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I think that I heard Liren say that this 2019 policy from the DOJ and the
NIST was a positive development. It's three years old and I'm not sure
why he mentioned it today. Maybe it's because he thinks that it'll
carry some weight in the upcoming Great Britain FRAND trial? I'll
have to listen again, but he did say that IDCC was looking forward to
the upcoming FRAND trial in GB.
FOR IMMEDIATE RELEASE
Thursday, December 19, 2019
Department of Justice, United States Patent and Trademark Office, and National Institute of Standards and Technology Announce Joint Policy Statement on Remedies for Standard-Essential Patents
Today the Justice Department, U.S. Patent and Trademark Office (USPTO), and National Institute of Standards and Technology (NIST) issued a joint policy Statement regarding the treatment of standard-essential patents (SEP) where the patent holder has agreed to license its patents on fair, reasonable, and non-discriminatory (F/RAND) terms. This Statement replaces the 2013 policy statement on SEP remedies issued jointly by the Department of Justice and USPTO.
“Consistent with Article I, Section 8 of the U.S. Constitution, our patent system rewards inventors with an exclusive right to practice their inventions for a limited time,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division. “Today’s Policy Statement recognizes that when licensing negotiations fail, appropriate remedies for patent infringement, including injunctive relief, should be available to SEP holders. The availability of the full range of remedies is necessary in order to preserve competition and incentives for innovation, and for continued participation in standards-setting activities, which can produce substantial benefits for American consumers.”
To this end, the Statement clarifies that a patent owner’s promise to license a patent on F/RAND terms is not a bar to obtaining any particular remedy, including injunctive relief. The agencies make clear that no “special set of legal rules” apply to SEPs, and the courts, the U.S. International Trade Commission, and other decision makers are able to assess appropriate remedies based on current law and relevant facts. According to the Statement, “The particular F/RAND commitment made by a patent owner, the [standard development organization’s] intellectual property policies, and the individual circumstances of licensing negotiations between patent owners and implementers all may be relevant in determining remedies for infringing a standards-essential patent, depending on the circumstances of each case.”
https://www.justice.gov/opa/pr/department-justice-united-states-patent-and-trademark-office-and-national-institute-standards
Yes, Liren mentioned that in the conference call. The license agreement(s)
was mentioned in the press release, but in the call, Liren specifically
mentioned both Amazon and Zebra Technology.
<<Second Quarter 2022 Financial Highlights
Total revenue of $124.7 million increased 42% from $87.7 million in second quarter 2021. Recurring revenue was $100.1 million, compared to recurring revenue of $78.1 million in second quarter 2021. The year-over-year increase was driven by new patent license agreements, including two agreements signed in second quarter 2022. Second quarter 2022 revenue included record levels of combined revenue from the consumer electronics, automotive, and IoT markets.>>
https://ir.interdigital.com/news-events/press-releases/news-details/2022/InterDigital-Announces-Financial-Results-for-Second-Quarter-2022/
Thanks - it looks like he's downgrading a lot lately like ANET which is a good
company with very good technology. But I've noticed over the years
that analysts are usually chasing thigs on the upside and downside and
they're typically late. For example, saying to buy NVDA when it was
$240 and they analysts said that it was going to $280 was an absolute
brain-dead analysis - and there's many similar analyst mistakes.
I think that IDCC is a good buy here when the BoA analyst says sell. But
I think that it'll take time for IDCC's new markets to kick in which are
consumer electronics, IoT, automotive, and cloud services.
If we an settle with Lenovo and Vivo as the litigation progresses, we
should in good shape if we bought at these levels (and even if it goes
down to $55 the returns will be better) as long as we have a long-term
view.
I guess that the BoA analyst is right about the lack of growth catalysts.
I always knew that the growth should come from winning in court and
getting paid from Lenovo, Oppo, etc. Here's an update on the Lenovo
proceedings from the latest 10-Q:
Lenovo
UK Proceeding
On August 27, 2019, the Company and certain of its subsidiaries filed a claim in the UK High Court against Lenovo Group Limited and certain of its
subsidiaries. The claim, as amended, alleges infringement of five of the Company's patents relating to 3G and/or 4G/LTE standards: European Patent (UK)
Nos. 2,363,008; 2,421,318; 2,485,558; 2,557,714; and 3,355,537. The Company is seeking, among other relief, injunctive relief to prevent further infringement
of the asserted patents.
The UK High Court held case management conferences on October 6, 2020, and December 16, 2020, a disclosure hearing on January 19, 2021, and
pre-trial review hearings for the first trial on January 28, 2021, and February 8, 2021. At those hearings, the UK High Court entered a schedule for the technical
and non-technical FRAND proceedings. Two technical trials were scheduled for March 2021 and June 2021, and the non-technical FRAND trial was scheduled
for January 2022. There are three additional technical trials scheduled for the remaining patents following the FRAND trial. The first and second technical
trials were completed, and on July 29, 2021, the UK High Court issued its decision regarding the first technical trial finding European Patent (UK) No.
2,485,558 valid, infringed, and essential to Release 8 of LTE. Lenovo is appealing this decision. On January 6, 2022, the UK High Court issued its decision
regarding the second technical trial finding European Patent (UK) No. 3,355,537 invalid, but essential and infringed but for the finding of invalidity. The
Company plans to appeal the second technical trial decision as legally erroneous. The FRAND trial commenced on January 11, 2022 and concluded on
February 11, 2022. The third technical trial is scheduled to commence on May 10, 2022, to be completed by May 18, 2022.
District of Delaware Patent Proceeding
On August 28, 2019, the Company and certain of its subsidiaries filed a complaint in the United States District Court for the District of Delaware (the
“Delaware District Court”) against Lenovo Holding Company, Inc. and certain of its subsidiaries alleging that Lenovo infringes eight of InterDigital’s U.S.
patents-U.S. Patent Nos. 8,085,665; 8,199,726; 8,427,954; 8,619,747; 8,675,612; 8,797,873; 9,203,580; and 9,456,449-by making, using, offering for sale,
and/or selling Lenovo wireless devices with 3G and/or 4G LTE capabilities. As relief, InterDigital is seeking: (a) a declaration that InterDigital is not in breach
of its relevant FRAND commitments with respect to Lenovo; (b) to the extent Lenovo does not agree to negotiate a worldwide patent license, does not agree to
enter into binding international arbitration to set the terms of a FRAND license, and does not agree to be bound by the FRAND terms to be set by the UK High
Court in the separately filed UK proceedings described above, an injunction prohibiting Lenovo from continued infringement; (c) damages, including enhanced
damages for willful infringement and supplemental damages; and (d) attorneys’ fees and costs.
11
Table of Contents
On September 16, 2020, the Delaware District Court entered a schedule for the case, setting a patent jury trial. On March 8, 2021, the Delaware
District Court held a claim construction hearing, and the court issued its order on May 10, 2021, construing various disputed terms. On March 24, 2021, the
Delaware District Court consolidated the antitrust proceeding discussed below with this patent proceeding. Trial for the consolidated proceedings is scheduled
for March 6, 2023. On April 25, 2022, the parties filed a stipulation to stay only the claims relating to U.S. Patent No. 8,199,726.
This was the previous recurring revenue guidance - so the recurring
is consistent. But it's nice to be able to get some one-time revenue -
every increase in revenue helps:
<<Near Term Outlook
Based both on existing licenses and license agreements that we currently expect to be executed in second quarter 2022, the company expects revenue for the quarter to be between $114 to $120 million, including approximately $97 to $101 million of recurring revenue. This revenue guidance does not include the potential impact of any additional new patent license, technology solutions or patent sale agreements that may be signed, or any arbitration or dispute resolutions that may occur, during the balance of second quarter 2022.>>
https://ir.interdigital.com/news-events/press-releases/news-details/2022/InterDigital-Announces-Financial-Results-For-First-Quarter-2022/default.aspx
dws, thanks for the information. I'm encouraged by the two high-level
Qualcomm executives coming over to InterDigital. These men (CEO and
CTO) are very tuned into the value of IP. And if they thought that IDCC's
technology was weak and not very relevant, they would have stayed
at Qualcomm.
<<Dr. Pankaj joins InterDigital from Qualcomm where he most recently served as the Senior Vice President, Engineering and Head of Corporate R&D, managing a global team of engineers focused on Artificial Intelligence, Edge Computing and new technologies. Throughout his 25-year tenure at Qualcomm, Dr. Pankaj oversaw research in 5G, 4G LTE, augmented reality and other technologies, contributing to an industry-leading wireless and mobile computing patent portfolio. His team developed a software platform for drones that was implemented in Ingenuity, the first vehicle to fly in the atmosphere of Mars. Dr. Pankaj is also a prolific innovator and is an inventor or co-inventor on 230 patents worldwide.
“I am delighted to welcome Rajesh to InterDigital as our new Chief Technology Officer,” Liren Chen, InterDigital President and CEO said. “As a highly experienced and respected innovation leader in cutting edge connected technologies, Rajesh is perfectly placed to take our work in wireless, video, AI and other areas to new heights. I am particularly excited by his experience of working in a variety of industry verticals and horizontal technologies, such as deep learning, that are shaping a new, more immersive era of connectivity.”>>
<<The slide show was the same. Apple expires in September and Samsung expires at the end of the year. They expect to resign them.>>
The question is will Apple force another lowball agreement?
<<Based on Apple-internal documents that showed up in its own dispute with Apple, Qualcomm notes that "Apple had a years-long strategy to hold out in SEP licensing, coerce favorable agreements, and then used those low-ball agreements as comparable licenses when holding out against Qualcomm." That is a very important allegation as it may explain why the likes of Ericsson, Nokia, and InterDigital have not yet renewed their SEP license agreements with Apple. At least the Ericsson-Apple agreement has expired, and I'll talk about their current litigation further below. But Nokia and InterDigital also appear to have a hard time working out reasonable license agreements with Apple short of having to enforce their rights in court. Those major SEP holders may simply be unwilling at this stage to renew those license agreements on low-ball terms. They'll want their fair share, and they now know Apple has so far paid greater SEP royalties to Qualcomm than to all others combined.
Qualcomm points to various examples of courts finding Apple an unwilling licensee, all the way up to the Optis and Unwired Planet v. Apple dispute in the UK, which will go to a FRAND trial shortly and where the court has already considered a hold-out tactic by Apple to constitute bad faith.>>
http://www.fosspatents.com/2022/06/qualcomm-says-apple-coerced-low-ball.html
This shows that Ericsson is back in court with Apple but they settled with Samsung:
https://www.reuters.com/technology/ericsson-sues-apple-again-over-5g-patent-licensing-2022-01-18/
Thanks - so it looks like their interest payments will jump from $8 million to
$14 million annually. That's not the worst thing in the world if they can
identify something good to buy or maybe buyback even more stock!
Thanks for pointing out the 3.5% notes - I just assumed that they haven't
been priced yet - I have so much other stuff to read!
The only explanation that I can have is that they're not optimistic about
the Samsung and Apple renewals. But, with that being said, why buyback
stock if that were the case? Secondly, in my view, Chen (the CEO) wouldn't give
up a high-profile role at QCOM to come to a company with dying IP.
So, to me, it looks like IDCC likes having ample cash at the ready for
more acquisitions and more stock buybacks.
The 2024 notes were paying a 2% yield and a lot of those
will likely be refinanced. We don't know the yield of the
2027 notes because they haven't been priced yet. So
on the 2024 notes, I believe that IDCC pays roughly
$8 million / year to the bondholders. I doubt the yield
on the 2027 notes gets doubled to 4%.
Also, I don't know why it hasn't been mentioned here, but IDCC
will also use some of the proceeds from the 2027 notes to
repurchase up to $100 million in stock from some select
institutional investors - not on the open market. I don't
think that IDCC has done that before.
Liren Chen at Qualcomm.
For those who might not know, this shows that he had some very important
roles at QCOM. Having such a high role at Qualcomm Technology Licensing,
which has about $6 billion per year in royalty revenues, is a big deal.
He must see potential in IDCC's IP to take the job as CEO. The Apple
and Samsung renewals are due later this year - he knows IP very well, so
he must think that IDCC has a good shot at some solid renewals.
--------------------------------------------------------------------------------------------------------------------------------------
Lawrence (Liren) Chen is President and CEO of InterDigital, Inc. InterDigital unites wireless and video communication technologies and AI solutions into one of the world’s largest pure research, innovation, and licensing companies to solve many of the industry’s most critical technical challenges.
Prior to joining InterDigital, Mr.Chen worked at Qualcomm Inc, where he most recently served as Senior Vice President, Global Head of IP, Legal Counsel. In that role, Mr. Chen was responsible for overseeing Qualcomm’s worldwide intellectual property portfolio (patent, copyright, trademark, and open source) and led technology, business strategy, product management, and global eco-system development for Qualcomm Technology Licensing. Preceding that, Mr. Chen served in various IP and technology roles at Qualcomm, including as Senior Vice President of Engineering, Legal Counsel.
Mr. Chen holds 28 granted patents in the U.S. and over 120 granted patents worldwide. He earned his bachelor’s degree in Automation from Tsinghua University, Beijing; his M.S.E.E. from the University of Maine; his M.B.A. from San Diego State University; and his J.D. degree from the University of San Diego. Mr. Chen is a member of the State Bar of California.
https://www.6gworld.com/team/liren-chen/
Another $100 million stock buyback was authorized on May 6th:
<<
Item 8.01.
Other Events.
On May 6, 2022, the Board of Directors of InterDigital, Inc. (the “Company”) authorized a $100 million increase to the Company’s existing stock repurchase program. The Board authorized a $300 million stock repurchase program in June 2014, which was increased to $400 million in June 2015, to $500 million in September 2017, to $600 million in December 2018 and to $700 million in May 2019. The latest increase brings the total authorization to $800 million.>>
http://archive.fast-edgar.com/20220524/AE2LM22DZZ2RV9ZZ2HJK2ZYSI3G9ZZ22Z242/d341132d8k.htm
Before these new notes, IDCC had just about $479 million in net cash in
the most recent 10-Q that was filed earlier this month. So if IDCC bought
back all of their debt, they would have that $480 million - so that's a nice
cash position particularly since their total market cap is currently $1.88
billion.
Part of these new notes will be to repurchase the old "2024" notes - which
are worth about $400 million in indebtedness.
We'll just have to see exactly how much of the "2024" notes that they
repurchase, but I'm guessing that their debt and cash position will be
roughly the same - and that's $899 million in cash and short term investments
and just about $420 million in total debts.
Hopefully IDCC can continue to generate (and increase) that healthy free
cash flow of $130 million last year and $150 million back in 2020 by
renewing the Apple and Samsung licenses.
Lastly, I'm a Rambus investor and they're not rolling out their debt - they have
about $172 million in convertible bonds and it looks like they're just buying
it back with their healthy cash flows of around $200 million annually.
New notes - some for stock buybacks:
<<InterDigital expects to use a portion of the net proceeds from the offering of the notes, and the proceeds from the sale of the warrants described below, to fund the cost of the convertible note hedge transactions described below. The remaining net proceeds from the offering of the notes are expected to be used for the repurchase of a portion of InterDigital’s existing 2.00% senior convertible notes due 2024 (the “2024 notes”) in privately negotiated transactions concurrently with the offering of the notes, the repurchase of up to $100 million of shares of InterDigital common stock from institutional investors consistent with its recently announced $100 million increase to its authorized repurchase program through one of the initial purchasers or its affiliate, as InterDigital's agent, concurrently with the pricing of the offering of the notes, and for general corporate purposes, which may include, among other things, the repurchase, redemption or other retirement of any remaining 2024 notes. >>
https://ir.interdigital.com/news-events/press-releases/news-details/2022/InterDigital-Announces-Proposed-Private-Offering-of-350-Million-of-Senior-Convertible-Notes/default.aspx
Chen - “I am particularly pleased with our strong outlook for second quarter 2022 with additional revenue expected from our auto and IoT licensing programs."
https://ir.interdigital.com/news-events/press-releases/news-details/2022/InterDigital-Announces-Financial-Results-For-First-Quarter-2022/default.aspx
IDCC signed a top 10 TV vendor in 2021 - "pretty major milestone"
according to the CEO, Liren Chen.
English FRAND Developments to Watch Out for in 2022
<<However, patentees continue to assert that “unwilling licensees” should irrevocably lose their entitlement to a FRAND license, and the English courts will grapple with this issue, which will also be considered in the InterDigital/Lenovo litigation, in 2022.>>
https://www.ipwatchdog.com/2022/02/03/english-frand-developments-to-watch-out-for-in-2022/id=145218/
olddog967, thanks for the article.
An optimist could look at that article and see that
almost all of the companies on the list are multi,
multi billion dollar companies.
A very crude and back of the envelope analysis could
show that if IDCC is about 1/10 of Qualcomm's contribution
to 5G (as more or less shown on that list), that's
still important relative to the size of both companies.
QCOM generates about $6.5 billion in IP revenues annually
and IDCC is striving to get about 1/10 of that.
So if IDCC can get that 1/10 of QCOM, that would
still be very good for IDCC's future stock price.
Unwired Planet - UK Supreme court.
This is a big deal for SEP patent holders who file in the UK
<<Whether it was equitable to grant injunctions against Huawei when it had agreed that it would accept the court’s determination of what were FRAND terms for the UK patents in question but not for the rest of the world.
The first three of these had been fully litigated in the lower courts in the Unwired Planet case, but had been pleaded, but stayed, in the Conversant case pending the decision in the Unwired Planet case. The fourth issue was newly raised in the Supreme Court. Additionally, Huawei had argued in the Conversant case that the English courts were forum non conviens for deciding the dispute.
The Supreme Court decided in favor of Unwired Planet and Conversant on all issues, affirming the judgments of the lower courts on the issues that had been litigated before them.>>
https://www.jdsupra.com/legalnews/uk-supreme-court-decisions-in-unwired-2737217/
<<This decision is the first from five technical trials that are scheduled to proceed before the UK High Court with an additional trial to establish fair, reasonable and non-discriminatory (FRAND) licensing terms scheduled for January 2022.>>
InterDigital Wins Key Patent Verdict Against Lenovo from the UK’s High Court
July 29, 2021
https://www.globenewswire.com/en/news-release/2021/07/29/2271052/24691/en/InterDigital-Wins-Key-Patent-Verdict-Against-Lenovo-from-the-UK-s-High-Court.html
The above win was a big deal.
Also, the FRAND trial will be a big deal - probably for more so
than just IDCC.
It could be important on the global level as well. The UK
could be the "go to" place for IP holders since the Unwired
Planet decision allows injunctions!
So maybe IDCC doesn't want to settle with Lenovo?
<<The company expects third quarter 2021 total revenue to be between $119 million and $121 million, including approximately $89 million to $91 million of recurring revenue. The increase from second quarter 2021 is driven by both an expected $15 million of recurring revenue and $30 million of non-recurring revenue from a fixed price license agreement signed during third quarter 2021.>>
FISH21049, that's very close to what they were 'hinting' / guiding
at last quarter's conference call.
But, to me, it looks like the recurring Xiaomi revenue is a bit higher -
$15 million / quarter = $60 million annually!
Thanks - I figured that was it because you post there a lot.
I'll be following the company now - thanks for the heads up.
My biggest position is in RMBS - the insiders own a fair amount of
stock. The CEO and CFO both hold over 200K shares. And the CTO
has about 150K shares. There's also a relatively new board
member whose fund owns over 500K shares - here he is:
https://investor.rambus.com/press-releases/press-release-details/2021/James-Mitarotonda-Joins-Rambus-Board-of-Directors/default.aspx
In my view, Rambus has more room for growth than IDCC does.
That's because RMBS is now designing products for high-growth
industries like the hyperscale data center companies and Intel's
and AMD's push into the CXL Interconnect as well as security
for those interconnects, etc.
But their stock is nothing like the founder of a company whose
company is their baby. Over time, I noticed that those can
be great investments. Not every time, but they must be in
the right field with the right products, etc.
Just look at Jen Hsun Huang's NVIDIA - it's still his "baby"
and he took that company to great heights.
Also, Bill Gates and Warren Buffett come to mind.
Some people forget that they used to be 30% holders of their
stock at the peak - or something close to that.
Here they are - I hope that you do well:
Beneficial Ownership of Common Stock
Name of Beneficial Owner
Shares of Common Stock Beneficially Owned
Percentage of Common Stock Beneficially Owned
Directors and Executive Officers
Francois Michelon
348,485(1)
2.5%
Michael Thornton
506,619(2)
3.6%
David Wells
121,588(3)
*
Louis Basenese
7,481(4)
*
Anthony DiGiandomenico
407,725(5)
2.9%
Dr. Sanjiv Sam Gambhir
39,824(6)
*
Michael Harsh
72,452(7)
*
Alexander Tokman
39,824(8)
*
All directors and executive officers as a group (9 persons)
1,536,516
10.3%
5% Stockholders
Catalytic Opportunity LLC (9)
1,511,262(10)
10.0%
David Dodd (11)
1,298,672(12)
9.6%
https://www.sec.gov/Archives/edgar/data/1681682/000165495420004207/ndra_pre14a.htm
__________
Excellent - you got me beat.
I thought that I was one of the biggest holders on the board.
If you've been doing this since 1992 (similar to me) you
definitely know what you're doing.
I've seen many traders get wiped out - I think that's going to happen
again with some young traders who are relatively new to the
game. The Wall Street Bets types.
When people buy options that expire worthless (because they're
not real long term investors that buy stock) they complain
a lot on Internet message boards.
I've seen it happen a lot.
They're greedy and they don't even know it!
This was Q2:
<<Second Quarter 2021 Financial Highlights
Recurring revenue was $78.1 million, compared to recurring revenue of $85.2 million in second quarter 2020.>
https://ir.interdigital.com/news-events/press-releases/news-details/2021/InterDigital-Announces-Financial-Results-for-Second-Quarter-2021/default.aspx
So the new recurring revenue model is for $360 million - that means
that this quarter's (Q3's) recurring revenue should be $90 million
because they said that in last quarter's conference call. More
specifically, they said that after the Xiaomi settlement, their
new annual recurring revenue should be $360 million.
So Xiaomi will be paying about $12 million / qtr or $48 million
annually.
So next quarter's one time "catch up payment" should be for
about $24 million. And then we'll also have the continuing
payment of $12 million per quarter.
That's my analysis!
Come to think of it, IDCC provided some type of "guidance" in their
last quarterly conference call. Check here - they gave enough
info to give us a decent idea as to what to expect:
<<Meanwhile, our estimated annualized expense savings from the restructuring remains roughly $15 million. We expect to begin to realize a portion of that savings sometime in the fourth quarter of this year. Looking forward to Q3, we expect our financial results to benefit from our long-term fixed price agreement with Xiaomi, including the expected recognition of two quarters worth of non-recurring revenue in Q3. In addition, we expect to recognize a level of recurring revenue that would put our revenue platform at roughly $360 million.>>
They also said this:
<<We will provide additional details around our expectations for Q3 revenue expense, including any adjustment to compensation accruals, and any expected restructuring charges in one or more releases later this quarter.>>
https://www.fool.com/earnings/call-transcripts/2021/08/05/interdigital-inc-idcc-q2-2021-earnings-call-transc/
dws, yes - I was talking about guidance as well.
IDCC typically reports the current quarter's guidance
several weeks after their last quarterly report.
my3sons37, good point.
Do you (or anyone) know when we shall expect the Q3 guidance?
Thanks.
Standard-essential patent royalties set to rise after unanimous Fifth Circuit judgment in Ericsson's favor ($2.50 or 1%/$1-4 per 4G device) against HTC
http://www.fosspatents.com/2021/08/standard-essential-patent-royalties-set.html
Hurricane Ida's landfall prevented the Fifth Circuit from holding the Continental v. Avanci et al. appellate hearing scheduled for yesterday (Monday, August 30). But the appeals court is still weathering the storm in other ways, and today put out its HTC v. Ericsson opinion (PDF).
The judgment is unanimous, though Circuit Judge Higginson filed a concurrence to make a point that is, ultimately, not outcome-determinative here.
The case originated from the Eastern District of Texas, where HTC alleged a FRAND breach by Ericsson, lost a jury trial, and the district court additionally entered declaratory judgment holding Ericsson in compliance with its obligations under the ETSI FRAND pledge, which is governed by French law. While the appeals court's affirmance of the district court ruling is based on purely legal questions (partly relating to jury instructions), it's worth noting what royalty demands have been blessed on the bottom line:
Ericsson initially (in 2016) wanted $2.50 per 4G device.
After HTC brought the complaint in question, "Ericsson proposed a new licensing agreement whereby HTC would pay 1% of each 4G device sold, subject to a $1 floor and a $4 cap."
HTC's response to the original $2.50 rate was a measly $0.10 counterproposal. The reaction to the 1%/$1-4 deal was an amended complaint.
Why such a discrepancy? Primarily it's due to the fact that HTC made a smallest salable patent-practicing unit (SSPPU) argument, claiming that the baseband processor should serve as the royalty base.
Outside of the Northern District of California, SSPPU arguments don't seem to get traction. While I believe no court would ever be inclined to let a WiFi SEP holder collect 1% of the price of an entire airplane with WiFi on board, baseband processors that aren't fully licensed aren't the measure--and if they are fully licensed, than the value of all IP licenses far exceeds that of the raw material.
The district court declined to overinstruct the jury, and its approach has now been affirmed. This is also a post-term achievement for the Antitrust Division of the United States Department of Justice under then-AAG Makan Delrahim. In late 2019, the Trump DOJ had filed an amicus brief formally in support of neither party but practically in Ericsson's favor. Interestingly, Apple's amicus brief in support of automotive supplier Continental's ill-conceived U.S. case against Avanci, Nokia and others--which is pending with the same appeals court--is all about bashing the Trump DOJ.
Let's face it: this victory for Ericsson is of transcendental importance. Whatever HTC will end up paying Ericsson is just a small piece of the puzzle. In the greater scheme of things, this is yet another milestone for cellular SEP holders, some of whom are going to look at Ericsson's win and feel that their rates are too low. And it's going to be harder and harder for car makers to refuse to pay royalties on their products that the U.S. judiciary apparently considers appropriate for phones. Apportionment arguments don't seem to do the trick for implementers--and there are so many license agreements that will have to be renewed in the near future, with SEP holders often demanding substantially higher royalty rates for licenses covering 5G.
tradero, thanks for the information.
I think that RMBS has a different situation than IDCC when it
comes to designing products. IDCC already tried that 10+ years
ago (and more recently as well, I think?) but it didn't pan out.
This article explains what IDCC did 10+ years ago:
https://www.barrons.com/articles/SB115758545680155754?tesla=y
In my view, Rambus' situation is different because they were able
to buy Inphi's memory buffer division about five years ago and
that's a nice niche market. But it's growing pretty fast - currently
$610 million market that's expected to double by 2025. There's
only three main players in that market and one is Chinese (Montage)
and the other is Japanese - Renesas bought the USA's IDTI for about
$7 billion a couple of years ago.
Also, the buffer chips are a good segue into the upcoming CXL
interconnect standard for data centers. That's Rambus' expertise -
high speed interface signaling. It's taken years and years and
years, but Rambus is finally in a position where the stars are
starting to align with regard to being a key player in the upcoming
interconnect standard that's backed by Intel, AMD, ARM, NVIDIA,
Microsoft, Google, Facebook, and many others - check below.
Also, Rambus' acquisition of CRI and Verimatrix's Inside Secure
division (both bought with IP profits) will add to the hardware
security cores that are part of this standard:
https://www.rambus.com/rambus-advances-new-era-of-data-center-architecture-with-cxl-memory-interconnect-initiative
https://www.computeexpresslink.org/members
So, the bottom line is that it isn't easy for the right markets
to fall into place for an IP company to expand into. I believe
that Texas Instruments did it a long time ago. Qualcomm obviously
did it, but these transitions take a long time and not all of
them work. ARM Holdings hit a home run (on their IP alone), but that took a long time as well.
Anyway, I think that IDCC will do well - and it would be nice if
they can find a way to expand into products. But, if they do,
that'll take years. You might be surprised as to how many
'slower moving' IP people left Rambus when fast moving product
guys like this were brought in. You could even say that more
than a couple of heads had to roll. But you also need balance
because it's important to keep the top innovators.
It's definitely somewhat of a cultural adaptation. Super high-
tech products are hard and you need the best in the business
to do it
successfully:
https://www.rambus.com/sean-fan-joins-rambus-as-chief-operating-officer/
<<Fear on the street is a buyers gift.>>
That's easy to say, but it's not so easy to put into practice.
Many company's stocks that are in a downtrend under $5 go
bankrupt. And, as we know, in most bankruptcies the shareholders
get wiped out.
The tricky part is only buying those companies that start to go
up again at fire-sale prices.
Just FYI - I was accumulating Rambus for a decade + at many prices
below $12 and many below $10. Many dips into the single digits,
I bought. My lowest price is $4. It's now just shy of $25.
I now have a huge position in RMBS because I follow the company
like a hawk. They're both IP companies, but, in my view, it's
even better than IDCC because its balance sheet is pristine,
but they're now getting into manufacturing products. Very
important products for the data center like memory buffers, PMICs,
SPD hubs, and CXL (the next datacenter interconnect standard)
security and expansion / memory pooling chips.
I'm not pumping RMBS. But what W. Buffet says about Ted William's
book - The Science of Hitting. Only swing at pitches
that you like and make sure you understand the fundamentals
of what you're investing in like a hawk!
PS: I have a fair amount of IDCC, but I have even more RMBS!
IDCC's foray into products didn't work. I think most people
are completely unaware of how many top-notch engineers
RMBS has scalped away from Integrated Device Technology
(bought by Japan's Renesas) and other similar companies
within the past few years. RMBS' product division will
work because they have both the money, the talent and the
synchronicity with the high speed signaling expertise that's
necessary to succeed.
<<Between January 1 of this year and August 3, we've reduced our outstanding share count by another 300,000 shares through the repurchase of $20 million of our common stock.>>
https://www.fool.com/earnings/call-transcripts/2021/08/05/interdigital-inc-idcc-q2-2021-earnings-call-transc/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Agreed. And it looks like every incremental 10% of the market
that's licensed brings in $36 million.
IDCC is currently at $360 million recurring with Xiaomi and
after the settlement, they now have 55% of the industry
licensed.
I don't think that they will ever get to 100%. So, to try
to be conservative, if they can get to 85% (because
there's some small frys that probably won't pay), we're
talking ~ $470 million in recurring revenue!
That's a lot of incremental EPS and that doesn't include
their growth initiatives in the Sidoti slide that I posted
a couple of days ago.
It was said very fast - but did they say that they plan to
purchase $20 million in stock this quarter.
I was so busy trying to get what they said before they threw
something like that out there.
In Q3 - non-recurring revenue from Xiaomi will show up for two
quarters. So that could be an $80 million catch up payment.
Now that's my interpolated guess - IDCC did not give a number -
they just said two quarters of catch up payments will show up
next quarter. I'm interpolating from the additional revenue
that IDCC should get for recurring - their model is now
$360 million. And 55% of the industry is now licensed.
CC over - it's pretty lame that I think that there were only
two analysts that asked questions.
Maybe that's good because a lot of people don't know what's
going on?
New recurring revenue model with Xiaomi is $360 million.
That's roughly $40 to $50 million annually from Xiaomi recurring.
That does not include two quarters of 'catch up payments' I think
to be reported in Q3.
This was heard on the fly - so I could be wrong about the catch
up payments. But I'm sure that I heard $360 million recurring.
dndodd, that makes sense.
But I hope that they give us a good idea about the Xiaomi
agreement during this morning's conference call.
For example, if they say that Xiaomi is a good template
for the others to settle that'll take IDCC's recurring
revenues at $500 million +.
I posted before I read that.
So now we know.