDCC not only in how the NOK arbitration plays out but even more importantly how we conduct the INEVITABLE fight to collect what we are owed for 3G. This business has two challenges, which are EQUALLY important. One is inventing and the second is getting paid for what you invent. We must dispense with the canon in defending against infringers and rely on the machine gun instead. I would like to see us seriously consider an action against NOK for 3G infringement even while we are in arbitration for 2G. This might push them to settle the current arbitration with a deal for both.
NOK is outraged that they have to pay royalties based on an Idcc settlement with Ericy that they had no control over. But wait a minute. This never would have happened if Nok had not chosen to infringe for years and then insisted on the contract that they signed. Their real problem is that they planned to screw Idcc even more than they have and this little upstart seems to have legally found a way to get what's theirs. No doubt NOK intends to cheat on 3G payments also. Why not? Every one else does and they're the biggest, baddest bear in the forest that sleeps wherever it wants. Idcc missed an opportunity to send a clear message to the telecom world in the Ericy case. Let's hope they don't let this chance get away too. In this business respect is a hell of a lot more important than "friendship".
A conference call to clarify matters would be really important to shareholders and analysts. Without one, I'm afraid we may lose an analyst or two because of "lack of visibility".