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William Blair 44th Annual Growth Stock
Conference
June 4, 2024
Rich Brezski, CFO
https://s25.q4cdn.com/626766191/files/doc_presentations/2024/Jun/04/interdigital-presentation-william-blair-june-4-2024.pdf
Lightwave Logic Reaffirms Commercialization Timeline Presented at the 2024 Annual Shareholder Meeting
Source: PR Newswire (US)
Management Reaffirms Commercialization Pathway with Licensing Perkinamine® Electro-optic
Polymers and Product Sales of High-Speed Modulators
ENGLEWOOD, Colo., June 3, 2024 /PRNewswire/ -- Lightwave Logic, Inc. (NASDAQ: LWLG), a technology platform company leveraging its proprietary electro-optic (EO) polymers to enable next generation high speed data transmission at low power consumption and small foot-print, today, announced the reaffirmation of commercial timelines as noted at the Company's Annual Shareholder Meeting (ASM) on May 22, 2024.
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As artificial intelligence, machine learning, and other cloud-based services continue to drive the need for higher speed data transmission, the interest in the inherent wide bandwidth, low power consumption and footprint of Lightwave Logic proprietary Perkinamine® electro-optic (EO) polymers is growing. As a result, the company continues to diligently pursue commercial material supply licensing agreements in 2024 and expects the cadence to grow in 2025 and beyond. The company focus today is on Tier 1 companies who have shown keen interest in our Perkinamine® materials. The company demonstration of world class high speed and low power performance earlier this year has accelerated the industry interest in Lightwave Logic's solution which has grown to over 25 companies to date. An updated presentation from the Annual Shareholder Meeting is available at the company's website (click here).
Dr. Michael Lebby, Chairman and Chief Executive Officer of Lightwave Logic, said: "We remain confident in the inherent competitive advantage of our solution and in our commercialization prospects and pipeline for 2024, and we continue to focus on Tier 1 material supply licensing agreements as well as having our polymer high-speed modulators evaluated by fiber optic communication companies. Our team continues to work tirelessly to realize near-term commercial agreement goals for 2024, 2025, and beyond as part of our ultimate goal to create sustainable, long-term value for our fellow shareholders."
About Lightwave Logic, Inc.
Lightwave Logic, Inc. (NASDAQ: LWLG) develops a platform leveraging its proprietary engineered electro-optic (EO) polymers to transmit data at higher speeds with less power in a small form factor. The company's high-activity and high-stability organic polymers allow Lightwave Logic to create next-generation photonic EO devices, which convert data from electrical signals into optical signals, for applications in data communications and telecommunications markets. For more information, please visit the company's website at www.lightwavelogic.com.
Safe Harbor Statement
The information posted in this release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these statements by use of the words "may," "will," "should," "plans," "explores," "expects," "anticipates," "continue," "estimate," "project," "intend," and similar expressions. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. These risks and uncertainties include, but are not limited to, lack of available funding; general economic and business conditions; competition from third parties; intellectual property rights of third parties; regulatory constraints; changes in technology and methods of marketing; delays in completing various engineering and manufacturing programs; changes in customer order patterns; changes in product mix; success in technological advances and delivering technological innovations; shortages in components; production delays due to performance quality issues with outsourced components; those events and factors described by us in Item 1.A "Risk Factors" in our most recent Form 10-K and 10-Q; other risks to which our company is subject; other factors beyond the company's control.
Investor Relations Contact:
Lucas A. Zimmerman
Managing Director
MZ Group - MZ North America
949-259-4987
LWLG@mzgroup.us
www.mzgroup.us
? View original content to download multimedia:https://www.prnewswire.com/news-releases/lightwave-logic-reaffirms-commercialization-timeline-presented-at-the-2024-annual-shareholder-meeting-302161562.html
SOURCE Lightwave Logic, Inc.
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Copyright 2024 PR Newswire
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
CASE NO. 5:23-CV-00493-FL
INTERDIGITAL INC., INTERDIGITAL
VC HOLDINGS, INC., INTERDIGITAL
PATENT HOLDINGS, INC., and
INTERDIGITAL MADISON PATENT
HOLDINGS SAS,
Plaintiffs,
v.
LENOVO (UNITED STATES) INC.,
LENOVO PC HK LTD., and MOTOROLA
MOBILITY LLC,
Defendants.
INTERDIGITAL’S OPPOSITION TO
LENOVO’S MOTION TO COMPEL
Case 5:23-cv-00493-FL Document 116 Filed 05/31/24 Page 1 of 14
1
I. INTRODUCTION
InterDigital is a research and design company that for more than half a century has been at
the forefront of developing foundational wireless communication and digital video technologies.
D.I. 64 at 7. InterDigital’s inventions help power wireless data transfers and make modern video
streaming possible for billions of people across the globe. Id. at 8.
This lawsuit involves InterDigital’s pioneering inventions in the wireless communications
and video streaming space. Given the importance of these inventions in modern life, InterDigital
licenses its patents covering these inventions to major technology companies including Apple, LG,
Panasonic, Samsung, and many others. Unlike its peers, Defendant Lenovo has repeatedly refused
to take a license to InterDigital’s patents without first forcing InterDigital to pursue expensive
litigation in Germany, the UK, the ITC, and in this Court—all with the hopes of holding out to
secure a better licensing deal for InterDigital’s patented technology.
In keeping with its tactics, Lenovo’s motion to compel is an unnecessary ploy designed to
drive up InterDigital’s litigation costs. InterDigital has dedicated significant time and expense
responding to Lenovo’s 151 discovery requests, diligently providing Lenovo with proportional,
relevant discovery in compliance with the Federal Rules. The additional documents Lenovo seeks
in its motion fall into three categories: (i) documents that are wholly irrelevant to any issue in this
case; (ii) documents that InterDigital has already agreed to provide; and (iii) documents that, while
theoretically containing some minimal relevance, would be so burdensome to locate and produce
and would provide such trivial value to Lenovo, that they are not proportional to the needs of the
case.
For example, Lenovo seeks, among other things “All Documents and Communications
Relating to” “the negotiations” of InterDigital’s third-party license agreements, all of InterDigital’s
Case 5:23-cv-00493-FL Document 116 Filed 05/31/24 Page 2 of 14
2
discussions with its licensees “Concerning the Asserted Patents,” “analysis of the proposals” to
InterDigital’s licensees, and “any meetings negotiations, discussions, agreements or other
Communications” regarding the asserted patents or related patents. D.I. 108-5 at RFP 89–91.
Lenovo claims that these (and numerous other) requests “bear on InterDigital’s valuation of the
Asserted Patents” and are relevant to its North Carolina Abusive Patent Assertions Act
(“NCAPAA”) counterclaim—specifically to whether InterDigital has offered to “license the patent
for an amount that is not based on a reasonable estimate of the value of the license,” or whether
InterDigital has offered “to license the patent for an amount that is based on the cost of defending
a potential or actual lawsuit.” D.I. 107 at 2–3 (quoting NCAPAA Factor 5 at §75-143(a)(5)).
But Lenovo does not allege any facts in its counterclaim suggesting that InterDigital
offered to license the asserted patents to it for a low-ball or litigation-cost figure. Nor could it. The
parties never discussed monetary terms for the asserted patents. And while NCAPAA Bad-Faith
Factor 5 is clearly not relevant here, in order to avoid burdening the Court with a dispute,
InterDigital has either produced, or agreed to produce, both its claim charts and its executed license
agreements with each of InterDigital’s licensees of the asserted patents. These multi-million-dollar
license agreements clearly show that InterDigital is not suing third parties merely to extract quick
settlement payments. NCAPAA Factor 5 certainly does not permit Lenovo unbounded,
disproportionate discovery into nearly every communication between InterDigital and its thirdparty licensees as Lenovo seeks through its motion. See Howard v. Coll. of the Albemarle, No.
2:15-CV-00039-D, 2016 U.S. Dist. LEXIS 109242, at *11 (E.D.N.C. Aug. 16, 2016) (citation
omitted) (“Litigants may not use the discovery process as a ‘fishing expedition.’”).
Lenovo’s additional justifications based on the NCAPAA Factors are likewise unsupported.
InterDigital never “failed to conduct an analysis comparing the claims in the patent to” Lenovo’s
Case 5:23-cv-00493-FL Document 116 Filed 05/31/24 Page 3 of 14
3
products (D.I. 107, quoting NCAPAA Factor 2). Lenovo admits InterDigital sent it a claim chart,
which compares the claims and Lenovo’s products. D.I. 107 at 5. Thus, NCAPAA Factor 2 is
irrelevant here.
Next, InterDigital has already agreed to provide the claim charts of infringement
InterDigital sent to third-party licensees. Thus, Lenovo’s arguments regarding Factor 9 (whether
InterDigital sent the same demand letter to multiple recipients) are moot.
Finally, Lenovo seeks “[d]ocuments sufficient to show Plaintiff’s contracts and agreements
with Third Parties for production of Products embodying the invention claimed in any claim of
any Asserted Patent.” D.I. 107 at 5. But, once again, InterDigital has already produced or agreed
to produce each of its agreements with third parties that allow the third parties to manufacture their
products that practice the asserted patents (e.g., the license agreements). Thus, this request is moot
as well. For these reasons and the additional reasons detailed herein, InterDigital respectfully
requests that the Court deny Lenovo’s motion.
II. FACTUAL BACKGROUND
A. Lenovo’s Expansive Discovery Requests and InterDigital’s Production.
On December 15, 2023, Lenovo served its first sets of discovery requests: 114 Requests
for Production and 12 Interrogatories. See D.I. 108-2, 108-5. On January 16, 2024, InterDigital
provided its Objections and Responses to those requests including the requests at issue here: RFP
Nos. 20, 21, 58, 62, 86, 89, 90, 91, 95, 96, and 97 and Interrogatory No. 4, summarized below:
? RFP 20 – documents relating to internal InterDigital meetings;
? RFP 21 – valuation of the asserted patents;
? RFP 58 – evaluation of whether the accused products infringe the asserted patents;
? RFP 62 – correspondence concerning accusations of infringement of the asserted patents;
? RFP 86 – documents concerning attempts to license the asserted patents;
? RFP 89 – documents regarding the economic terms of agreements for the asserted patents;
? RFP 90 – documents relating to discussions with licensees concerning the asserted patents;
? RFP 91 – documents relating to communications regarding the asserted patents;
Case 5:23-cv-00493-FL Document 116 Filed 05/31/24 Page 4 of 14
4
? RFP 95 – documents identifying all people involved in licensing of InterDigital’s IP;
? RFP 96 – documents showing InterDigital’s agreements with third parties for production
of products embodying the inventions of the asserted patents;
? RFP 97 – documents regarding the licensing of any of the Asserted Patents, regardless of
whether a license or any agreement was actually executed; and
? ROG 4 – efforts to license the asserted patents.
D.I. 108-8, 108-9.
Nearly four months passed, and InterDigital heard nothing from Lenovo on these requests.
Then, on April 5, 2024, Lenovo sent a letter requesting that InterDigital supplement its response
to Interrogatory 4 (and another Interrogatory not at issue here) and produce additional documents
in response to the above RFPs within two weeks. D.I. 108-1. Lenovo’s sole basis for the purported
relevance of these requests was a vague reference to its NCAPAA counterclaim. Id. In its response
to Lenovo’s April 5th letter, InterDigital explained that it was in the process of supplementing its
response to Interrogatory 4 and disagreed that the RFPs identified by Lenovo have any relevance
to its NCAPAA counterclaim, but nevertheless, agreed to produce additional documents—many
of which InterDigital had already provided to Lenovo in a parallel ITC proceeding. D.I. 108-7 at
1, 108-6 at 1-2. InterDigital produced the majority of those documents on April 30, 2024. The
parties met and conferred about the issues in the parties’ letters on May 1st. D.I. 108-6 at 1-2.
On May 8, 2024, InterDigital produced additional documents responsive to the RFPs at
issue here and identified documents—by Bates numbers—that are responsive to Lenovo’s RFPs.
InterDigital again explained in detail why the additional documents Lenovo demands are not
relevant to Lenovo’s NCAPAA counterclaim and why their production would be disproportionate
to the needs of this case. D.I. 108-6. That same day, Lenovo served a second set of discovery
requests: RFPs 115–130 and Interrogatory Nos. 13–16.
On May 16, 2024, InterDigital supplemented three Interrogatory responses related to
Lenovo’s NCAPAA counterclaim: Rog No. 4 (efforts to license the asserted patents); Rog No. 7
Case 5:23-cv-00493-FL Document 116 Filed 05/31/24 Page 5 of 14
5
(InterDigital’s bases for an injunction) and Rog No. 12 (InterDigital’s bases for its contention that
the NCAPAA does not apply it to it and InterDigital did not bring this litigation in “bad faith”).
D.I. 108-9. In these responses, InterDigital included Bates numbers identifying which documents
it produced related to which Lenovo interrogatory. Less than 24 hours later, without requesting to
meet and confer to attempt to resolve any lingering disputes, Lenovo filed its motion to compel.
B. The NCAPAA Factors.
Lenovo’s purported basis for the relevance of the requests at issue here are four factors
related to its NCAPAA counterclaim: Bad-Faith Factors 2, 5, and 9 and Good-Faith Factor 4.
(a) A court may consider the following factors as evidence that a person has made
a bad-faith assertion of patent infringement:
. . .
(2) Prior to sending the demand, the person failed to conduct an analysis
comparing the claims in the patent to the target’s products, services, and
technology, or the analysis was done but does not identify specific areas in
which the products, services, and technology are covered by the claims in
the patent.
. . .
(5) The person offers to license the patent for an amount that is not based
on a reasonable estimate of the value of the license, or the person offers to
license the patent for an amount that is based on the cost of defending a
potential or actual lawsuit.
. . .
(9) The person making the claim or assertion sent the same demand or
substantially the same demand to multiple recipients and made assertions
against a wide variety of products and systems without reflecting those
differences in a reasonable manner in the demands.
(b) A court may consider the following factors as evidence that a person has not
made a bad-faith assertion of patent infringement:
. . .
(4) The person makes a substantial investment in the use of the patent or in
the production or sale of a product or item that the person reasonably
believes is covered by the patent. “Use of the patent” in the preceding
sentence means actual practice of the patent and does not include licensing
without actual practice.
N.C. Gen. Stat. Ann. § 75-143.
Case 5:23-cv-00493-FL Document 116 Filed 05/31/24 Page 6 of 14
6
III. ARGUMENT
Lenovo’s sole relevance argument for the expansive discovery it now seeks is a vague
relationship to its NCAPAA counterclaim. But, Lenovo’s requests seek information far beyond the
narrow scope of the NCAPAA factors, and any potential relevance they may have is far outweighed
by the burden to InterDigital. Moreover, InterDigital has already provided responsive
documents—including documents that demonstrate the value of the asserted patents.
A. NCAPAA Bad-Faith Factor Five Does Not Justify Lenovo’s Expansive
Discovery Requests.
NCAPAA Bad-Faith Factor 5 provides the sole basis for the purported relevance of the
majority of the requests at issue, which collectively seek every document related to any negotiation
between InterDigital and any company it had licensing discussions with concerning the asserted
patents. Lenovo does not separately consider how each of its requests is relevant to Factor 5,
instead alleging that they all relate to the asserted patents’ “valuation.” See D.I. 107 at 4.
Bad-Faith Factor 5 relates to low-ball or litigation-cost patent licensing demands, which
may be indicative of bad-faith assertions of patent infringement. See N.C. Gen. Stat. § 75-143(a)(5)
(requiring an offer from InterDigital to Lenovo “to license the patent[s] for an amount that is not
based on a reasonable estimate of the value of the license,” or that is based “on the cost of
defending a potential or actual lawsuit.”). It simply does not apply here.
InterDigital has never provided a demand to Lenovo to license the asserted patents for a
specific dollar figure—the parties’ licensing discussions never reached that point as Lenovo
ignored all of InterDigital’s requests to discuss the asserted patents. Put another way, Bad-Faith
Factor 5 cannot apply because InterDigital never made a low-ball or litigation-cost demand. Thus,
NCAPAA Factor 5 is not a basis for Lenovo to seek any documents, let alone every communication
that may in some way relate to licensing.
Case 5:23-cv-00493-FL Document 116 Filed 05/31/24 Page 7 of 14
7
Moreover, InterDigital has already produced (or is in the process of producing) every
executed license agreement for the asserted patents and all claim charts (technical comparisons
between the asserted patents and the accused products) it sent to its licensees. Thus, to the extent
that licensing documents have any relevance to Bad-Faith Factor 5, InterDigital has already
produced hundreds of documents and is in the process of producing more. To the extent Lenovo’s
motion seeks more, it should be denied.1 See Mohammed v. Daniels, No. 5:13-CT-3077-FL, 2015
U.S. Dist. LEXIS 106089, at *5 (E.D.N.C. Aug. 12, 2015) (Flanagan, J) (“Due to the vague nature
of plaintiff’s discovery requests and in light of the large volume of materials defendants already
provided plaintiff, plaintiff’s current discovery requests appear to be a fishing expedition.”).
Lenovo does not dispute InterDigital’s production of these documents. D.I. 107 at 7
(acknowledging that InterDigital has “already collected and produced” requested information in
the parallel ITC case and has “reproduced a subset” of that information in this case).
Even if Lenovo’s discovery requests were marginally relevant to Bad-Faith Factor 5, any
such relevance is not “proportional to the needs of the case, considering the importance of the
issues at stake in the action, the amount in controversy, the parties’ relative access to relevant
information, the parties’ resources, the importance of the discovery in resolving the issues, and
whether the burden or expense of the proposed discovery outweighs its likely benefit.” Fed. R.
Civ. P. 26(b)(1). Lenovo’s requests encompass enormous volumes of highly sensitive
communications regarding InterDigital’s licensing—many of which are privileged or are subject
to third-party non-disclosure agreements. For example, RFP No. 86 seeks documents and
communications concerning any attempt to license the Asserted Patents, RFP No. 90 seeks
1
To accomplish this production, InterDigital is actively seeking approval from third parties (e.g.,
Apple), as required by its licenses, to produce documents in this litigation.
Case 5:23-cv-00493-FL Document 116 Filed 05/31/24 Page 8 of 14
8
documents and communications relating to negotiations with licensees, and RFP No. 97 seeks
documents and communications relating to efforts to license the Asserted Patents, regardless of
whether any license was executed. Lenovo’s requests are not proportional under Fed. R. Civ. P.
26(b)(1) as any theoretical relevance of these third-party communications is clearly outweighed
by the prejudice InterDigital faces in collecting a huge number of sensitive documents, almost all
of which require third-party approval. See Va. Dep’t of Corr. v. Jordan, 921 F.3d 180, 188-89 (4th
Cir. 2019) (“Proportionality requires courts to consider, among other things, whether the burden
or expense of the proposed discovery outweighs its likely benefit. This relieves parties from the
burden of taking unreasonable steps to ferret out every relevant document.”); Cruz v. Bd. of
Supervisors, No. 91-1547, 1993 U.S. App. LEXIS 187, at *7 (4th Cir. Jan. 7, 1993) (“In this case,
[plaintiff] requested a vast amount of highly sensitive material with little or no notion of what he
might find, in what can properly be termed a ‘fishing expedition.’”).
B. InterDigital Already Produced Documents Responsive to RFP No. 58.
Lenovo argues that its RFP No. 58—seeking “Documents sufficient to show
[InterDigital]’s analysis, consideration, testing, or evaluation of whether any Accused Product
Infringes any claim of the Asserted Patents . . . .”—is relevant to Bad-Faith Factor 2 of its NCAPAA
counterclaim. D.I. 107 at 4. Bad-Faith Factor 2 of the NCAPAA applies if InterDigital “failed to
conduct an analysis comparing the claims in the patent to [Lenovo’s] products, services, and
technology, or the analysis was done but does not identify specific areas in which the products,
services, and technology are covered by the claims in the patent.”
As Lenovo acknowledges, InterDigital has already produced claim charts that compare the
asserted patent claims to the accused Lenovo devices. D.I. No. 107 at 4–5. These charts were
created prior to this lawsuit, clearly demonstrate Lenovo’s infringement, and are directly
responsive to Lenovo’s Request No. 58. Further, InterDigital has produced additional claim charts
Case 5:23-cv-00493-FL Document 116 Filed 05/31/24 Page 9 of 14
9
previously sent to Lenovo detailing its infringement of the Asserted Patents. D.I. 108-9 at 55–56.
These documents provide, on a claim limitation-by-limitation basis, InterDigital’s contentions
regarding Lenovo’s infringement of the Asserted Patents. Accordingly, once again, Lenovo has the
documents responsive to its Request.
Yet, Lenovo asserts that “InterDigital should be compelled to produce documents for all
other investigations it performed into the practice of the products when evaluating whether to
assert its claims.” D.I. No. 107 at 5. It is unclear as to what is meant by “other investigations.”
Regardless, InterDigital again confirms it has produced the documents it has in its possession
responsive to this request.
C. NCAPAA Bad-Faith Factor 9 Is Inapplicable Here, but Regardless,
InterDigital Has Already Produced Documents Responsive to RFP 62.
Lenovo asserts that InterDigital should be forced to produce additional documents
responsive to RFP No. 62, which, in broad terms, seeks documents regarding “any
Communication, including demand letters” informing Lenovo or third parties that they infringe
the asserted patents. D.I. 108-5 at 25. Specifically, Lenovo asserts that it “seeks. . . other demands
InterDigital has made that are relevant to . . . factor [9].” D.I. 107 at 5. InterDigital never sent a
“demand” to Lenovo. But Bad-Faith Factor 9 only applies if InterDigital “sent the same demand”
to Lenovo as it did to “multiple recipients.” See N.C. Gen. Stat. § 75-143(a)(9). Because
InterDigital never sent Lenovo a demand at all, Bad-Faith Factor 9 is inapplicable here.
Regardless, InterDigital has provided (or shortly will produce) all executed licenses and
claim charts created during the process that led to the licenses, which disclose InterDigital’s
contentions. Accordingly, to the extent that factor nine has any marginal relevance, Lenovo already
has or shortly will have responsive documents. To the extent that Lenovo seeks additional
documents, such request is foreclosed by Rule 26’s proportionality requirement.
Case 5:23-cv-00493-FL Document 116 Filed 05/31/24 Page 10 of 14
10
D. InterDigital Already Produced Documents Responsive to Request No. 96.
Finally, Lenovo asserts that it needs additional documents responsive to RFP No. 96, which
requests “Documents sufficient to show Plaintiff’s contracts and agreements with Third Parties for
production of Products embodying the invention claimed in any claim of any Asserted Patent.”
D.I. 108-5 at 32. As explained above, InterDigital has or shortly will produce all licenses with third
parties relating to the Asserted Patents. The licenses specifically provide the terms by which
licensed third parties may produce “products embodying the invention claimed in any claim of any
Asserted Patent.” Id. Thus, this request is moot, and the Court should deny this portion of Lenovo’s
motion.
IV. CONCLUSION
InterDigital has clearly produced (or agreed to produce) the vast majority of what Lenovo
seeks. The remainder has either no relevance to this case or such minimal relevance that it is far
outweighed by the tremendous burden of searching for, collecting, and producing sensitive
communications with third parties that, even if produced, would have negligible importance in
resolving the issues related to Lenovo’s misguided NCAPAA counterclaim. InterDigital
respectfully asks this Court to deny Lenovo’s Motion it its entirety.
Respectfully Submitted,
Dated: May 31, 2024 /s/ M. Scott Stevens
M. Scott Stevens
NC State Bar No. 37828
Kirk T. Bradley
NC State Bar No. 26490
ALSTON & BIRD LLP
Vantage South End
1120 South Tryon Street, Suite 300
Charlotte, NC 28203
Telephone: 704-444-1025
Case 5:23-cv-00493-FL Document 116 Filed 05/31/24 Page 11 of 14
11
Fax: 704-444-1935
scott.stevens@alston.com
kirk.bradley@alston.com
Philip C. Ducker
CA State Bar No. 262644
Katherine G. Rubschlager
CA State Bar No. 328100
ALSTON & BIRD LLP
560 Mission Street, Suite 2100
San Francisco, CA 94105
Telephone: 415-243-1000
Fax: 415-243-1001
phil.ducker@alston.com
katherine.rubschlager@alston.com
Ryan W. Koppelman
CA State Bar No. 290704
ALSTON & BIRD LLP
333 S. Hope St., 16th Floor
Los Angeles, CA 90071
Telephone: (213) 576-1000
Facsimile: (213) 576-1100
ryan.koppelman@alston.com
Special Appearance Pursuant to L.R. 83.1
Forthcoming
Neal A. Larson
GA State Bar No. 599069
TX State Bar No. 24106190
ALSTON & BIRD LLP
1201 West Peachtree Street
Atlanta, GA 30309
Telephone: (404) 881-7000
Facsimile: (404) 881-7777
neal.larson@alston.com
Special Appearance Pursuant to L.R. 83.1
Forthcoming
Jenny J. Wang
NC State Bar No. 61255
ALSTON & BIRD LLP
555 Fayetteville Street, Suite 600
Raleigh, NC 27601
Case 5:23-cv-00493-FL Document 116 Filed 05/31/24 Page 12 of 14
12
Telephone: (919) 862-2200
Facsimile: (919) 862-2260
jenny.wang@alston.com
Christopher L. McArdle
NY State Bar No. 4823654
Ravi Shah
NY State Bar No. 5720149
ALSTON & BIRD LLP
90 Park Ave., 15th Floor
New York, NY 10016
Telephone: 212-210-9400
Fax: 212-210-9444
Chris.McArdle@alston.com
Ravi.Shah@alston.com
Attorneys for Plaintiffs
InterDigital, Inc. InterDigital VC Holdings,
Inc., InterDigital Patent Holdings, Inc., and
InterDigital Madison Patent Holdings SAS
Implied Volatility Surging for InterDigital (IDCC) Stock Options
May 30, 2024 — 10:17 am EDT
Written by Zacks Equity Research
Investors in InterDigital, Inc. IDCC need to pay close attention to the stock based on moves in the options market lately. That is because the Jun 21, 2024 $120.00 Put had some of the highest implied volatility of all equity options today.
What is Implied Volatility?
Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.
What do the Analysts Think?
Clearly, options traders are pricing in a big move for InterDigital shares, but what is the fundamental picture for the company? Currently, InterDigital is a Zacks Rank #3 (Hold) in the Wireless Equipment industry that ranks in the Bottom 21% of our Zacks Industry Rank. Over the last 60 days, no analysts have increased their earnings estimates for the current quarter, while three analysts have revised their estimates downward. The net effect has taken our Zacks Consensus Estimate for the current quarter from $1.15 per share to 86 cents in that period.
Given the way analysts feel about InterDigital right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.
https://www.nasdaq.com/articles/implied-volatility-surging-interdigital-idcc-stock-options
InterDigital to Present at Upcoming Conferences
Source: GlobeNewswire Inc.
InterDigital, Inc. (Nasdaq: IDCC), a mobile, video and AI technology research and development company, today announced that the company will be presenting at two upcoming investor events: the William Blair 44th Annual Growth Stock Conference on Tuesday, June 4, 2024, at 4:20 PM ET, and the 14th Annual East Coast IDEAS Investor Conference on Wednesday, June 12, at 4:10 PM ET.
Both events will be webcast live and an archived replay of the presentation will also be available following the conference. For more information, please visit the Investors section of the company’s website.
About InterDigital®
InterDigital is a global research and development company focused primarily on wireless, video, artificial intelligence (“AI”), and related technologies. We design and develop foundational technologies that enable connected, immersive experiences in a broad range of communications and entertainment products and services. We license our innovations worldwide to companies providing such products and services, including makers of wireless communications devices, consumer electronics, IoT devices, cars and other motor vehicles, and providers of cloud-based services such as video streaming. As a leader in wireless technology, our engineers have designed and developed a wide range of innovations that are used in wireless products and networks, from the earliest digital cellular systems to 5G and today’s most advanced Wi-Fi technologies. We are also a leader in video processing and video encoding/decoding technology, with a significant AI research effort that intersects with both wireless and video technologies. Founded in 1972, InterDigital is listed on Nasdaq.
InterDigital is a registered trademark of InterDigital, Inc.
For more information, visit: www.interdigital.com.
InterDigital Contact:
investor.relations@interdigital.com
+1 (302) 300-1857
On Fri, May 24, 2024, 12:49?PM Investor Relations
Hi Glenn, I’m following up on your email inquiry to our Media Inbox. I’ve checked with our team to ask if we are involved with MPAI, and no, we are not involved at this time.
Best regards,
Raiford
Tesla asks UK court to let 5G patents lawsuit continue to trial
Reuters 05/23/2024 10:28
By Sam Tobin
LONDON, May 23 (Reuters) - Tesla TSLA.O on Thursday asked a London court to allow its lawsuit against U.S. technology firm InterDigital and a patent licensing platform to continue, as the automaker seeks a patent licence ahead of its launch of 5G vehicles in Britain.
Elon Musk's company is suing InterDigital IDCC.O and Avanci – which licenses patents from multiple owners, largely for automotive uses – at London's High Court.
Tesla wants the court to determine the fair, reasonable and -discriminatory (FRAND) terms of a licence for Tesla to use patents owned by patent holders, including InterDigital and which are licensed by Avanci, in its planned 5G vehicles.
InterDigital and Avanci, however, both say the case against them should be thrown out, partly because any litigation should take place in the United States rather than in London.
Thomas Raphael, a lawyer representing InterDigital, told the High Court that what Tesla really wants from the case is a licence on FRAND terms to use the patents.
"That is a licence InterDigital cannot grant and cannot make Avanci grant," he said. Avanci, meanwhile, argues Tesla has contractual rights against it.
But Tesla, whose lawyers said in court filings that the company "plans imminently to launch 5G vehicles in the UK", argues that Avanci is demanding too much for a license and refusing to .
"Avanci makes a basic demand of $32 per 5G-connected vehicle, which is more than double the rate being paid by Tesla and most other vehicle manufacturers for a 4G vehicle," Tesla's lawyer James Segan said in written arguments.
He added that Tesla is entitled to have the High Court determine what FRAND terms would be for a licence to use InterDigital's patents around the world.
London's High Court has previously been willing to grant global FRAND licences, bolstered by a landmark Supreme Court ruling in 2021.
[Link not available]
Sequans Cassiopeia CA410 Module Awarded Industry Certification and Completes Successful Utility Field Testing
https://iotbusinessnews.com/2024/05/20/89100-sequans-cassiopeia-ca410-module-awarded-industry-certification-and-completes-successful-utility-field-testing/
Lightwave Logic Collaborates With Advanced Micro Foundry To Develop Polymer Slot Modulators
Standard Fabrication Processes on 200mm Silicon Wafers Using Lightwave Logic's Proprietary Slot Modulator Design Achieved Record Breaking sub-1V Drive at 200Gbps PAM4 – Ideal for 800Gbps and 1.6T Pluggable Transceivers.
Mr. Rob Stien, Chief Communications and Public Policy Officer
Questions:
* Is InterDigital Communications a member of or participate in the Standards organization titled "Moving picture, Audio and Data Coding by Artificial Intelligence " (MPAI)?
* If IDCC is involved with MPAI, does InterDigital personnel hold any leadership positions such as Chair or Co-Chair?
[email sent 5/18/24]
______________________
Additional information provided by Gemini:
Who are the participants in the standards board titled "Moving picture, Audio and Data Coding by Artificial Intelligence "?
The specific participants of the Moving Picture, Audio and Data Coding by Artificial Intelligence (MPAI) standards board are not publicly disclosed. However, the organization is open to any interested party to join as a member. This means that the board likely includes representatives from various companies and organizations with an interest in AI-based data coding, such as:
* Technology companies that develop AI and machine learning algorithms
* Consumer electronics companies that manufacture devices that use video, audio, and data compression
* Content providers that create and distribute movies, music, and other forms of digital media
* Research institutions that are developing new AI-based compression techniques
dws - I'm showing 318.35k for the entire day, including after hours. Have a great weekend!
IDCC short interest as of 4/30/24 @ 3.58m down from 3.69m.
Interdigital Inc IDCC.O: Jefferies cuts target price to $100 from $106
INTERDIGITAL INC : JEFFERIES CUTS TO HOLD FROM BUY
Reuters 05/13/2024 03:24
LENOVO AND MOTOROLA PHONES, TABLETS AND OTHER DEVICES BANNED IN GERMAN
May 11, 2024
https://www.gizchina.com/author/efosa/
LTE - I posted on Feb 13th about the Tesla/ Advanci issue regarding InterDigital from this same link dated Jan 3rd. I haven't seen anything more recent concerning the issue.
InterDigital, Inc. (IDCC) Q1 2024 Earnings Call Transcript
May 02, 2024 3:03 PM ETInterDigital, Inc. (IDCC) Stock
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Q1: 2024-05-02 Earnings Summary
EPS of - misses by $2.76 | Revenue of - (-100.00% Y/Y) misses by $213.85M
nterDigital, Inc. (NASDAQ:IDCC) Q1 2024 Earnings Conference Call May 2, 2024 10:00 AM ET
Company Participants
Raiford Garrabrant - Head, Investor Relations
Liren Chen - President and Chief Executive Officer
Rich Brezski - Chief Financial Officer
Conference Call Participants
Arjun Bhatia - William Blair
Anja Soderstrom - Sidoti
Scott Searle - ROTH MKM
Operator
Good day and thank you for standing by. Welcome to the InterDigital First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Raiford Garrabrant, Head of Investor Relations. Please go ahead.
Raiford Garrabrant
Good morning to everyone and welcome to InterDigital’s first quarter 2024 earnings conference call. I am Raiford Garrabrant, Head of Investor Relations for InterDigital. With me on today’s call are Liren Chen, our President and CEO; and Rich Brezski, our CFO. Consistent with prior calls, we will offer some highlights about the quarter and the company and then open up the call for questions. For additional details, you can access our earnings release and a slide presentation that accompany this call on our Investor Relations website.
Before we begin our remarks, I need to remind you that in this call, we will make forward-looking statements regarding our current beliefs, plans and expectations, which are not guarantees of future performance and are made only as of the date hereof. Forward-looking statements are subject to risks and uncertainties that could cause actual results and events to differ materially from results and events contemplated by such forward-looking statements. These risks and uncertainties include those described in the Risk Factors section of our 2023 annual report on Form 10-K and in our other SEC filings. In addition, today’s presentation may contain references to non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the supplemental materials posted to the Investor Relations section of our website.
With that taken care of, I will turn the call over to Liren.
Liren Chen
Thank you, Raiford. Good morning, everyone. Thank you for joining us today. On our last call, we provided annual guidance for 2024 revenue of between $620 million and $670 million. This guidance highlights the increasing momentum of our business and the multiple growth opportunity that we have identified and expect to achieve through the rest of the year. Today, I am pleased to share that we have made significant headwinds in achieving our goal and reconfirm our 2024 annual guidance. Revenue for the first quarter were $264 million, up by 30% year-over-year and above the high-end of our guidance. Our Q1 revenue was one of the highest in our history and an all-time high for our CE and our IT licensing program.
Through the quarter, we have made great progress on multiple fronts of our business. We signed 7 new license agreements. We enhanced our position as a leader in the application of AI in both wireless and video and we received several positive core decisions, which we believe will help us to advance negotiations with certain unlicensed smartphone OEMs. We began the quarter with a new landmark license with Samsung TV business. The agreement covers patents and our joint licensing program with Sony and introduced our own pattern across a range of video and Wi-Fi technologies. Samsung is a market leader in TV and this agreement highlights both the value of video and Wi-Fi innovation and the growth we continue to build in licensing the consumer electronics sector. I would emphasize that this new agreement is separate to the Samsung smartphone license. We announced at the start of 2023 that Samsung and InterDigital has agreed to renew the license for their smart TV to our portfolio.
The final term of the smartphone license includes how much spent on mass payouts are still the subject of arbitration hearing, which is on track to be held this summer with the final resolution expected by end of this year. The 7 new agreements that we signed in the first quarter reflect the momentum we continue to see across all our licensing programs and our strength in consumer electronics and our IT in particular. The revenue and recurring revenue in Q1 from our CE and our IT program were both record highs. With Samsung and other agreements that we closed in the quarter, we have increased the cumulative value of contracts that we have signed over the last 3 years to almost $2.7 billion, giving us an incredible strong base from which to drive new long-term agreements and pursue additional growth opportunities.
Staying on license, we are making significant progress in our effort to ensure that we received further compensation for our innovation from unlicensed smartphone OEMs. Earlier today, a German court issued a very positive decision for us in our dispute with Lenovo. The court ruled that Lenovo infringed one of our 4G and 5G standard essential patents that InterDigital has acted in a friend manner that Lenovo is an on-leading licensee who engaged in hold out and should therefore be enjoined in the German market. The injunction means that Lenovo will be prohibited from selling 4G and 5G contract devices in Germany. Also, as part of our dispute with OPPO, a German court also wrote that OPPO infringed Interdigital’s 4G and 5G standard issuance of patent in sued. The Interdigital has acted in a friend manner that OPPO is an on-leading licensee, the court also awarded injunction against OPPO. In India, in another trial against OPPO, we received yet another positive decision, but OPPO was ordered to pay royalties in the form of a security deposit to the court. The Indian court also heavily criticized and fined OPPO for delaying tactics during our negotiations and ordered as the trial be concluded before end of the year. We are encouraged by this recent development in our cases and we believe we have built significant momentum in our negotiations with both companies. As I have said many times before, we always prefer to sign long-term license through amicable negotiations, but we are ready to enforce our patent rights, if necessary.
Our strength as the fundamental innovator in critical technology, continue to underpin our progress. Our research team has long been recognized by the world leaders in the development of wireless and video technology. And increasingly, our leadership in AI is coming to the forefront. In Q1, one of our senior engineers was appointed to hedge the AI and machine learning standing committee of IEEE, the standard development automation, which leads the evolution of Wi-Fi. At this year’s Mobile World Congress in Barcelona, we showcased two demonstrations, which has AI at their heart. One was in partnership with Keysight, which use a newer network developed by our genres to demonstrate the application of AI in our 6G network. And a second combined advanced video compression and AI to significantly reduce energy consumption of streaming video while preserving picture quality.
Also at MWC, we demonstrated cutting-edge immersive video and haptic technology in a specific use case of eSports and showed our increasing leadership in integrated sensing and communications and emerging technology, which will be a pillar of 6G. Our research success continue to be reflected in the development of our global patent portfolio. Recently, we were confirmed among the top 25 companies globally that filed the most new pattern applications with European patent office last year. Our number of new applications filed with the EPO increased by 40% year-over-year in a clear indication of our success in translating our foundational innovation into patent assets. The strength of innovation and patent footprint give us an excellent platform to drive further growth in our existing licensing program and in green field opportunities such as cloud-based video services. And with our track record for delivering new license agreements with leading manufacturers such as Samsung, we believe we are in an excellent position to reach our financial target for the year.
With that, I’ll hand it over to Rich to talk you through the numbers in more details.
Rich Brezski
Thanks, Liren. Q1 was another outstanding quarter for InterDigital as our strong revenue growth drove both non-GAAP EPS and adjusted EBITDA to the high end of our guidance range. This growth was powered by new licensing agreements, most notably Samsung TV. These results support our long-term objective of delivering consistent revenue growth combined with strong margins. Total revenue increased 30% year-over-year with CE and IoT leading the way. Based on new licensing agreements reached in Q1, recurring revenue for CE and IoT reached an annualized run rate of almost $90 million, an increase of 57% year-over-year and has roughly doubled over the last 2 years. When combined with catch-up revenue of $160 million, CE and IoT total revenue for the quarter reached an all-time high at $183 million. This performance highlights our ability to deliver significant growth beyond the smartphone market.
Our adjusted EBITDA for the quarter of $130 million equates to an adjusted EBITDA margin close to 50%, consistent with our guidance. These results demonstrate the power of our business model. Our investments in fundamental technologies drive top line growth while the reuse of those technologies across multiple verticals delivers high margins and drives cash flow. Our strong performance in Q1 produced cash from operations of $51 million and free cash flow of $41 million. This strong cash flow, combined with a cash balance of nearly $1 billion, supports our continued return of capital to shareholders. In Q1, we repurchased approximately 300,000 shares for $29 million. We repurchased another 200,000 shares in April for a year-to-date total of roughly 0.5 million shares. Since we first paid our dividend in 2011, we have now returned approximately $1.8 billion to shareholders through share buybacks and dividends.
In that time, we reduced our outstanding share count by almost 45% from more than 45 million shares to just over 25 million shares. And with $246 million left on the current buyback authorization, we’re not done yet. Looking forward to Q2, we expect recurring revenue will include $93 million to $97 million of revenue from existing contracts plus any amounts we recognize from any new agreements we may sign over the balance of the quarter. Based only on existing contracts, we expect an adjusted EBITDA margin of about 38% and non-GAAP diluted earnings per share of $0.70 to $0.80. Any additional agreements would be additive to those totals. Our strong first quarter results have us on track to meet our full year 2024 targets, and we are reaffirming our prior guidance of revenue in the range of $620 million to $670 million.
We continue to expect an adjusted EBITDA margin of roughly 50% for the full year of 2024 and non-GAAP diluted earnings per share of $7.45 to $8.76. Before I conclude, I’d like to mention that we’ll be attending four conferences over the remainder of the second quarter, the Bank of America Global Tech Conference in San Francisco on June 4. And the William Blair Growth Stock Conference in Chicago on June 4, the IDEAS Investor Conference in New York on June 12 and the Roth 10th Annual London Conference on June 26 and 27. Please check with your representatives at those firms if you’d like to schedule a meeting.
With that, I’ll turn it back to Raiford.
Raiford Garrabrant
Thanks, Rich. At this point, operator, we are ready to take questions.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] Our first question comes from Arjun Bhatia of William Blair.
Arjun Bhatia
Alright. Thank you, guys. Appreciate you taking the question. To start, Liren, maybe a couple of questions on the Samsung side. More on the smartphone side, not necessarily on the TV side. But as you think about just going through arbitration here over the summer and looking at a potential outcome later this year, how should we think about maybe the range of outcomes that you’re considering that could result from that arbitration? I mean, is there a possibility that prices are going up and maybe how is your royalty rate is coming up? And how do you handicap that? And then for Rich, the same thing on the Samsung smartphone side, can you just remind us how you’re accounting for the license revenue in the recurring line from Samsung thus far? And might that be something that’s contributing to the decline in smartphone recurring revenue. Thank you.
Liren Chen
Take one or two simple questions. So, on the Samsung smartphone arbitration, as we have discussed in the prior call, since having our customer for the smartphone side for actually a long time since 1995 and before they release the variables, with guidance. The last contract was a 10-year agreement and which covered frankly, the previous generation technology and not including very valuable assets like 5G and a lot of the advanced video technology we have done. So that agreement acts for December 31, 2022, and both parties has agreed through negotiations that they will renew the agreement without disruption and that we frankly couldn’t get a pricing agreed upon in time.
So we both agreed to do a binding arbitration that started January 1, 2023. We are, frankly, well into the process. The panel has been assembled and the hearing has been confirmed this summer and will be decided before the end of the year as the current projection. So regarding valuation for multiple reasons, we feel very confident that the value of portfolio has gone up, that Santa’s benefited more through the years compared to the time of the last agreement. So that obviously, we still need to have the arbitration to go through to confirm our belief.
And I’ll hand it over to Rich to comment on the revenue recognition side.
Rich Brezski
Yes. Thanks, Liren. On the rev rec, we’ve been recognizing since the first quarter of last year at level with the prior Samsung agreement, which is just shy of $80 million a year. That’s what we believe is a conservative estimate. We have effectively a license in place with Samsung, and we are just estimating what the ultimate outcome will be on a conservative basis. But because of the conservative nature of the GAAP requirement, we are certainly hopeful that we will have a positive true-up when it’s ultimately concluded. And as to the question on the decline in recurring revenue, I presume you mean ‘23 going into ‘24. So, based on what I just said, it’s not because of Samsung, but rather expiration of other agreements, most notably Huawei, which expired at the end of last year.
Arjun Bhatia
Yes. Perfect. Alright. Thank you. One more, if I can. It was interesting to hear the injunction against Lenovo and OPPO. And I am curious, in the past, Liren, to the extent you have experienced with these injunctions, how do you think they – or how have they may be changed behavior of some of these manufacturers in the past? I mean is it enough of an incentive to bring them to the negotiation table and say, hey, we want to strike a deal. Like how punitive can those injunctions be for these companies to get them to strike a deal with you?
Liren Chen
Yes. Hey Arjun. As we announced in a separate press this morning, the Court in Munich has issued a decision. In that decision, basically, the court decided that InterDigital has consistently act in good phase under the front obligation at all times. The court also said Lenovo has systematically actively in hold out, and frankly, it’s not in combined of the front obligation. So, as a result, the court has issued the injunction of a patent that’s standard essential for both 4G and 5G. And unless if something happens, Lenovo will be prohibited from selling devices with those features in German market. Regarding how the company may behave, I don’t want to spec on Samsung – on Lenovo, how they will proceed from here. I can see Germany is obviously a very major market and this injunction applied to a pretty wide range of devices beyond the cell phones. So, I hope with this decision that Lenovo will come back and frankly, take a licensing and fair terms from us. And I am definitely hopeful.
Arjun Bhatia
Alright. Appreciate the color. Thank you.
Operator
Thank you. [Operator Instructions] And our next question comes from Anja Soderstrom of Sidoti. Your line is open.
Anja Soderstrom
Hi. Thank you for taking my question. Can you just – you talked about this in the past, but maybe go over again the different opportunities you have to reach your guidance for 2024.
Liren Chen
Yes. Hey. Good morning. This is Liren. So, we have multiple passes. On the smartphone side, just for example, we have OPPO negotiation where we will, as Rich just mentioned here, have has expired, which we are bringing renewed discussion with them. And then Lenovo was licensed through the UK court decision for the cellular side until end of last year. Now, the unlicensed as we announced this morning, we received court injunctions, and we hope to be able to, frankly, sign a long-term agreement with them. So, that’s just on the smartphone side. On the CE side, as we mentioned in the prepared remarks, we signed Samsung TV, which is the largest vendor in TV space. We are working diligently on the next multiple layers of TV vendors include LG, TCL and Hisense. So, on top of all the stuff here, we are also working on the Samsung arbitration, and we expect that to be finished before the end of the year. And if we are able to get a favorable judgment beyond the revenue recognition that will be a positive true-up pass.
Anja Soderstrom
Okay. Thank you. And when it comes to Huawei, how constructive are those discussions given you fairly recently signed an agreement with them?
Liren Chen
Yes. Probably negotiation is proceeding according to plan. And our last agreement expired the end of the year, and frankly, Huawei business has gone through a certain amount of period of up and down. So, we are currently in negotiation with them, and we are hopeful we will get a long-term deal down with us soon.
Anja Soderstrom
Okay. Thank you. That was all for me.
Operator
Thank you. [Operator Instructions] And our next question comes from Scott Searle of ROTH MKM. Your line is open.
Scott Searle
Hey. Good morning. Thanks for taking the questions. I apologize in advance, I was on the call late, so if you already covered this, but. Liren, in regard to the Lenovo injunction, what is the actual process and procedure there in terms of how that’s going to be implemented? And are there additional costs associated with it? I believe that there is an appeal period from their standpoint. So, can you walk us through the milestones timeline and the cost element?
Liren Chen
Yes. Hi Scott. Good morning. So, we don’t – I am not certain you were on the call when we were describing it earlier. So basically, the court has decided that we have acted in front manner consistently all the time. The Lenovo has systematic conduct sold out and their non-infant obligation and they are frankly, on-leading licensee. As a result, the court has issued injunction against them that covers devices with 4G and 5G features built in. So, there will be some procedure stuff which we are frankly working through and our intention is to enforce this injunction as quickly as we can. And you are also teat this is what they call a first insulin decision, which is automatically appealable. So, I don’t want to speculate on the Lenovo’s legal strategy, but that’s frankly up to them.
Scott Searle
Got it. And Liren, just to quickly follow-up on that front. This is in Germany, will that extend to the rest of the EU, or what is the plan there in terms of how you implement across the pan-European marketplace?
Liren Chen
Yes. Scott, this is the case that – this is a German pattern, and it’s a German court. So, just the decision will be limited to the German market. As you are aware, Scott, we do have other cases, including our PC, ITC in U.S. against them in different technology area. But this particular decision is Germany only.
Scott Searle
Got it. And two others, if I could, just the latest update in terms of video IPs licensing into the streaming and services model. Are there any updated thoughts, timelines in terms of how that’s evolving and the impact in ‘24 and ‘25?
Liren Chen
Yes. Hey Scott, we do view the video cloud service licensing as a very, very good, greenfield opportunity. We are proceeding according to plan, which we believe we have very valuable IP asset and frankly, very strong technology leadership. Regarding our direct financial impact, as of now, we are not projecting material impact to 2024. And if we have more update, we will share with you timely.
Scott Searle
Got it. And lastly, if I could, you have maintained the guidance range for the year of $620 million to $670 million. I am wondering if some things have kind of moved around in terms of higher probability versus lower probability. I am not sure if you can address it, but just kind of – I know there are multiple paths to get to that range if there are certain things that have materialized and become a little bit more confident about. Thanks.
Liren Chen
Yes. Hey Scott. As I said in my prepared remarks, when we issued the guidance beginning of the year, we feel very strongly that our business momentum has increased, and we have identified multiple past recent results. And now we have delivered a resounding strong quarter in Q1 for both the top line or adjusted EBITDA and EPS, and especially in the record recency and our key space. So, we feel very good about where we are, and we are on track to deliver the results. And as of now, we are not either predict the rest of the quarter other than we feel very confident about our ability to deliver for the year.
Scott Searle
Great. Thank you.
Operator
Thank you. This concludes the question-and-answer session. At this time, I would like to turn it back to Liren Chen for closing remarks.
Liren Chen
Thank you, operator. Before we close, I would like to thank all of our employees for their dedication and contribution to InterDigital as well as our many partners and licensees for an outstanding start to 2024. Thanks to everyone who joined our call today and we look forward to updating you on our progress next quarter.
Operator
This concludes today’s conference call. Thank you for participating and you may now disconnect.
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nterDigital, Inc. (NASDAQ:IDCC) Q1 2024 Earnings Conference Call May 2, 2024 10:00 AM ET
Company Participants
Raiford Garrabrant - Head, Investor Relations
Liren Chen - President and Chief Executive Officer
Rich Brezski - Chief Financial Officer
Conference Call Participants
Arjun Bhatia - William Blair
Anja Soderstrom - Sidoti
Scott Searle - ROTH MKM
Operator
Good day and thank you for standing by. Welcome to the InterDigital First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Raiford Garrabrant, Head of Investor Relations. Please go ahead.
Raiford Garrabrant
Good morning to everyone and welcome to InterDigital’s first quarter 2024 earnings conference call. I am Raiford Garrabrant, Head of Investor Relations for InterDigital. With me on today’s call are Liren Chen, our President and CEO; and Rich Brezski, our CFO. Consistent with prior calls, we will offer some highlights about the quarter and the company and then open up the call for questions. For additional details, you can access our earnings release and a slide presentation that accompany this call on our Investor Relations website.
Before we begin our remarks, I need to remind you that in this call, we will make forward-looking statements regarding our current beliefs, plans and expectations, which are not guarantees of future performance and are made only as of the date hereof. Forward-looking statements are subject to risks and uncertainties that could cause actual results and events to differ materially from results and events contemplated by such forward-looking statements. These risks and uncertainties include those described in the Risk Factors section of our 2023 annual report on Form 10-K and in our other SEC filings. In addition, today’s presentation may contain references to non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the supplemental materials posted to the Investor Relations section of our website.
With that taken care of, I will turn the call over to Liren.
Liren Chen
Thank you, Raiford. Good morning, everyone. Thank you for joining us today. On our last call, we provided annual guidance for 2024 revenue of between $620 million and $670 million. This guidance highlights the increasing momentum of our business and the multiple growth opportunity that we have identified and expect to achieve through the rest of the year. Today, I am pleased to share that we have made significant headwinds in achieving our goal and reconfirm our 2024 annual guidance. Revenue for the first quarter were $264 million, up by 30% year-over-year and above the high-end of our guidance. Our Q1 revenue was one of the highest in our history and an all-time high for our CE and our IT licensing program.
Through the quarter, we have made great progress on multiple fronts of our business. We signed 7 new license agreements. We enhanced our position as a leader in the application of AI in both wireless and video and we received several positive core decisions, which we believe will help us to advance negotiations with certain unlicensed smartphone OEMs. We began the quarter with a new landmark license with Samsung TV business. The agreement covers patents and our joint licensing program with Sony and introduced our own pattern across a range of video and Wi-Fi technologies. Samsung is a market leader in TV and this agreement highlights both the value of video and Wi-Fi innovation and the growth we continue to build in licensing the consumer electronics sector. I would emphasize that this new agreement is separate to the Samsung smartphone license. We announced at the start of 2023 that Samsung and InterDigital has agreed to renew the license for their smart TV to our portfolio.
The final term of the smartphone license includes how much spent on mass payouts are still the subject of arbitration hearing, which is on track to be held this summer with the final resolution expected by end of this year. The 7 new agreements that we signed in the first quarter reflect the momentum we continue to see across all our licensing programs and our strength in consumer electronics and our IT in particular. The revenue and recurring revenue in Q1 from our CE and our IT program were both record highs. With Samsung and other agreements that we closed in the quarter, we have increased the cumulative value of contracts that we have signed over the last 3 years to almost $2.7 billion, giving us an incredible strong base from which to drive new long-term agreements and pursue additional growth opportunities.
Staying on license, we are making significant progress in our effort to ensure that we received further compensation for our innovation from unlicensed smartphone OEMs. Earlier today, a German court issued a very positive decision for us in our dispute with Lenovo. The court ruled that Lenovo infringed one of our 4G and 5G standard essential patents that InterDigital has acted in a friend manner that Lenovo is an on-leading licensee who engaged in hold out and should therefore be enjoined in the German market. The injunction means that Lenovo will be prohibited from selling 4G and 5G contract devices in Germany. Also, as part of our dispute with OPPO, a German court also wrote that OPPO infringed Interdigital’s 4G and 5G standard issuance of patent in sued. The Interdigital has acted in a friend manner that OPPO is an on-leading licensee, the court also awarded injunction against OPPO. In India, in another trial against OPPO, we received yet another positive decision, but OPPO was ordered to pay royalties in the form of a security deposit to the court. The Indian court also heavily criticized and fined OPPO for delaying tactics during our negotiations and ordered as the trial be concluded before end of the year. We are encouraged by this recent development in our cases and we believe we have built significant momentum in our negotiations with both companies. As I have said many times before, we always prefer to sign long-term license through amicable negotiations, but we are ready to enforce our patent rights, if necessary.
Our strength as the fundamental innovator in critical technology, continue to underpin our progress. Our research team has long been recognized by the world leaders in the development of wireless and video technology. And increasingly, our leadership in AI is coming to the forefront. In Q1, one of our senior engineers was appointed to hedge the AI and machine learning standing committee of IEEE, the standard development automation, which leads the evolution of Wi-Fi. At this year’s Mobile World Congress in Barcelona, we showcased two demonstrations, which has AI at their heart. One was in partnership with Keysight, which use a newer network developed by our genres to demonstrate the application of AI in our 6G network. And a second combined advanced video compression and AI to significantly reduce energy consumption of streaming video while preserving picture quality.
Also at MWC, we demonstrated cutting-edge immersive video and haptic technology in a specific use case of eSports and showed our increasing leadership in integrated sensing and communications and emerging technology, which will be a pillar of 6G. Our research success continue to be reflected in the development of our global patent portfolio. Recently, we were confirmed among the top 25 companies globally that filed the most new pattern applications with European patent office last year. Our number of new applications filed with the EPO increased by 40% year-over-year in a clear indication of our success in translating our foundational innovation into patent assets. The strength of innovation and patent footprint give us an excellent platform to drive further growth in our existing licensing program and in green field opportunities such as cloud-based video services. And with our track record for delivering new license agreements with leading manufacturers such as Samsung, we believe we are in an excellent position to reach our financial target for the year.
With that, I’ll hand it over to Rich to talk you through the numbers in more details.
Rich Brezski
Thanks, Liren. Q1 was another outstanding quarter for InterDigital as our strong revenue growth drove both non-GAAP EPS and adjusted EBITDA to the high end of our guidance range. This growth was powered by new licensing agreements, most notably Samsung TV. These results support our long-term objective of delivering consistent revenue growth combined with strong margins. Total revenue increased 30% year-over-year with CE and IoT leading the way. Based on new licensing agreements reached in Q1, recurring revenue for CE and IoT reached an annualized run rate of almost $90 million, an increase of 57% year-over-year and has roughly doubled over the last 2 years. When combined with catch-up revenue of $160 million, CE and IoT total revenue for the quarter reached an all-time high at $183 million. This performance highlights our ability to deliver significant growth beyond the smartphone market.
Our adjusted EBITDA for the quarter of $130 million equates to an adjusted EBITDA margin close to 50%, consistent with our guidance. These results demonstrate the power of our business model. Our investments in fundamental technologies drive top line growth while the reuse of those technologies across multiple verticals delivers high margins and drives cash flow. Our strong performance in Q1 produced cash from operations of $51 million and free cash flow of $41 million. This strong cash flow, combined with a cash balance of nearly $1 billion, supports our continued return of capital to shareholders. In Q1, we repurchased approximately 300,000 shares for $29 million. We repurchased another 200,000 shares in April for a year-to-date total of roughly 0.5 million shares. Since we first paid our dividend in 2011, we have now returned approximately $1.8 billion to shareholders through share buybacks and dividends.
In that time, we reduced our outstanding share count by almost 45% from more than 45 million shares to just over 25 million shares. And with $246 million left on the current buyback authorization, we’re not done yet. Looking forward to Q2, we expect recurring revenue will include $93 million to $97 million of revenue from existing contracts plus any amounts we recognize from any new agreements we may sign over the balance of the quarter. Based only on existing contracts, we expect an adjusted EBITDA margin of about 38% and non-GAAP diluted earnings per share of $0.70 to $0.80. Any additional agreements would be additive to those totals. Our strong first quarter results have us on track to meet our full year 2024 targets, and we are reaffirming our prior guidance of revenue in the range of $620 million to $670 million.
We continue to expect an adjusted EBITDA margin of roughly 50% for the full year of 2024 and non-GAAP diluted earnings per share of $7.45 to $8.76. Before I conclude, I’d like to mention that we’ll be attending four conferences over the remainder of the second quarter, the Bank of America Global Tech Conference in San Francisco on June 4. And the William Blair Growth Stock Conference in Chicago on June 4, the IDEAS Investor Conference in New York on June 12 and the Roth 10th Annual London Conference on June 26 and 27. Please check with your representatives at those firms if you’d like to schedule a meeting.
With that, I’ll turn it back to Raiford.
Raiford Garrabrant
Thanks, Rich. At this point, operator, we are ready to take questions.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] Our first question comes from Arjun Bhatia of William Blair.
Arjun Bhatia
Alright. Thank you, guys. Appreciate you taking the question. To start, Liren, maybe a couple of questions on the Samsung side. More on the smartphone side, not necessarily on the TV side. But as you think about just going through arbitration here over the summer and looking at a potential outcome later this year, how should we think about maybe the range of outcomes that you’re considering that could result from that arbitration? I mean, is there a possibility that prices are going up and maybe how is your royalty rate is coming up? And how do you handicap that? And then for Rich, the same thing on the Samsung smartphone side, can you just remind us how you’re accounting for the license revenue in the recurring line from Samsung thus far? And might that be something that’s contributing to the decline in smartphone recurring revenue. Thank you.
Liren Chen
Take one or two simple questions. So, on the Samsung smartphone arbitration, as we have discussed in the prior call, since having our customer for the smartphone side for actually a long time since 1995 and before they release the variables, with guidance. The last contract was a 10-year agreement and which covered frankly, the previous generation technology and not including very valuable assets like 5G and a lot of the advanced video technology we have done. So that agreement acts for December 31, 2022, and both parties has agreed through negotiations that they will renew the agreement without disruption and that we frankly couldn’t get a pricing agreed upon in time.
So we both agreed to do a binding arbitration that started January 1, 2023. We are, frankly, well into the process. The panel has been assembled and the hearing has been confirmed this summer and will be decided before the end of the year as the current projection. So regarding valuation for multiple reasons, we feel very confident that the value of portfolio has gone up, that Santa’s benefited more through the years compared to the time of the last agreement. So that obviously, we still need to have the arbitration to go through to confirm our belief.
And I’ll hand it over to Rich to comment on the revenue recognition side.
Rich Brezski
Yes. Thanks, Liren. On the rev rec, we’ve been recognizing since the first quarter of last year at level with the prior Samsung agreement, which is just shy of $80 million a year. That’s what we believe is a conservative estimate. We have effectively a license in place with Samsung, and we are just estimating what the ultimate outcome will be on a conservative basis. But because of the conservative nature of the GAAP requirement, we are certainly hopeful that we will have a positive true-up when it’s ultimately concluded. And as to the question on the decline in recurring revenue, I presume you mean ‘23 going into ‘24. So, based on what I just said, it’s not because of Samsung, but rather expiration of other agreements, most notably Huawei, which expired at the end of last year.
Arjun Bhatia
Yes. Perfect. Alright. Thank you. One more, if I can. It was interesting to hear the injunction against Lenovo and OPPO. And I am curious, in the past, Liren, to the extent you have experienced with these injunctions, how do you think they – or how have they may be changed behavior of some of these manufacturers in the past? I mean is it enough of an incentive to bring them to the negotiation table and say, hey, we want to strike a deal. Like how punitive can those injunctions be for these companies to get them to strike a deal with you?
Liren Chen
Yes. Hey Arjun. As we announced in a separate press this morning, the Court in Munich has issued a decision. In that decision, basically, the court decided that InterDigital has consistently act in good phase under the front obligation at all times. The court also said Lenovo has systematically actively in hold out, and frankly, it’s not in combined of the front obligation. So, as a result, the court has issued the injunction of a patent that’s standard essential for both 4G and 5G. And unless if something happens, Lenovo will be prohibited from selling devices with those features in German market. Regarding how the company may behave, I don’t want to spec on Samsung – on Lenovo, how they will proceed from here. I can see Germany is obviously a very major market and this injunction applied to a pretty wide range of devices beyond the cell phones. So, I hope with this decision that Lenovo will come back and frankly, take a licensing and fair terms from us. And I am definitely hopeful.
Arjun Bhatia
Alright. Appreciate the color. Thank you.
Operator
Thank you. [Operator Instructions] And our next question comes from Anja Soderstrom of Sidoti. Your line is open.
Anja Soderstrom
Hi. Thank you for taking my question. Can you just – you talked about this in the past, but maybe go over again the different opportunities you have to reach your guidance for 2024.
Liren Chen
Yes. Hey. Good morning. This is Liren. So, we have multiple passes. On the smartphone side, just for example, we have OPPO negotiation where we will, as Rich just mentioned here, have has expired, which we are bringing renewed discussion with them. And then Lenovo was licensed through the UK court decision for the cellular side until end of last year. Now, the unlicensed as we announced this morning, we received court injunctions, and we hope to be able to, frankly, sign a long-term agreement with them. So, that’s just on the smartphone side. On the CE side, as we mentioned in the prepared remarks, we signed Samsung TV, which is the largest vendor in TV space. We are working diligently on the next multiple layers of TV vendors include LG, TCL and Hisense. So, on top of all the stuff here, we are also working on the Samsung arbitration, and we expect that to be finished before the end of the year. And if we are able to get a favorable judgment beyond the revenue recognition that will be a positive true-up pass.
Anja Soderstrom
Okay. Thank you. And when it comes to Huawei, how constructive are those discussions given you fairly recently signed an agreement with them?
Liren Chen
Yes. Probably negotiation is proceeding according to plan. And our last agreement expired the end of the year, and frankly, Huawei business has gone through a certain amount of period of up and down. So, we are currently in negotiation with them, and we are hopeful we will get a long-term deal down with us soon.
Anja Soderstrom
Okay. Thank you. That was all for me.
Operator
Thank you. [Operator Instructions] And our next question comes from Scott Searle of ROTH MKM. Your line is open.
Scott Searle
Hey. Good morning. Thanks for taking the questions. I apologize in advance, I was on the call late, so if you already covered this, but. Liren, in regard to the Lenovo injunction, what is the actual process and procedure there in terms of how that’s going to be implemented? And are there additional costs associated with it? I believe that there is an appeal period from their standpoint. So, can you walk us through the milestones timeline and the cost element?
Liren Chen
Yes. Hi Scott. Good morning. So, we don’t – I am not certain you were on the call when we were describing it earlier. So basically, the court has decided that we have acted in front manner consistently all the time. The Lenovo has systematic conduct sold out and their non-infant obligation and they are frankly, on-leading licensee. As a result, the court has issued injunction against them that covers devices with 4G and 5G features built in. So, there will be some procedure stuff which we are frankly working through and our intention is to enforce this injunction as quickly as we can. And you are also teat this is what they call a first insulin decision, which is automatically appealable. So, I don’t want to speculate on the Lenovo’s legal strategy, but that’s frankly up to them.
Scott Searle
Got it. And Liren, just to quickly follow-up on that front. This is in Germany, will that extend to the rest of the EU, or what is the plan there in terms of how you implement across the pan-European marketplace?
Liren Chen
Yes. Scott, this is the case that – this is a German pattern, and it’s a German court. So, just the decision will be limited to the German market. As you are aware, Scott, we do have other cases, including our PC, ITC in U.S. against them in different technology area. But this particular decision is Germany only.
Scott Searle
Got it. And two others, if I could, just the latest update in terms of video IPs licensing into the streaming and services model. Are there any updated thoughts, timelines in terms of how that’s evolving and the impact in ‘24 and ‘25?
Liren Chen
Yes. Hey Scott, we do view the video cloud service licensing as a very, very good, greenfield opportunity. We are proceeding according to plan, which we believe we have very valuable IP asset and frankly, very strong technology leadership. Regarding our direct financial impact, as of now, we are not projecting material impact to 2024. And if we have more update, we will share with you timely.
Scott Searle
Got it. And lastly, if I could, you have maintained the guidance range for the year of $620 million to $670 million. I am wondering if some things have kind of moved around in terms of higher probability versus lower probability. I am not sure if you can address it, but just kind of – I know there are multiple paths to get to that range if there are certain things that have materialized and become a little bit more confident about. Thanks.
Liren Chen
Yes. Hey Scott. As I said in my prepared remarks, when we issued the guidance beginning of the year, we feel very strongly that our business momentum has increased, and we have identified multiple past recent results. And now we have delivered a resounding strong quarter in Q1 for both the top line or adjusted EBITDA and EPS, and especially in the record recency and our key space. So, we feel very good about where we are, and we are on track to deliver the results. And as of now, we are not either predict the rest of the quarter other than we feel very confident about our ability to deliver for the year.
Scott Searle
Great. Thank you.
Operator
Thank you. This concludes the question-and-answer session. At this time, I would like to turn it back to Liren Chen for closing remarks.
Liren Chen
Thank you, operator. Before we close, I would like to thank all of our employees for their dedication and contribution to InterDigital as well as our many partners and licensees for an outstanding start to 2024. Thanks to everyone who joined our call today and we look forward to updating you on our progress next quarter.
Operator
This concludes today’s conference call. Thank you for participating and you may now disconnect.
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InterDigital Announces Financial Results for First Quarter 2024
Source: GlobeNewswire Inc.?
InterDigital, Inc. (Nasdaq: IDCC), a mobile, video, and AI technology research and development company, today announced results for the quarter ended March 31, 2024.
"InterDigital made significant progress in first quarter towards our 2024 revenue guidance of $620 million to $670 million,” commented Liren Chen, President and CEO, InterDigital. “Revenue was $264 million for the quarter, one of the highest quarters in our history, and included an all-time high for our CE and IoT licensing program. With our landmark consumer electronics agreement with Samsung, we signed agreements with a cumulative value of almost $2.7 billion over the last three years, giving us an incredibly strong base from which to drive additional growth opportunities.”
First Quarter 2024 Financial Highlights, as compared to First Quarter 2023:
Three Months Ended
March 31,(in millions, except per share data)2024 2023 ChangeGAAP Results: Revenues$263.5 $202.4 30%Operating Expenses (a)$159.8 $83.1 92%Net income 1$81.7 $105.3 (22)%Net income 1 margin31% 52% (21) pptDiluted EPS 1$2.88 $3.58 (20)% Non-GAAP Results: Adjusted EBITDA 2$130.4 $154.8 (16)%Adjusted EBITDA margin 249% 76% (27) pptNon-GAAP Net income 3$94.5 $123.6 (24)%Non-GAAP EPS 3$3.58 $4.21 (15)% Additional Information: Revenue by type: Recurring revenues$96.9 $101.6 (5)%Catch-up revenues$166.7 $100.8 65%Revenue by program: Smartphone$80.3 $186.2 (57)%CE, IoT/Auto$182.5 $16.1 1,035%Other$0.7 $0.1 1,184% (a) Includes revenue share costs of $69.0 million and $1.1 million in first quarter 2024 and 2023, respectively.
Return of Capital to Shareholders
(in millions, except per share data)
Share Repurchases Dividends Declared Total Return
of Capital
Shares Value Per Share Value First quarter 20240.3 $29.0 $0.40 $10.2 $39.2
Near Term Outlook
The Company has reaffirmed its full year 2024 outlook and provided an initial outlook for second quarter 2024 in the table below. The outlook for second quarter 2024 is based on existing licenses only, and any new agreements that might be reached over the balance of the second quarter would be additive. The outlook for full year 2024 includes both existing licenses and the potential for new agreements over the balance of the year.
(in millions, except per share data)Q2 2024 Full Year 2024Revenue$93 - $97 $620 - $670Adjusted EBITDA 2(a)$35.5 - $38.0 $310 - $345Diluted EPS 1(a)$0.20 - $0.30 $4.95 - $6.15Non-GAAP EPS 3(a)$0.70 - $0.80 $7.45 - $8.76 (a) Includes revenue share costs of $3 million for Q2 2024 and $80 million to $90 million for full year 2024.
Conference Call Information
InterDigital will host a conference call on Thursday, May 2, 2024 at 10:00 a.m. ET to discuss its first quarter 2024 financial performance and other company matters.
For a live Internet webcast of the conference call, visit www.interdigital.com and click on the “Webcast” link on the Investors page. The company encourages participants to take advantage of the Internet option.
For telephone access to the conference call, visit www.interdigital.com and click on the “Dial In Registration” link on the Investors page. Registration is necessary to obtain a dial in phone number and PIN to join.
An Internet replay of the conference call will be available on InterDigital’s website under Events in the Investors section. The replay will be available for one year.
About InterDigital®
InterDigital is a global research and development company focused primarily on wireless, video, artificial intelligence (“AI”), and related technologies. We design and develop foundational technologies that enable connected, immersive experiences in a broad range of communications and entertainment products and services. We license our innovations worldwide to companies providing such products and services, including makers of wireless communications devices, consumer electronics, IoT devices, cars and other motor vehicles, and providers of cloud-based services such as video streaming. As a leader in wireless technology, our engineers have designed and developed a wide range of innovations that are used in wireless products and networks, from the earliest digital cellular systems to 5G and today’s most advanced Wi-Fi technologies. We are also a leader in video processing and video encoding/decoding technology, with a significant AI research effort that intersects with both wireless and video technologies. Founded in 1972, InterDigital is listed on Nasdaq.
InterDigital is a registered trademark of InterDigital, Inc.
For more information, visit the InterDigital website: www.interdigital.com.
For additional financial measures, refer to our first quarter 2024 Form 10-Q and the financial metrics tracker, which are available on the Investor Relations section of our website.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include information regarding our current beliefs, plans and expectations. Words such as “believe,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “forecast,” “goal,” “could,” "would," "should," "if," "may," "might," "future," "target," "trend," "seek to," "will continue," "predict," "likely," "in the event," and variations of any such words or similar expressions are intended to identify such forward-looking statements.
Forward-looking statements are made on the basis of management’s current views and assumptions and are not guarantees of future performance. Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results, and actual events that occur, to differ materially from results contemplated by the forward-looking statements. These risks and uncertainties include, but are not limited to: (i) unanticipated delays, difficulties or accelerations in the execution of patent license agreements; (ii) the resolution of current legal proceedings, including any awards or judgments relating to such proceedings, additional or related legal proceedings, including appeals, changes in the schedules or costs associated with such proceedings or adverse rulings; (iii) our ability to leverage our strategic relationships and secure new patent license agreements on acceptable terms; (iv) our ability to enter into sales and/or licensing partnering arrangements for certain of our patent assets; (v) our ability to expand our revenue opportunities by entering into licensing arrangements with video streaming and other cloud-based service providers; (vi) our ability to enter into partnerships with leading inventors and research organizations and identify and acquire technology and patent portfolios that align with our roadmap; (vii) our ability to commercialize our technologies and enter into customer agreements; (viii) the failure of the markets for our current or new technologies to materialize to the extent or at the rate that we expect; (ix) our continued ability to develop new technologies and secure new patents, including the risk of unexpected delays or difficulties related to the development of our technologies; (x) risks associated with our capital allocation strategies, including risks associated with our planned dividend payments and share repurchases; (xi) changes in our interpretations of, and assumptions and calculations with respect to the impact on us of, the 2017 Tax Cuts and Jobs Act, as well as further guidance that may be issued regarding such act; (xii) risks related to the potential impact of new accounting standards on our financial position, results of operations or cash flows; (xiii) failure to accurately forecast the impact of our restructuring activities on our financial statements and our business; (xiv) the timing and impact of potential administrative and legislative matters; (xv) changes or inaccuracies in market projections; (xvi) our ability to obtain liquidity though debt and equity financings; (xvii) the potential effects that macroeconomic uncertainty could have on our financial position, results of operations and cash flows; (xviii) impacts from acts of terrorism, war or political or civil unrest, or any responses thereto, in the United States or elsewhere; (xix) changes in our business strategy; (xx) changes or inaccuracies in our expectations with respect to royalty payments by our customers and (xxi) risks related to our assumptions and application of relevant accounting standards, including with respect to revenue recognition.
We undertake no duty to revise or update publicly any forward-looking statement for any reason, except as otherwise required by law.
Footnotes
1 Throughout this press release, net income and diluted earnings per share (“EPS”) are attributable to InterDigital, Inc. (e.g., after adjustments for non-controlling interests), unless otherwise stated. Net income margin is net income attributable to InterDigital, Inc. over total revenues.
2 Adjusted EBITDA and Adjusted EBITDA margin are supplemental non-GAAP financial measures that InterDigital believes provide investors with important insight into the Company's ongoing business performance. InterDigital defines Adjusted EBITDA as net income attributable to InterDigital Inc. plus net loss attributable to non-controlling interest, income tax (provision) benefit, other income (expense) & interest expense, depreciation and amortization, share-based compensation, and other items. Other items include restructuring costs, impairment charges and other non-recurring items. Adjusted EBITDA margin is Adjusted EBITDA over total revenues. These non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The presentation of these financial measures, which are not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. A reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure is provided below.
3 Non-GAAP net income, Non-GAAP EPS, and Non-GAAP weighted-average diluted shares are supplemental non-GAAP financial measures that InterDigital believes provides investors with important insight into the Company's ongoing business performance. InterDigital defines Non-GAAP net income as net income attributable to InterDigital, Inc. plus share-based compensation, acquisition related amortization, depreciation and amortization, restructuring costs, impairment charges and one-time adjustments, losses on extinguishments of long-term debt, the related income tax effect of the preceding items, and adjustments to income taxes. Non-GAAP EPS is defined as Non-GAAP net income divided by Non-GAAP weighted average diluted shares, which adjusts the weighted average number of common shares outstanding for the dilutive effect of the Company's convertible notes, offset by our hedging arrangements. InterDigital’s computation of these non-GAAP financial measures might not be comparable to similarly named measures reported by other companies. The presentation of these financial measures, which are not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. A reconciliation of each of these metrics to its most directly comparable GAAP financial measure is provided below.
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
(unaudited) For the Three Months Ended March 31, 2024 2023 Revenues$263,542 $202,373 Operating expenses: Research and portfolio development 49,375 49,429 Licensing 96,589 21,368 General and administrative 13,840 12,315 Total operating expenses 159,804 83,112 Income from operations 103,738 119,261 Interest expense (11,922) (12,087)Other income, net 9,247 13,191 Income before income taxes 101,063 120,365 Income tax provision (19,411) (16,845)Net income$81,652 $103,520 Net loss attributable to noncontrolling interest — (1,739)Net income attributable to InterDigital Inc.$81,652 $105,259 Net income per common share — Basic$3.20 $3.66 Weighted average number of common shares outstanding — Basic 25,510 28,780 Net income per common share — Diluted$2.88 $3.58 Weighted average number of common shares outstanding — Diluted 28,341 29,372 Cash dividends declared per common share$0.40 $0.35
SUMMARY CONSOLIDATED CASH FLOWS
(in thousands)
(unaudited) For the Three Months Ended March 31, 2024 2023 Cash flows from operating activities: Net income$81,652 $103,520 Non-cash adjustments 8,459 (4,004)Working capital changes (39,338) (127,368)Net cash provided by (used in) operating activities 50,773
(27,852)Cash flows from investing activities: Net sales (purchases) of short-term investments 24,616
(5,982)Capitalized patent costs and purchases of property and equipment (9,417) (8,481)Long-term investments 1,576 — Net cash provided by (used in) investing activities 16,775
(14,463)Cash flows from financing activities: Repurchase of common stock (28,868) (203,381)Dividends paid (10,226) (10,384)Other (10,225) (4,371)Net cash used in financing activities (49,319) (218,136)Net increase (decrease) in cash, cash equivalents and restricted cash 18,229 (260,451)Cash, cash equivalents and restricted cash, beginning of period 442,961 703,161 Cash, cash equivalents and restricted cash, end of period$461,190 $442,710
SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited) MARCH 31, 2024 DECEMBER 31, 2023Assets Cash, cash equivalents and short-term investments$984,635 $1,006,356Accounts receivable 145,629 117,292Prepaid and other current assets 85,172 43,976Property & equipment and patents, net 318,216 324,567Other long-term assets, net 273,369 278,623Total assets$1,807,021 $1,770,814Liabilities and Shareholders' equity Current portion of long-term debt$579,369 $578,752Current deferred revenue 155,966 153,597Other current liabilities 168,484 148,779Long-term deferred revenue 193,955 223,866Long-term debt & other long-term liabilities 84,956 84,271Total liabilities 1,182,730 1,189,265Total shareholders' equity 624,291 581,549Total liabilities and shareholders' equity$1,807,021 $1,770,814
RECONCILIATION OF NON-GAAP MEASURESThe table below presents a reconciliation of Adjusted EBITDA to net income attributable to InterDigital, Inc., the most directly comparable GAAP financial measure: For the Three Months Ended March 31, Outlook (in thousands) (in millions) 2024 2023 Q2 2024 Full Year 2024Net income attributable to InterDigital, Inc.$81,652 $105,259 $5.5 - $8.0 $140 - $175Net loss attributable to non-controlling interest — (1,739) — —Income tax provision 19,411 16,845 1.5 40 - 50Other income (expense) & interest expense 2,675 (1,104) 0.5 5 - 15Depreciation and amortization 17,240 19,526 18.0 73Share-based compensation 9,386 7,790 10.0 42Other items (a) — 8,237 — —Adjusted EBITDA 2$130,364 $154,814 $35.5 - $38.0 $310 - $345 (a) Other items in the above table includes a $5.7 million one-time charge for a net litigation fee reimbursement and a $2.5 million one-time impairment on our patents held for sale during the three months ended March 31, 2023.
The table below presents a reconciliation of Non-GAAP net income to net income attributable to InterDigital, Inc., the most directly comparable GAAP financial measure:
For the Three Months Ended March 31, Outlook (in thousands, except for per share data) (in millions, except for per share data) 2024 2023 Q2 2024 Full Year 2024Net income attributable to InterDigital, Inc.$81,652 $105,259 $5.5 - $8.0 $140 - $175Share-based compensation 9,386 7,790 10.0 42Acquisition related amortization 8,421 10,268 8.0 33Other operating items (a) — 8,237 — —Other non-operating items (b) 674 (158) (1.0) —Related income tax and noncontrolling interest effect of above items (3,881) (6,739) (4.0) (16)Adjustments to income taxes (1,708) (1,042) — —Non-GAAP net income 3$94,544 $123,615 $18.5 - $21.0 $199 - $234 Weighted average dilutive shares - GAAP 28,341 29,372 27.8 28.3Less: Dilutive impact of the Convertible Notes 1,942 — 1.5 1.6Weighted average dilutive shares - Non-GAAP 3 26,399 29,372 26.3 26.7 Non-GAAP EPS 3$3.58 $4.21 $0.70 - $0.80 $7.45 - $8.76 (a) Other items in the above table includes a $5.7 million one-time charge for a net litigation fee reimbursement and a $2.5 million one-time impairment on our patents held for sale during the three months ended March 31, 2023.
(b) Other non-operating items includes net (gains) or losses from observable price changes of our long-term strategic investments.
CONTACT:InterDigital, Inc. Email: investor.relations @diplomat2
InterDigital awarded injunction against Lenovo
Source: GlobeNewswire Inc.?
InterDigital, Inc. (Nasdaq: IDCC), a mobile, video and AI technology research and development company, today announced it has been awarded an injunction against Lenovo by a court in Germany.
The Regional Court in Munich held that Lenovo infringes InterDigital’s patent-in-suit covering 4G and 5G devices, that InterDigital has acted in a FRAND manner at all times, and that Lenovo is an unwilling licensee who has not acted in line with widely recognized FRAND principles. This is a first instance decision which can be appealed.
“The strength of our portfolio and the quality of our standards contributions have once again been recognized by a court,” commented Josh Schmidt, Chief Legal Officer, InterDigital. “Following the court’s finding that Lenovo’s behavior constitutes hold-out, we hope Lenovo reverses course and finally takes a fair and reasonable license.”
About InterDigital®
InterDigital is a global research and development company focused primarily on wireless, video, artificial intelligence (“AI”), and related technologies. We design and develop foundational technologies that enable connected, immersive experiences in a broad range of communications and entertainment products and services. We license our innovations worldwide to companies providing such products and services, including makers of wireless communications devices, consumer electronics, IoT devices, cars and other motor vehicles, and providers of cloud-based services such as video streaming. As a leader in wireless technology, our engineers have designed and developed a wide range of innovations that are used in wireless products and networks, from the earliest digital cellular systems to 5G and today’s most advanced Wi-Fi technologies. We are also a leader in video processing and video encoding/decoding technology, with a significant AI research effort that intersects with both wireless and video technologies. Founded in 1972, InterDigital is listed on Nasdaq.
InterDigital is a registered trademark of InterDigital, Inc.
For more information, visit: www.interdigital.com.
InterDigital Contact:
Richard Lloyd
Email: richard.lloyd@interdigital.com
+1 (202) 349-1716
InterDigital’s Beijing office aims to spur telecoms, video codec deals
Olivia Rafferty
30 April 2024
InterDigital’s Eeva Hakoranta and Jason Wu speak to IAM about the company’s Chinese market penetration efforts six months after it opened its first office in Asia
https://www.iam-media.com/article/interdigitals-beijing-office-aims-spur-telecoms-video-codec-deals?utm_source=InterDigital%25E2%2580%2599s%2BBeijing%2Boffice%2Baims%2Bto%2Bspur%2Btelecoms%252C%2Bvideo%2Bcodec%2Bdeals&utm_medium=email&utm_campaign=IAM%2BDaily
InterDigital’s Doug Castor Elected Co-Chair of the ATIS Next G Alliance Steering Group
Source: GlobeNewswire Inc.
InterDigital, Inc. (Nasdaq: IDCC), a mobile, video and AI technology research and development company, announced the election of Doug Castor, InterDigital’s Head of Wireless Research, to serve as co-chair of the ATIS Next G Alliance (NGA) Steering Group.
InterDigital is a founding member of the NGA, an industry group committed to delivering North American wireless technology leadership in 6G and beyond. Co-chaired by InterDigital’s Doug Castor alongside representatives from AT&T and Nokia Bell Labs, the Steering Group leads strategic decision-making on the execution of NGA’s core mission and goals while developing recommendations for the long-term growth and evolution of the group.
“InterDigital’s perception as a world-leading innovator is bolstered by the recognition and respect earned by our outstanding engineers. Doug Castor’s recent election to the NGA Steering Board, alongside his existing leadership responsibilities, reflect his valuable expertise and insight to guide our industry in the right direction towards 6G,” said Rajesh Pankaj, Chief Technology Officer, InterDigital.
In addition to co-chairing the NGA Steering Group, Doug will continue his second term as Vice Chair of the NGA National 6G Roadmap Working Group, which is responsible for shaping the 6G vision and developing a path of technology evolution that aligns with North American priorities.
Learn more about the Next G Alliance here and the Steering Group leadership here.
About InterDigital ®
InterDigital is a global research and development company focused primarily on wireless, video, artificial intelligence (“AI”), and related technologies. We design and develop foundational technologies that enable connected, immersive experiences in a broad range of communications and entertainment products and services. We license our innovations worldwide to companies providing such products and services, including makers of wireless communications devices, consumer electronics, IoT devices, cars and other motor vehicles, and providers of cloud-based services such as video streaming. As a leader in wireless technology, our engineers have designed and developed a wide range of innovations that are used in wireless products and networks, from the earliest digital cellular systems to 5G and today’s most advanced Wi-Fi technologies. We are also a leader in video processing and video encoding/decoding technology, with a significant AI research effort that intersects with both wireless and video technologies. Founded in 1972, InterDigital is listed on Nasdaq. For more information, visit: www.interdigital.com.
InterDigital Contact:
Roya Stephens
Email: roya.stephens@interdigital.com
+1 (202) 349-1714
Sequans Explores Strategic Options, Secures Funds
April 24, 2024 Anne-Françoise Pelé
EE Times Europe sat down with Sequans Communications’ Olivier Pauzet to understand the impact of the MOU termination and discuss projects such as its recent funding under the France 2030 initiative.
https://www.eetimes.eu/sequans-explores-strategic-options-secures-funds/
LTE-M/NB-IoT Cellular IoT Connectivity for Critical Asset Tracking
Author of the article:
Newsfile
Published Apr 23, 2024 • Last updated 12 hours ago
Paris, France–(Newsfile Corp. – April 23, 2024) – Sequans Communications, S.A. (NYSE: SQNS), leader in 4G/5G cellular IoT chips and modules, announced that Abeeway, a subsidiary of Actility, global leader in LPWAN solutions, has adopted its Monarch 2 GM02S module to provide low power cellular IoT connectivity for a new version of the Abeeway Compact Tracker that now combines LTE-M and NB-IoT connectivity from Sequans with GPS, Wi-Fi Sniffer, Bluetooth and LoRa technologies in a single, highly accurate tracker.
https://www.pembrokeobserver.com/newsfile/206515-abeeway-selects-sequans-low-power-ltemnbiot-cellular-iot-connectivity-for-critical-asset-tracking
Sequans Calliope 2: First Cat 1bis Module Approved by AT&T
Newsfile Corp.
Thu, Apr 18, 2024, 8:00 AM EDT
Approval extends to FirstNet, built with AT&T
Paris, France--(Newsfile Corp. - April 18, 2024) - Sequans Communications, S.A. (NYSE: SQNS), leader in 4G/5G cellular IoT chips and modules, announced that its Calliope 2 Cat 1bis platform, which includes the Calliope 2 chip and the GC02S1 module, has received modular approval for use on the AT&T commercial mobility network and the FirstNet® network.
https://finance.yahoo.com/news/sequans-calliope-2-first-cat-120000737.html
Think1st - I don't know enough about this technology to be saying anything. I offered the link in order to consider the discussion that might follow.
Research team manufactures the first universal, programmable and multifunctional photonic chip
by Universitat Politècnica de València
https://techxplore.com/news/2024-04-team-universal-programmable-multifunctional-photonic.html
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
INTERDIGITAL INC., INTERDIGITAL VC
HOLDINGS, INC., INTERDIGITAL PATENT
HOLDINGS, INC., AND INTERDIGITAL
MADISON PATENT HOLDINGS SAS,
Plaintiff,
vs.
LENOVO (UNITED STATES) INC.,
MOTOROLA MOBILITY LLC, AND
LENOVO PC HK LIMITED,
Defendants.
Civil Action No. 5:23-CV-004930FL
JOINT NOTICE
Plaintiffs Interdigital, Inc., Interdigital VC Holdings, Inc., Interdigital Patent Holdings, Inc.,
and Interdigital Madison Patent Holdings SAS (collectively, “Plaintiffs” or “Interdigital”) and
Defendants Lenovo (United States) Inc., Motorola Mobility LLC, and Lenovo PC HK Limited
(collectively, “Defendants” or “Lenovo”), by counsel, respectfully submit this Joint Notice and
hereby state as follows:
1. On February 23, 2024, Defendant Lenovo PC HK Limited moved for Judgment on
the Pleadings that U.S. Patent Nos. 9,173,054, 8,737,933, and 10,250,877 are directed to patentineligible subject matter under 35 U.S.C. § 101. ECF No. 69. Lenovo PC HK Limited noted that
the other two defendants—Lenovo (United States) Inc., and Motorola Mobility LLC—would join
the motion once the pleadings closed and InterDigital’s motion to dismiss Count III of Lenovo’s
counterclaims resolved. Id. at 2 n.1. The pleadings closed on March 15, 2024. ECF No. 77. The
Court denied InterDigital’s motion to dismiss on March 25, 2024. ECF No. 81.
Case 5:23-cv-00493-FL Document 91 Filed 04/15/24 Page 1 of 4
2
2. On April 15, 2024, Lenovo (United States) Inc., and Motorola Mobility LLC moved
for Judgment on the Pleadings that U.S. Patent Nos. 9,173,054, 8,737,933, and 10,250,877 are
directed to patent-ineligible subject matter under 35 U.S.C. § 101 on the same basis as Lenovo PC
HK Limited’s prior motion. ECF No. 90.
3. To avoid burdening the Court and the parties with identical briefing on this motion,
the parties hereby stipulate they will rely upon their briefs and exhibits thereto associated with
Lenovo PC HK Limited’s motion (ECF No. 69) in lieu of refiling briefs.
Dated: April 15, 2024 /s/ M. Scott Stevens
M. Scott Stevens
NC State Bar No. 37828
ALSTON & BIRD LLP
Vantage South End
1120 South Tryon Street, Suite 300
Charlotte, NC 28203
Telephone: 704-444-1025
Fax: 704-444-1935
scott.stevens@alston.com
Philip C. Ducker
CA State Bar No. 262644
Katherine G. Rubschlager
CA State Bar No. 328100
ALSTON & BIRD LLP
560 Mission Street, Suite 2100
San Francisco, CA 94105
Telephone: 415-243-1000
Fax: 415-243-1001
phil.ducker@alston.com
katherine.rubschlager@alston.com
Special Appearance Pursuant to L.R. 83.1
Forthcoming
Ryan W. Koppelman (Pro Hac Vice)
California State Bar No. 290704
ryan.koppelman@alston.com
ALSTON & BIRD
333 South Hope Street
Los Angeles, CA 90071
Case 5:23-cv-00493-FL Document 91 Filed 04/15/24 Page 2 of 4
3
Telephone: (213) 576-1100
Neal A. Larson
GA State Bar No. 599069
TX State Bar No. 24106190
ALSTON & BIRD LLP
1201 West Peachtree Street
Atlanta, GA 30309
Telephone: (404) 881-7000
Facsimile: (404) 881-7777
neal.larson@alston.com
Special Appearance Pursuant to L.R. 83.1
Forthcoming
Jenny J. Wang
CA State Bar No. 328002
ALSTON & BIRD LLP
555 Fayetteville Street, Suite 600
Raleigh, NC 27601
Telephone: (919) 862-2200
Facsimile: (919) 862-2260
jenny.wang@alston.com
Special Appearance Pursuant to L.R. 83.1
Forthcoming
Attorneys for Plaintiffs InterDigital, Inc.
InterDigital VC Holdings, Inc., InterDigital Patent
Holdings, Inc., and InterDigital Madison Patent
Holdings SAS
/s/ Raymond M. Bennett
Raymond M. Bennett (NC Bar No. 36341)
WOMBLE BOND DICKINSON (US) LLP
555 Fayetteville Street, Suite 1100
Raleigh, North Carolina 27601
Telephone: 919-755-2158
Facsimile: 919-755-6068
Ray.Bennett@wbd-us.com
Jacob S. Wharton (NC Bar No. 37421)
WOMBLE BOND DICKINSON (US) LLP
One West 4th St.
Winston-Salem, North Carolina 27601
Telephone: 919-747-6609
Jacob.Wharton@wbd-us.com
Adam Shartzer
Case 5:23-cv-00493-FL Document 91 Filed 04/15/24 Page 3 of 4
4
FISH & RICHARDSON P.C.
1000 Maine Ave SW
Washington, D.C. 20024
Telephone: 202-626-6380
shartzer@fr.com
Special Appearance Pursuant to L.R. 83.1
Jack R. Wilson IV
FISH & RICHARDSON P.C
1000 Maine Ave SW
Washington, D.C. 20024
Telephone: 202-626-6415
jwilson@fr.com
Special Appearance Pursuant to L.R. 83.1
Attorneys for Lenovo (United States) Inc.,
Motorola Mobility LLC, and Lenovo PC HK
Limited
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
NO. 5:23-CV-00493-FL
INTERDIGITAL INC.,
INTERDIGITAL VC HOLDINGS, INC.,
INTERDIGITAL PATENT HOLDINGS,
INC., and
INTERDIGITAL MADISON PATENT
HOLDINGS SAS,
Plaintiffs,
v.
LENOVO (UNITED STATES) INC.,
MOTOROLA MOBILITY LLC, and
LENOVO PC HK LIMITED,
Defendants.
)
)
)
)
)
)
)
)
)
)
)
)
)
)
MOTION FOR JUDGMENT ON
THE PLEADINGS
Fed. R. Civ. P. 12(c)
DEFENDANTS LENOVO (UNITED STATES) INC. AND MOTOROLA MOBILITY
LLC’S MOTION FOR JUDGMENT ON THE PLEADINGS PURSUANT TO FED. R.
CIV. P. 12(C)
InterDigital, Inc., InterDigital VC Holdings, Inc., InterDigital Patent Holdings, Inc., and
InterDigital Madison Patent Holdings SAS (collectively, “InterDigital” or “Plaintiffs”) accuse
Defendants Lenovo (United States) Inc., Motorola Mobility LLC, and Lenovo PC HK Limited
(“Lenovo HK”) of infringing five patents. Second Amended Complaint, ECF No. 64 ¶ 2. At
least three of these patents are directed to patent-ineligible subject matter under 35 U.S.C. § 101.
Namely, the claims of U.S. Pat. No. 9,173,054 (“the ’054 patent”), and U.S. Pat. No. 8,737,933
(“the ’933 patent”) embody the abstract idea of wirelessly transferring data (Alice, Step One).
The claims also lack an inventive concept sufficient to make the claims patent eligible (Alice,
Step Two). The claims of the third patent, U.S. Pat. No. 10,250,877 (“the ’877 patent”), embody
the abstract idea of encoding and decoding image data, where the abstract idea is achieved by
using mathematical equations. These claims also lack an inventive concept. Consequently,
Case 5:23-cv-00493-FL Document 90 Filed 04/15/24 Page 1 of 3
ii
pursuant to Fed. R. Civ. P. 12(c), Lenovo (United States) Inc. and Motorola Mobility LLC move
the Court for a judgment on the pleadings that the ’054, ’933, and ’877 patents are patent
ineligible under 35 U.S.C. § 101, and, therefore, that they are invalid.
The parties are concurrently filing a Joint Notice stipulating they will rely upon their
briefs and exhibits thereto associated with Lenovo PC HK Limited’s motion (ECF No. 69) in lieu
of refiling briefs. The grounds for this motion are set forth more fully in the briefs and exhibits
thereto associated with Lenovo PC HK Limited’s motion.
This 15th day of April 2024.
/s/ Raymond M. Bennett _
Raymond M. Bennett (NC Bar No. 36341)
WOMBLE BOND DICKINSON (US) LLP
555 Fayetteville Street, Suite 1100
Raleigh, North Carolina 27601
Telephone: 919-755-2158
Facsimile: 919-755-6068
Ray.Bennett@wbd-us.com
Jacob S. Wharton (NC Bar No. 37421)
WOMBLE BOND DICKINSON (US) LLP
One West 4th St.
Winston-Salem, North Carolina 27601
Telephone: 919-747-6609
Jacob.Wharton@wbd-us.com
Adam Shartzer
FISH & RICHARDSON P.C.
1000 Maine Ave SW
Washington, D.C. 20024
Telephone: 202-626-6380
shartzer@fr.com
Special Appearance Pursuant to L.R. 83.1
Jack R. Wilson IV
FISH & RICHARDSON P.C.
1000 Maine Ave SW
Washington, D.C. 20024
Telephone: 202-626-6415
jwilson@fr.com
Case 5:23-cv-00493-FL Document 90 Filed 04/15/24 Page 2 of 3
iii
Special Appearance Pursuant to L.R. 83.1
Attorneys for Lenovo (United States) Inc.,
Motorola Mobility LLC, and
Lenovo PC HK Limited
Avanci Launches 4G Smart Meter patent licensing program
October 30, 2023 by Avanci
EDMI, a global leader in smart metering solutions, joins as first licensee
Avanci, the independent global leader in joint licensing solutions, today launched a program for 4G smart meters, with global smart metering leader EDMI as its first licensee.
Since 2016, Avanci has been transforming how patent licensing is done, through efficient, independent platforms which offer a convenient option to reduce transaction costs, enhance licensing efficiency, and improve predictability for all parties. This new Avanci program builds on the success of Avanci 4G Vehicle, which now has more than 145 million connected vehicles from over 95 automotive brands covered by an Avanci 4G Vehicle license.
Roy Kirsopp, CEO at EDMI, says: “As a leader in the global smart metering market, EDMI is unwavering in its commitment to customers to provide reliable and seamless smart metering solutions. We joined the Avanci 4G Smart Meter patent licensing program to assure our valued customers and partners that EDMI takes its licensing obligations seriously. An Avanci license is extremely valuable as it gives us authorised, licensed access to a broad range of 4G technology patent owners in a simple and efficient manner.”
Avanci 4G Smart Meter is Avanci’s first Internet of Things (IoT) program beyond the automotive sector. It simplifies the process of licensing essential cellular technologies for the growing global 4G smart meter market. Analyst firm Transforma Insights forecasts that more than 15 million 4G smart meters in scope of the program will be sold in 2023, with over 160 million to be sold during the next 10 years.
Marianne Frydenlund, Vice President and head of IoT licensing at Avanci, said: “We are delighted to launch our latest IoT program and to welcome EDMI, a leader in smart metering solutions, as our first 4G Smart Meter licensee. Our thanks to EDMI and all our partners for giving us their trust and confidence to deliver another efficient IoT licensing solution.”
An Avanci 4G Smart Meter license covers meters enabling 4G* connected meters. It offers a single license covering the 4G, 3G, and 2G essential patents of the 39 licensors in the program today, together with those of any licensors that join in future, at a fixed rate of $3 per meter, paid once for the lifetime of the meter.
Smart meter manufacturers and owners of cellular essential patents can email IOT@avanci.com to learn more about the program.
* Smart meters that communicate solely using the NB-IoT and/or LTE-M subsets of the 4G standard are not covered by the program.
About EDMI
EDMI Limited is one of the leading smart metering solutions providers in the world. EDMI is focused on designing, developing and manufacturing innovative and technologically advanced energy meters and metering systems for the global utility industry. EDMI’s metering portfolio includes a comprehensive range of premium quality metering products, advanced infrastructure and energy management systems. EDMI is owned by Osaki Electric Co., Ltd., a Japanese metering solutions provider listed on the Prime Market of the Tokyo Stock Exchange.
Oleblue - direct link
https://www.lightwavelogic.com/
Lenovo confidentiality breaches represent "serious failings", says UK court in InterDigital dispute
Adam Houldsworth
04 April 2024
An English High Court decision has revealed that Lenovo committed several breaches of a confidentiality protocol relating to InterDigital’s third-party SEP licence agreements in the latest development of the much-watched SEP/FRAND dispute.
Nevertheless, the London court has granted Lenovo retrospective permission to use the confidential information in a second set of FRAND proceedings between the two parties, including in a fast-approaching hearing concerning a jurisdictional challenge by InterDigital.
This comes against the background of a multi-faceted, global set of disputes between the parties, which have great legal and strategic significance for the broader SEP licensing landscape.
Lenovo’s breaches relate to information protected under a confidentiality protocol established during an initial round of UK litigation pertaining to the use of InterDigital’s 5G-era cellular SEP portfolio until the end of 2023.
That litigation produced a landmark global FRAND ruling by the High Court of England and Wales in March 2023 – the UK’s second ever such decision. The ruling set a rate favourable to Lenovo, rejected key aspects of InterDigital’s rate-setting methodology and found the US patentee to have been an unwilling licensor.
InterDigital is challenging that ruling in an appeal whose outcome will have profound implications for SEP strategies around the world. It is scheduled to be heard by the Court of Appeal on 10 June this year.
Lenovo’s breaches of the confidentiality protocol were committed as part of a second round of UK global licence rate-setting litigation, which the Chinese company initiated on 23 September 2023.
The Chinese implementer filed a UK High Court action seeking either a declaration of invalidity and non-essentiality against two of InterDigital’s 4G SEPs, or a global FRAND rate determination for InterDigital’s cellular SEP portfolio for the period 2024-2028. It also requested that a global rate be set for InterDigital’s broader portfolio of SEPs and non-standard-essential patents.
This defensive or ‘free-standing’ global FRAND rate-setting request was filed alongside a similar action filed by Lenovo in a parallel worldwide SEP dispute with Ericsson. Indeed, as a recent IAM interview with Lenovo’s Chief IP Officer John Mulgrew showed, the company has been persuaded of the merits of UK litigation by the favourable March 2023 ruling.
In contrast, InterDigital, having seemingly lost its appetite for UK global FRAND decisions, has filed a jurisdictional challenge, based partly on the grounds that Lenovo is seeking a declaration relating to some non-ETSI SEPs and non-standard-essential patents that are not subject to FRAND commitments. The hearing for this jurisdictional challenge is set to take place in a few weeks, on 24 April.
Lenovo believes that its case in that jurisdictional challenge will be strengthened by use of third-party patent licence information that was used under the protection of a confidentiality protocol in the first dispute. In late March, it applied for permission to make use of that information.
This brought a serious issue to the court’s attention, however. By the Chinese company’s admission, it had already inadvertently misused that information, in breach of confidentiality provisions, on several occasions since the initiation of the September legal action. Lenovo therefore asked for retrospective permission to use the confidential information in the ongoing case.
Handing down his decision on the matter, Mr Justice Zacaroli stated that there “have been serious failing on the part of Lenovo”. These included Lenovo’s inclusion of confidential information in its original September 2023 pleading, its use of the third-party licences as part of its strategic review for the second dispute and its use of unredacted licences and an unredacted version of the first global FRAND ruling in its disclosure for the second proceeding.
Zacaroli J also found that the confidentiality protocol had been breached by the sharing of information with Lenovo’s German lawyers, who were outside the confidentiality ring. Moreover, affected third parties had not been informed of the breach in a timely manner, and although Lenovo’s lawyers had not intentionally misused the information, the company “ought to have come to court at a much earlier stage” after the breaches were brought to its attention in November 2023.
InterDigital requested that Lenovo’s retroactive request be rejected. Otherwise, its interests would be prejudiced, it argued, adding that Lenovo and its lawyers could not be trusted.
However, Zacaroli J ruled that need to encourage compliance had to be balanced against his findings that there had been no substantial prejudice to the interests of InterDigital or the third parties involved, and Lenovo had not gained any significant benefit from the breaches. Moreover, he reasoned, Lenovo would have a good chance of introducing the information at a later stage in proceedings, regardless. It was in the interests of justice to allow the confidential information to be weighed in the jurisdictional ruling.
As such, Lenovo was granted retrospective permission to use the information in its original and amended particulars of claim, and in pleading those matters, as well as in the forthcoming jurisdiction challenge.
For its breaches, however, Lenovo has been ordered to pay £80,000 to cover both parties’ costs relating to its request.
The jurisdiction hearing will determine which claims, if any, Lenovo is allowed to proceed with. The resolution of those questions will also trigger a hearing on Lenovo’s request for an expedited FRAND trial.
Some other important questions relating to the case have already been resolved. On 21 March, the High Court rejected InterDigital’s request to stay proceedings pending developments at the Munich Regional Court. It also rejected Lenovo’s request for an interim global licence – based on the March 2023 decision – pending the full UK global FRAND ruling. Such a provisional licence would have only slight value in English proceedings, the court found, because Lenovo is not under the threat of an injunction and InterDigital has not sought interim payments.
The global context
However, all of Lenovo’s UK actions against InterDigital must be understood as part of a wider context in which the US patentee has asserted cellular SEPs and other patents in several other jurisdictions.
In Germany, for example, InterDigital asserted several 4G and 5G patents at the Munich Regional Court in September of last year, immediately before Lenovo’s UK filing. A hearing regarding one of the asserted patents is set to take place on 18 April.
Also in September 2023, InterDigital filed US legal actions at the International Trade Commission and the District Court for the Eastern District of North Carolina, concerning five US patents (which are not subject to FRAND obligations) relating to the AV1 and VP9 video codec specifications. The ITC has instituted InterDigital’s complaint, setting a hearing for June-July 2024.
InterDigital had also asserted SEPs relating to the HEVC video codec standard in various jurisdictions, though this part of the dispute was resolved by a licensing deal in late 2023.
According to InterDigital’s recent annual report, the company’s 2023 patent revenue (totalling $549.6 million) included $150.1 million (mostly back-payments) from Lenovo, comprised of payments relating to the March 2023 cellular SEP decision and the later HEVC agreement.
Teramount and GlobalFoundries partnership focuses on new silicon photonic solutions
April 4, 2024
The two companies will focus on accelerating scale and improving power efficiency to meet the growing needs created by AI.
https://www.lightwaveonline.com/home/article/55002231/teramount-and-globalfoundries-partner-on-driving-new-silicon-photonic-solutions
Notable Monday Option Activity: NET, SPHR, IDCC
April 01, 2024 — 03:18 pm EDT
Written by BNK Invest
And Interdigital Inc (Symbol: IDCC) saw options trading volume of 2,781 contracts, representing approximately 278,100 underlying shares or approximately 50.7% of IDCC's average daily trading volume over the past month, of 548,755 shares. Especially high volume was seen for the $95 strike put option expiring April 19, 2024, with 588 contracts trading so far today, representing approximately 58,800 underlying shares of IDCC. Below is a chart showing IDCC's trailing twelve month trading history, with the $95 strike highlighted
https://www.nasdaq.com/articles/notable-monday-option-activity:-net-sphr-idcc
BoA got their quarter end client statements printed. The end justifies the means, in their minds. JMHO
InterDigital: Ample Room To Lift On The Momentum
Mar. 30, 2024 9:27 AM ET
Tristan De Blick
Summary
InterDigital's stock price has increased by 50% in the last 12 months after trading sideways for 4 years.
The company's revenue has been growing consistently since 2019, with revenue becoming less dependent on one-off payments.
However, the stock price seemingly still depends on these one-off payments: in 2016 and 2023, it increased for extended periods after obtaining them.
Interestingly, InterDigital has struck a new deal with Samsung, and is to obtain a record high one-off payment this year.
Will the stock price follow suit once more?
After having traded sideways for 4 years, InterDigital's (NASDAQ:IDCC) stock price has increased by 50% over the last 12 months. Has the stock finally found its inflection point, and will its strong momentum continue, or is it, instead, more likely to trade sideways again for another 4 years? Let's investigate.
The reason behind the recent stock price surge
For a long time, I found it quite startling that IDCC stock traded sideways, as the results from 2019 on have been really strong. Revenue has grown spectacularly every single year since 2019, concluding a weaker period (revenue halved between 2016 and 2019 because InterDigital had received a strong one-off payment for so-called 'past royalties' from Apple and Huawei).
After receiving the large one-off payments in 2016, the stock price skyrocketed to above 100$ - which seemed fair as EPS was 8.95$. However, in the years to come, EPS would drop to 0.66$ in 2019. Since, IDCC's recurring revenues have been increasing at a rapid clip, making the company and its profits less dependent on these one-off payments:
For example, in 2020, total recurring revenue was $336M, while non-recurring revenue consisted of only $22M. As stated, the level of recurring revenue further increased over 2021-2023. In 2022, recurring revenue already accounted for $404M, or 20% more than in 2020.
Ironically, in 2023, recurring revenues did not increase all that much.
Instead, InterDigital once again received very large one-off catch-up payments:
As such, seemingly, just as in 2016 and 2017, the recent increase in the stock price has, at least to some extent, been driven by these catch-up payments!
What now?
Keeping the history since 2016 in mind, investors should be careful in valuing the company based on 2023's EPS. If they were to do so, the stock would look very cheap, trading at 14x (EPS: 7.62$). Normalized earnings would be much closer to those of 2022, when the catch-up payments were in line with the historical average. Based on the EPS of that year, IDCC is trading at 34x earnings.
However.
With that caution in mind, IDCC just announced that it has struck a magnificent new deal with Samsung, which allows the Korean conglomerate to use IDCC's codec for video formatting in its TVs. Samsung will pay in Q1 24 no less than $160M in catch-up payments. This exceeds the catch-up payments for the full year of 2023!
Moreover, IDCC also expects recurring revenue to increase throughout 2024. It has guided for a total revenue for the fiscal year between 620 and 670 million dollars. Excluding Samsung's catch-up payment, that leaves us with 460-510 million dollars in revenue. If that number includes another $50M in catch-up payments, which was the total for fiscal year 2022, recurring revenue is guided to be 410M-460M dollars. This equals a guided expected increase of 1-10% this year (and IDCC tends to beat, or at least meet the upper end of its guidance ranges).
Conclusion
IDCC has over the years increased its recurring revenue. The stock price, however, seemingly mostly reacts to the one-off catch-up payments which happen from time to time. Buying the stock right after the company has pocketed these large payments, has proven to be a great strategy. But one has to be quick. Buying the stock the fiscal year after after the firm had received these payments, proved to be a terrible strategy.
2023 was such a year: the company has received large one-off payments again, and the stock price is on the rise. As such, one needs to be cautious. However, IDCC just reported that it has received an even larger one-off payment this quarter from Samsung. As such, revenue and EPS are likely to hit all-time highs this year. I believe, therefore, that investors are still in time to lift on the recent strong momentum.
https://seekingalpha.com/article/4681304-interdigital-ample-room-to-lift-on-the-momentum
dws - The last sentence was a "cut & paste" from the article. What do you believe institutional ownership to be now?
https://www.marketbeat.com/instant-alerts/nasdaq-idcc-sec-filing-2024-03-26/
Pacer Advisors Inc. Has $125.01 Million Position in InterDigital, Inc. (NASDAQ:IDCC)
Written by MarketBeat
March 26, 2024
Pacer Advisors Inc. raised its position in InterDigital, Inc. (NASDAQ:IDCC - Free Report) by 220.9% during the fourth quarter, according to the company in its most recent 13F filing with the Securities and Exchange Commission. The fund owned 1,151,777 shares of the Wireless communications provider's stock after purchasing an additional 792,868 shares during the period. Pacer Advisors Inc. owned 4.48% of InterDigital worth $125,014,000 as of its most recent filing with the Securities and Exchange Commission.
A number of other large investors also recently modified their holdings of IDCC. Norges Bank purchased a new position in InterDigital in the fourth quarter valued at approximately $14,439,000. Marshall Wace LLP purchased a new position in shares of InterDigital in the 2nd quarter valued at $16,076,000. Two Sigma Investments LP purchased a new position in shares of InterDigital in the 1st quarter valued at $6,199,000. Vanguard Group Inc. grew its holdings in shares of InterDigital by 2.2% during the third quarter. Vanguard Group Inc. now owns 3,343,395 shares of the Wireless communications provider's stock worth $268,274,000 after purchasing an additional 72,720 shares during the last quarter. Finally, Dimensional Fund Advisors LP grew its holdings in shares of InterDigital by 6.7% during the first quarter. Dimensional Fund Advisors LP now owns 1,031,916 shares of the Wireless communications provider's stock worth $75,226,000 after purchasing an additional 65,217 shares during the last quarter. 99.83% of the stock is owned by hedge funds and other institutional investors.
InterDigital to Showcase Innovations in High Definition and Sustainable Video Streaming Alongside Partners at NAB 2024
Source: GlobeNewswire Inc.
InterDigital, Inc. (Nasdaq: IDCC), a mobile, video and AI technology research and development company, announced plans to showcase their contributions to video streaming and sustainability technologies alongside partners at NAB 2024. As critical contributor to Advanced HDR by Technicolor® solutions and longtime member of the Ultra HD Forum, InterDigital will showcase advancements in high dynamic range (HDR) production, distribution, and display solutions and AI-enhanced energy efficient streaming technologies at NAB 2024, taking place in Las Vegas from April 13 – 17.
Advanced HDR Streaming Solutions
A collaboration between Philips, InterDigital and Technicolor, Advanced HDR by Technicolor® is a suite of HDR solutions that leverage machine learning to maximize image quality and enhance the consumer viewing experience. At NAB, partners InterDigital and Philips will highlight progress in industry adoption of Advanced HDR solutions that support the bandwidth-efficient distribution of HDR content for any type of video streaming service provider or live broadcast production workflow. The solution enables end-to-end HDR and SDR production with a single master workflow and ensures optimal source fidelity on both SDR-to-HDR and HDR-to-SDR conversions. Advanced HDR by Technicolor remains the only solution delivering HDR broadcasts of any content, any time, and anywhere over the ATSC 3.0 NextGen TV stations.
Our contributions to Advanced HDR streaming solutions can be experienced at the ATSC booth at W3056 in West Hall, at the Ultra HD Forum booth at W4007 in West Hall, and by invitation at the Advanced HDR by Technicolor Meeting Room at W2476.
In addition, InterDigital will deliver a presentation as part of NAB’s Broadcast Engineering and IT conference. The session, “HDR-SDR conversion: Live HDR Single Master Production Conversion Interoperability Challenges” will take place on Tuesday, April 16 from 10:00 AM - 10:20 AM PST in room W222-W223.
Sustainable Streaming Solutions
At NAB booth W4007, members of the Ultra HD Forum will showcase current and future-looking solutions and strategies that support the sustainable delivery of Ultra HD content. As a member of the Ultra HD Forum, InterDigital leads and contributes to three of the demonstrations on display, including:
“Pixel Value Reduction in HDR Content” and the ways we leverage InterDigital’s AI expertise to adjust pixel luminance to reduce energy consumption with minimal impact on visual quality.
“Energy Efficient Enhanced Media Streaming” alongside partner ATEME to display the impact of luminance adjustment on energy usage and the strategic insertion of video metadata to enhance content delivery and viewer experiences.
“Viewing Condition Impacts on Display Energy Consumption” alongside collaborator CTOIC to illustrate the influence of ambient lighting on modern TV energy usage.
To register and learn more, please visit the NAB 2024 website here.
About Advanced HDR by Technicolor
A collaboration between Philips, InterDigital and Technicolor, Advanced HDR by Technicolor® is a suite of High Dynamic Range (HDR) production, distribution and display solutions that leverages machine learning (ML) technology to maximize image quality and enhance the consumer viewing experience. There are two major components to Advanced HDR by Technicolor:
The Intelligent Tone Management (ITM) tool provides a dynamic, tunable, real-time solution to up-convert SDR content to HDR with full freedom and flexibility to manage contrast, brightness and color saturation.
The Single Layer HDR (SL-HDR) is a dynamic and tunable real-time tool that implements the ETSI SL-HDR standards to generate and deliver a single, consistent, high-quality broadcast stream starting from any mix of input content (such as live, movies, news) across a wide range of HDR formats (HDR10, HLG, S-LOG3). SL-HDR1 transforms HDR input streams into SDR-plus-metadata streams. SL-HDR compatible receivers provide consumers with high-quality HDR images that can be adapted to optimize the display capabilities of their devices. Thanks to the unique backward compatibility feature of SL-HDR1, consumers who do not have HDR devices can enjoy the highest quality SDR experience.
To learn more about Advanced HDR by Technicolor visit: https://advancedhdrbytechnicolor.com/
About Ultra HD Forum
Founded in 2015, the Ultra HD Forum accelerates Ultra HD adoption by establishing best practices for the future of television. The Forum is a crucible for interoperability testing and standard synchronization.
For more information, please visit https://ultrahdforum.org or @UltraHDForum on LinkedIn.
About InterDigital®
InterDigital is a global research and development company focused primarily on wireless, video, artificial intelligence (“AI”), and related technologies. We design and develop foundational technologies that enable connected, immersive experiences in a broad range of communications and entertainment products and services. We license our innovations worldwide to companies providing such products and services, including makers of wireless communications devices, consumer electronics, IoT devices, cars and other motor vehicles, and providers of cloud-based services such as video streaming. As a leader in wireless technology, our engineers have designed and developed a wide range of innovations that are used in wireless products and networks, from the earliest digital cellular systems to 5G and today’s most advanced Wi-Fi technologies. We are also a leader in video processing and video encoding/decoding technology, with a significant AI research effort that intersects with both wireless and video technologies. Founded in 1972, InterDigital is listed on Nasdaq.
InterDigital is a registered trademark of InterDigital, Inc.
For more information, visit: www.interdigital.com.
InterDigital Contact:
Roya Stephens
Email: Roya.Stephens@interdigital.com
Phone: +1 (202) 349-1714