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Mindset of ERICY in Harris Case
mschere,
If you think about it, ERICY and Harris went to trial over what seemed to be royalties of about $17 million. This case extended over several years and featured a patent that was already expired so there was no future revenue to be gained from the fight.
I'm sure if ERICY were willing to give just a little, Harris probably would have settled and the trial never would have taken place. Apparently, ERICY was nonnegotiable in its settlement positions which ultimately led the parties to trial. You can bet Harris probably spent close to the requested damage amount in legal fees and disruptions to their continuing business. So why did Harris take this case all the way to trial?
Was it simply based on the recommendations of F&J due to the smoking guns uncovered in depositions? Was the Harris trial meant to be a practice run by F&J for the IDCC trial? Did IDCC encourage Harris to go the extra mile with ERICY to see what kind of impact the evidence would have on a jury? Would Harris have gone to trial without the smoking guns? I am trying to use the Harris trial to establish the real value of the smoking guns to IDCC and F&J.
I just don't understand why Harris took this case all the way through trial for the damages they were requesting unless they needed it to set a precedent and gain respect from those who are using their patents illegally. I don't think money was the key factor in the Harris trial. It have been more a matter of principal and respect. It may also have been that once the smoking guns were uncovered, Harris was enraged enough to take ERICY to the mat no matter what.
Judging on the outcome of the Harris case, ERICY has to be reexamining their settlement strategy with IDCC. I don't think they can possibly maintain their previous attitude that they they will definitely prevail in a trial unless they have some equally damaging smoking guns. If they do, F&J and IDCC must be aware of them and must have established their relative importance in the grand scheme of things. This is getting to be one hell of a chess match.
Bill
Disclosure of damages sought by IDCC...
mschere,
IDCC won't disclose damages sought because it would likely cause false expectaions from its shareholders. IDCC will be seeking the largest damage award they can reasonably expect to pursue and then probably end up settling for something less. They couldn't publicly announce the damages sought and then say, but we'll take something less in a settlement. The jury would simply hone in on what they would take in a settlement. Also, if the amount sought is believed by the industry to be excessive, it could damage IDCC's credibility in the marketplace.
If they publicly disclose the damages they are seeking, IDCC shareholders will try to hold them to it and will be severely disappointed if they do not get it. We've seen this happen with NEC and Samsung already. If I were IDCC management, I would not publicly disclose the damages sought either.
The only positive reason for publicly disclosing the damages sought would be that it would tell the ERICY shareholders how significant this lawsuit really is. Then ERICY's shareholders may start pressing ERICY for a settlement. The notice of trial delay has not been associated with ERICY news because ERICY continues to treat this litigation as a non event to ERICY. At some point they are going to have to face the wrath of their shareholders and it won't be pretty. I fully expect to see some shareholder suits out of ERICY's camp when this is all said and done unless ERICY can put a positive spin on it in a settlement.
Bill
Settlement waiting to be signed...
Mickey,
If the proposed settlement stinks, it will never be signed so there isn't any point in discussing it. I believe ERICY has always had an offer to settle on the table but it is not worth signing because the terms won't benefit IDCC going forward.
At this point, we need to stick to our guns and prepare for the trial in May.
Further delays in trial...
AMS, I don't agree with you about further delays in the trial. I believe this delay is caused by the magnitude of work that the judge and her clerks must do to get ready for this case once the exhibits were filed and motions and objections posted. It simply overwhelmed them to the point that a delay was in order. This may have been part of the trial strategy of ERICY all along. Now that everything has been presented before the judge, there will not be any need for further delays. I no longer think a settlement will happen and the judge will realize this preparing for the next court date. She will not let it delay any longer. I only hope she releases her order on Harris soon as that one is starting to get old.
The trial delay was leaked somehow by ERICY. That is why you saw the ERICY price go up this week on days when the market was down. That is also why you saw a lot of dumping in IDCC on the one day of an up market this week.
It is nice to know that Wall Street still has access to nonpublic information and can use it to manipulate stocks. Now I await the hoard of options that the execs of IDCC award themselves. If so, I will start a personal campaign to see that all executives at IDCC are replaced. These people tend to take a lot of credit for meaningless accomplishments. We need 3g licencees and these are not all tied to ERICY.
Bill
Pressure from the Big Three...
Consider this. ERICY holds out for NOK and now Samsung to pressure IDCC into a lower royalty rate. Both of these companies now have an interest in the outcome of the ERICY trial. Furthermore, all of these companies have a significant interest in the royalty rate for 3G. Could these companies be trying to persuade IDCC to be reasonable with ERICY?
Suppose NOK and Samsung approach IDCC and say we can fix this problem for now and going forward. All you have to do is accept a royalty rate of .5% backwards and forwards for 2G and 3G. You do that and we will all agree to license your technology. ERICY has nothing to lose with this scenario until the trial starts and the jury verdict is read. Until then, the powers to be can still hammer away at IDCC to get a fovorable settlement approved.
Bill
What about this notion...
It couldn't be as simple as ERICY just holding out for a more reasonable royalty rate could it? We know there was a group WP5 trying to control the royalty costs for 2G. We also know there is a group established to try to control the royalty costs for 3G. ERICY and NOK were and are members of both groups. Do you suppose NOK is putting pressure on IDCC in the ERICY case to lower their royalty rate for 2G?
It is obvious that NOK and ERICY are pressuring IDCC to lower their 3G royalty rate to make W-CDMA more competitive. Is NOK really joined at the hip with ERICY?
This may really start to get interesting as the truth unfolds. I am starting to think that IDCC has to play up to the big guys beating up the little guys role in their case with ERICY. They also need to watch their backs with NOK. I believe, depending on the department within NOK that you are dealing with, that NOK is both a friend and a foe.
Bill
Response on MFL clause of Nokia contract...
captainslog, in my opinion, MOT does not license IDCC technology because of the court finding that MOT's equipment has been found not to infringe IDCC's patents. This finding is due both to the invalidation of IDCC patents that underly the technology of MOT and the finding by the jury that MOT equipment does not infringe IDCC's patents. Regardless, we got hosed in the MOT case.
NOK recognizes that their technology uses patents owned by IDCC and will therefore be subject to some royalty rate. NOK, however, made the rate in their contract subject to the finding of infringement and establishment of a royalty rate in a future proceeding that we have come to believe is the ERICY case. Since the PTO revalidation and Markman hearings, I do not believe the jury will be given the option to invalidate IDCC's remaining patents unless ERICY can provide substantial evidence that prior art was omitted from IDCC's patent filings or that IDCC's patents are invalid because they were not timely filed. I am less confident that ERICY can prove their technology does not infringe IDCC's patents if they are held to be valid.
In short, the findings in the MOT case have affected the payments of royalties to IDCC but do not eliminate the royalties for patents not pursued in the MOT case. It is believed that a win by IDCC against ERICY will open the door for IDCC to pursue MOT once again. I would like to see IDCC get a second chance at that company.
Bill
If ERICY proceeds with trial....
I don't see ERICY going to trial unless one of two things happen:
1) ERICY found a prior reference to the patents of IDCC that they were looking for last year that if made publicly by IDCC, would prove that IDCC's patents were not timely filed or,
2) ERICY plans for a long appeal in order for them to set the company up for bankruptcy. (What is the bonding requirement here?)
There is simply no other logical explanation for this case going to trial with all of the information that is coming to light.
What can we possibly be missing here?
Nokia meeting with ERICY?
Do you think Nokia was trying to determine what information was supplied to IDCC concerning the GSM WP5 group? That would be a bit embarassing now wouldn't it? Does anyone know the time frame that this information was obtained by IDCC? I bet it was within a year prior to the Nokia announcement.
I have the feeling that there have been many more smoking gun memos uncovered by F&J in this proceeding. Again, ERICY's only remaining chance is to keep this information from being admissable on some technicality. If ERICY can't get the evidence thrown out, they will be forced to settle and license. ERICY knows IDCC doesn't want to go to trial and will take any reasonable offer to settle after the 28th. It's like you have a winning poker hand but there is still one last wild card to be dealt. There is a slim chance we could still be beat but I like our odds better after every card is shown.
Bill
Smoking gun depositions...
Loop, what I find incredible is the fact that a finding of willful infringement was obtained by Harris against ERICY using the memos describing the patent violations against IDCC. These memos didn't even pertain to Harris and they still used them to show the motifs of ERICY. Does anyone think IDCC will get any less favorable treatment from the next jury?
In the Motorola trial, IDCC performed numerous errors that essentially lost the case for them. IDCC concentrated solely on proving infringement and trying to establish damages. Motorola was busy trying to invalidate their patents. That thought never crossed the mind of IDCC's legal counsel. IDCC lost on appeal because IDCC never established a defense against Motorola's claims of prior art, therefore the appeals court had no choice but to accept the jury's verdict, even if it was flawed. That was a major blunder by IDCC's legal team and won't be repeated by F&J. I believe F&J have all of their bases covered.
Even if ERICY produces other witnesses supporting prior art against the patents of IDCC, I think those witnesses have already been identified and F&J has a defense against them. I agree with putting the Hoff memo on a blow-up chart so that every time ERICY presents a witness to refute the claims of IDCC, the jury can see the statement of an ERICY employee that IDCC had the first TDMA base station patent and the patent was unavoidable. There is some mighty powerful information disclosed tonight by JKJ and ERICY is going to have to stomp through a virtual minefield to survive.
Question, I don't understand why Nokia is gambling on the ERICY verdict. Do you suppose Nokia has a not-to-exceed rate that triggers in the event of an IDCC victory against ERICY? In other words, Nokia is guaranteed a better rate than ERICY so Nokia has nothing to lose if IDCC wins, but stands to win if IDCC loses. You don't think IDCC would be dumb enough to have put themselves into this position, do you? I wish we could figure this part out.
Bill
To the Attorneys on board:
Who has the final shot at delivering closing arguments to the jury, IDCC or ERICY?
The information on this board is incredible!
Regarding Bates Stamp....
jaykayjones, the Bates notation refers to a Bates Stamp (document number) that is recorded on each document that is filed in reference to the case. An exhibit may be made up of one or more documents. You can tell the number of documents by the beginning and ending number of the Bates stamp recorded for the exhibit.
I wish I could join you in Dallas. I would love to get a peek at the documents you are reviewing. Thanks for all of your efforts and research.
Bill
Who are the sellers?
It is my opinion that the sellers comprise holders of call options that are trying to lock in profits on their shares while risking only the cost of the options. That was going to be my strategy too but now I am going to hold both shares and options and go for broke.
The selling should be over soon.
Laranger...Bravo
By that action, you invariably gave notice to PWC that there was an unrecognized contingent liability on the books of ERICY that PWC was either unaware of or not told about. Your action put PWC on notice and provided information that they could not ignore.
If the case had settled or gone to trial and ERICY had to pay material royalties or damages, your e-mail could have been evidence against PWC and their arguments that they were unaware of the litigation of IDCC.
I'm not surprised about your statement that PWC no longer accepts e-mails about their clients. I would love to have seen the conversations between PWC and ERICY as a result of your e-mail. You probably made a few enemys back then.
Bill
wireless_wazoo is right on the money...
Ultimately, why is PWC so concerned about the disclosures of ERICY in their SEC reports and reports to shareholders. As the auditor for ERICY, PWC is like an insurance policy to creditors and shareholders of ERICY. If ERICY's financial statements are found to be materially misleading and PWC had access to the information that caused the financials of ERICY to be misleading, then PWC would likely be sued for damages suffered by creditors and shareholders. PWC must cover their respective arses to keep this from happening.
PWC does have access to all of the litigation information and representations made by ERICY's attorneys. If PWC is limited in any way from getting this information, they have no choice but to sever their relationship with ERICY or face possible lawsuits if anything goes awry. The poptential damages to PWC in this case could amount to hundreds of millions of dollars.
As I see it, the only way IDCC can lose this case is by a fluke jury decision and that is still entirely possible. The difference between the ERICY and Motorola cases is that a reputable lawfirm is now representing the interest of IDCC. In the Motorola case, most of the legal work was done by in-house counsel. IDCC was so outmaneuvered in that case it isn't even funny. Ask our beloved leader Howard Goldberg what his role was in the Motorola case. I'm also betting on a settlement between the parties before the jury verdict is read.
Thanks wireless for giving us the insight about PWC. You are 100% right on the money.
Bill
To All...Please be patient!!!!
Have a little faith in F&J. If IDCC didn't have a case, you can bet F&J would be telling them to settle and it would have been done by now. F&J did a marvelous job representing IDCC in the Markman hearings.
Remember what Corpgold said was the demise of IDCC in the Motorola hearings. Motorola held up one of their phones and compared it to one of IDCC's Ultraphones. Well gee, there's not much comparison there and Motorola captured the attention of the jury with a simple presentation.
All F&J has to do is hold up a Nokia, Samsung, and NEC phone and compare it to an ERICY phone. Those are all companies who recognize our technologies and patents and whose royalty rates will be tied to the royalty rate determined for ERICY. I would even say to the jury that these companies are so confident that ERICY will pay royalties to IDCC that ERICY's rate was referenced in their contracts with IDCC. Other phones to be presented are Sharp and Matsushita. In fact, put a line of ten phones in a row next to ERICY's. The jury should get the message. Arguments about claim structure and single versus multiple base stations will go right over a jury's head. Keep it simple stupid (KISS).
I believe in F&J and their ability to steer IDCC to victory. I will not panic or sell until the case is completed. If you're scared, buy puts for protection.
Bill
ERICY Pre trial tactics
Revlis, you are right about the position of IDCC. I would not expect them to change their position unless damaging evidence that is counted on for trial is ruled inadmissable by the court based on some technical matter.
ERICY on the other hand has not as much to lose. Suppose IDCC's minimum offer is not acceptable to ERICY. We do not know what IDCC's minimum offer to ERICY is. What is the harm to ERICY if they try to undermine IDCC's position by going after the admissability of IDCC's evidence. The worst that can happen is that ERICY accepts IDCC's previous offer. On the other hand, they have an opportunity to harm IDCC's case through the admissability of evidence to the jury. It doesn't matter what evidence IDCC has if they cannot present it to the jury. A good attorney would recommend that (absent a sweetheart deal from IDCC) ERICY wait until the evidence is set for trial before even thinking of giving in to IDCC's demands.
I was recently involved in a case (as a consultant) whereby settlement negotiations were not even considered by the opposing party until our direct case was filed with the court. After that, the settlement was agreed to within a week. The opposing party determined their position harder to defend than ours when all the evidence was weighed.
Rules of Evidence
Mickey, the rules of evidence can destroy even the best laid plans in a lawsuit. For example, how many times do you read about the murder weapon or admission of guilt being tossed because the evidence was improperly obtained. ERICY has been preaching improper acts by IDCC ever since the PTO revalidations and the Markman hearings.
The last opportunity for ERICY to damage IDCC's case was in the exchange of exhibits that displays all of the remaining evidence by each of the parties. If information is not presented in the exhibits or testimony, it cannot be presented at trial to the jury.
If ERICY, by their objections, can succeed in keeping damaging evidence from the jury, their bargaining power in settlement negotiations changes immensely. If their objections are denied, we might see a change in settlement strategies proposed by ERICY. It is like a chess match until check mate is evident.
ERICY has more to lose than gain in settling to quickly until they know exactly what evidence can be presented to the jury. That's why most settlements happen just before or during the trial. After all, there is always a chance for a screw up by IDCC, but not likely by F&J.
Here is a twist to par_q’s theory on ERICY.
We know that IDCC has not sued anyone other than ERICY and Motorola. We have theorized that IDCC has agreements with other potential infringers which ties them to the ERICY outcome. I think that’s a pretty plausible theory. That means the other infringers have a vested interest in supporting ERICY in this case even to the extent of sharing in any settlement offers made to IDCC by ERICY. Now suppose ERICY (and the other infringers) made settlement offers to IDCC to settle the lawsuit without admitting any guilt and suppose the settlement offer amounted to as much as $200 to $300 million. Should IDCC accept it? It would probably represent a total settlement of ten cents on the dollar. A settlement like this would probably eliminate IDCC’s ability to collect from any other potential infringer for past misdeeds. It would not provide any kind of a framework for future payments either.
I believe the pendulum swung significantly in IDCC’s favor once the Special Masters report was unveiled. That put IDCC in an entirely different bargaining position in this case. The Special Masters report affirmed the validity of IDCC’s patents and the resulting revised claim language will be hard to refute in a non-infringement argument by ERICY. The trump card appears to be the former ERICY employees that can point the finger at their former employer in a willful infringement argument. I believe IDCC is more likely the hold-out on any proposed settlement offer because ERICY (and partners) are not willing to admit guilt in any way, shape or form in a settlement offer. If they did, it would be an automatic trigger for payments from the rest of the infringers. That cost could quickly escalate to $1 billion or higher and would be a last resort to be presented just prior to the trial or while the trial is ongoing. The stakes are high and why does IDCC appear to be willing to take the risk of a trial?
IDCC cannot accept a settlement offer for anything short of full recognition of IDCC’s patents and at least unintentional infringement of the patents by ERICY. This position would guarantee payments by all infringers for both past and future royalties. This position would also cause much heartburn for ERICY (and its co-conspirators). As we get closer to trial, ERICY will be forced to look out for its own interests unless they have financial guarantees from the other parties. If ERICY does have guarantees and it is disclosed in the trial, the conspiracy theory is a slam dunk. That may also be part of the trump card held by IDCC.
There is a risk of loss on both parties to this lawsuit. But somehow I feel the trump card held by IDCC is the deciding factor in IDCC’s decision to press forward with the trial. If this case goes to trial, I firmly believe it will be based more on a recommendation by F&J that IDCC has a winnable position and that it shouldn’t settle for anything less than at least partial admission of infringement by ERICY. If the odds of IDCC winning are less than 80%, we have no business going to trial and that should be F&J’s recommendation to Harry. Based on F&J’s reputation, I sure like our chances of winning a lot better than ERICYs.
The exhibits in the case have already been exchanged by the parties. The exhibits paint a pretty good picture of each party’s case to one another. I would like to know what exhibits ERICY objected to when they filed their notice of objection on Monday. Could they relate to IDCC’s trump card? The objections represent ERICY’s last hope at keeping potentially damaging evidence from exposure to the jury. If the objections are accepted or denied, it may have a significant impact on future settlement options. At any point, it is certainly worth holding back settlement offers for. The next couple of weeks are definitely going to be very interesting. In my past experience, the settlement offers really begin to get serious about a week prior to trial. That’s when all bluffs are finally called and the lawyers are held accountable.
Is tommorow a big day for IDCC?
According to the scheduling order for IDCC/ERICY, tomorrow is the deadline for several items in the IDCC/ERICY litigation. I believe objections to exhibits and deposition designations are due as well as a Joint Pre-Trial Order if it has not been postponed. A settlement status is also to be attached to the Pre-Trial Order.
Requested jury instructions (annotated) and interrogatories must be filed no later than noon, January 6, 2003. Also, Motions in Limine and requested voir dire must be filed by noon, January 6, 2003.
Have any of these filings been postponed and if so, what are the new dates?
JK or Brokentrade, will either of you report any new Pacer filings tomorrow? Many thanks for all of your assistance with the legal aspects of this case.
Bill
(Formerly Billwar_98)