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my3sons: The case referred to ( Delaware 1:11-cv-00654-RGA Interdigital Communications LLC et al v. Nokia Corporation et al) is an inactive case that keeps getting repeated stays.
Date filed: 07/26/2011
Date terminated: 10/13/2011
Date of last filing: 06/12/2017
06/09/2017
101
Joint Status Letter, by IPR Licensing Inc., Interdigital Communications LLC, Interdigital Technology Corporation. (Belgam, Neal) Modified on 6/12/2017 (nms). (Entered: 06/09/2017)
06/12/2017
102
ORAL ORDER: The request to continue the stay (D.I. [101) is GRANTED. The parties shall file another status report by September 11, 2017. Ordered by Judge Richard G. Andrews on 6/12/2017. (nms) (Entered: 06/12/2017)
IDCCfan: Yes, cellular standard essential patents for network infrastructure are in a different category than those for mobile phones. In fact, IDCC has set up a separate subsidiary, the "Signal Foundation for Wireless Innovation", Inc. for the licensing of their network infrastructure patents.
http://www.signalwirelesstrust.com/general/learn_more
According to the Nokia press release announcing the agreements it appears that most of the emphasis of the agreements is focused on areas other than mobile phones.
http://www.nokia.com/en_int/news/releases/2017/07/05/nokia-and-xiaomi-sign-business-cooperation-and-patent-agreements
It is also interesting that the announcement says nothing about any payments, except that apparently Xiaomi will purchase certain network equipment from Nokia
jjff: I'm sure he can reply himself. Apparently you are calling him a " BABE IN THE WOODS" because his initial board post was in 2013. You should read his initial post which indicates he was involved with IDCC for a lot longer time period than many posters.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=89497088
dilt: The new revenue recognition policy was discussed in IDCC's last 10-K report (see below). As described, the principal change will be that for fixed fee lump sum contracts, the total license amount will recognized as revenue when the license is signed, rather than being amortized in quarterly increments over the life of the agreement. This will result in very high revenue earnings reports in the quarters when fixed fee lump sum licenses are signed, and lower and more variable reported amounts when only recurring revenues are reported.
"Accounting Standards Update: Revenue Recognition
In May 2014, the FASB issued guidance on revenue from contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The guidance is effective for the interim and annual periods beginning on or after December 15, 2017 (early adoption is permitted as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within those annual periods). The guidance permits the use of either a retrospective or cumulative effect transition method.
The Company does not intend to adopt the new guidance early and is in the process of determining the adoption method as well as the effects the adoption will have on its consolidated financial statements. Although we have not finalized our evaluation of the impact this accounting guidance will have on our consolidated financial statements, we expect that revenue from both our fixed-fee and per-unit licensees will be impacted. Under the new standard, the Company may be required to recognize up to a substantial majority of the royalties under a fixed-fee license agreement upfront upon entry into the agreement, as opposed to recognizing the royalties on a quarterly basis over the term of the agreement, which has been our historical practice. This could impact the revenue recognition of all of our fixed-fee patent license agreements, including certain fixed-fee agreements that cover both our current technologies and future technologies that are added to our portfolio during the term of the license, such as our patent license agreements with Apple and Samsung. In addition, under our existing policy, we recognize revenue from our per-unit royalty agreements one quarter in arrears from the period in which the underlying sales occurred. Upon adoption of the new accounting guidance, we will be required to record per-unit royalty revenue during the period in which the sales occurred based on estimates of our licensees’ sales, which will result in the recognition of an adjustment to true up revenue to the actual amounts reported by our licensees."
mickey:: you should read the whole thread a little slower before you get all excited about IDCC receiving patents that will generate no income.
Lando posted a question about whether IDCC will receive any ongoing revenue for transferred patents that Huawei already has licensed. My comments (below) were that under normal licensing terms IDCC will not receive any royalty income directly related to these patents from Huawei’s licensees. However as I further stated IDCC could collect royalties related to the transferred patents as part of their normal package license from companies not licensed by Huawei
“Under this system where royalty payments are not related to specific patents, I don't see how IDCC can expect to receive any royalty income from any oF Huawei's patent licensors for the patents transferred to IDCC.”
“As far as valuing the patents transferred to IDCC, while they might not collect royalties on these patents from companies already licensed, there are other companies that have not been licensed.”
My point was that since PLAs by IDCC, and most other major telecom patent holders, are for entire patent portfolios, and not for individual patents, royalties received, whether lump sum or on a per unit basis, cannot be attributed to any one specific patent in the portfolio. Therefore, there is no basis to allocate royalty payments to a company who acquires individual patents.
If an individual patent covered by a license is transferred it shouldn't matter to the licensee, since as long as agreed to royalty payments, have been/are made to the original licensor he is protected against any infringement claim.
As far as valuing the patents transferred to IDCC, while they might not collect royalties on these patents from companies already licensed, there are other companies that have not been licensed. In addition, these patents, as part of a package, may help in IDCC's licensing negotiations. There are other factors, plus and minus, that can affect patent valuations, that is why there are companies and expert consultants, who do valuations as a business.
lando: The general rule is that patents are encumbered by any licenses of the patents unless otherwise spelled out in the license agreement. However, this does not mean that IDCC will be receiving royalties from the Huawei patents.
Huawei, like most other firms in the industry, cross licenses their patent portfolios to other firms, with net royalty patents to one of the firms apparently being based on the number and strength of the patents in the related portfolios, not for individual patents.
Under this system where royalty payments are not related to specific patents, I don't see how IDCC can expect to receive any royalty income from any oF Huawei's patent licensors for the patents transferred to IDCC.
Gamco: I would expect the patents to be valued in the $8 million range.
When the Huawei PLA was signed, IDCC received half of the patents that were to be transferred. These patents were recorded at an estimated value of $7.9 million. When these patents were discussed during the 3rd qtr 2016 conference call, Bill Merritt stated:
“Yes, so as I mentioned, Charlie, the reason that we can’t recognize revenue at this point is that we made the determination that the value of the patents prior to the transfer is not determinable. That said [indiscernible] has accounting consequences. But that is obviously tied to my discussion around being on the low end of the range for guidance and I will also highlight that we mentioned and disclosed in the 10-Q, that half the patents have been transferred – the value of half the patents that transferred to date was a little less than $8 million. So while the second half is not a determinable from an accounting standpoint, you have a couple of guideposts there. “
I take his statement regarding “guideposts” to mean that since half of the patents received were valued at $7.9, the remaining half to be received should be in the same valuation range.
I also believe that there is something else besides the valuation determination as to why the patents have not been transferred. It shouldn’t take a year from 3rd qtr 2016 when the PLA was signed , until 3rd qtr 2017, to determine patent valuations.
Hydro_gen: I believe that the YAHOO reported average EPS of $1.14 for the 2nd qtr is low and has been distorted by what appears to be an unreasonable low estimate by one analyst. The following is a comparison of 2nd qtr earning estimates as reported by YAHOO and NASDAQ (Zacks).
……………..YAHOO…………NASDAQ
Average…….$1.14……………$1.34
High………….1.34…………….1.34
Low……….…0.76……………..1.33
Number…………3…………………2
http://www.nasdaq.com/symbol/idcc/earnings-forecast
https://finance.yahoo.com/quote/IDCC/analysts?p=IDCC
Based on the following calculation, it appears obvious that the YAHOO estimate was based on the following 3 analyst computations:
YAHOO/NASDAQ high analyst……..$1.34
NASDAQ low analyst………………….1.33
YAHOO low analyst……………………0.76
…….Total………………………………$3.43
Average (total /3)………………..……$1.14
Since we don’t have the details supporting the estimates, don’t know why there is such a variation in the 3rd (low) analyst’s estimate. Unless there were some major unforeseen expenses, I believe the $1.34 is a reasonable estimate.
Note: The one good thing about a low average estimate is that it should be easy to beat, and allows for a nice headline when earnings are reported.
redviking: Avanci has yet to publish their promised royalty schedules. The following is from an Avanci white paper on pricing. The way I read it is that when you sign a license it is with a fixed per unit royalty rate, and that the royalty rate remains the same even after any new licensors are added to the platform. Since you now have more companies sharing in the same royalty amount, it would appear that each participants income would be less.
“Due to the unique nature of its platform, a license from Avanci becomes more valuable over time due to the following:
• Existing licensors in the platform receive new patent grants that are automatically included in the license;
• Existing licensors acquire patents that are automatically included in the license; and
• New licensors with standard-essential patents join Avanci and their patents are automatically included in the license.
Even as these three growth drivers increase the scope of an Avanci license, the royalty rate remains the same. Since Avanci offers long-term licenses, a licensee can count on a fixed cost for a license for the duration of the solution’s shelf-life. In addition, supply chain or product design changes, including the addition of multiple connectivity modules to the same device or a new component supplier, will not affect the availability or cost of an Avanci license.”
http://avanci.com/wp-content/uploads/2017/01/2016-Avanci-WP-Final-_-Jan-24.pdf
ia-idcc-fan: In regard to your comment that "because in the final analysis, the market is made by "individual perceptions". ", I think you might find the following statistics interesting"". Computers are replacing individuals in the market.
"First, some striking facts: to understand this market transformation, note that Passive and Quantitative investors now account for ~60% of equity assets (vs. less than 30% a decade ago). We estimate that only ~10% of trading volumes originates from fundamental discretionary traders. This means that while fundamental narratives explaining the price action abound, the majority of equity investors today don’t buy or sell stocks based on stock-specific fundamentals."
http://www.zerohedge.com/news/2017-06-13/jpm-head-quant-warns-catastrophic-losses-short-vol-strategies
robertc1: There is a possibility that the license may have expired without renewal. See my previous post:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=127266315&txt2find=
mickey: BCDMA is an old standard that is no longer used. However as stated below in an old (1999) article on Interdigital and BCDMA, and other articles I have read, BCDMA helped in the development of 3G CDMA
B-CDMA
Broadband Code Division Multiple Access technology-championed by InterDigital Communications Corp., Samsung Electronics Co. Ltd. and Alcatel Telecom in the B-CDMA Alliance-has gone through similar growing pains. Siemens AG recently pulled away from the B-CDMA Alliance, saying it wanted to put its resources in other areas of its business, mainly Global System for Mobile communications technology. Siemens was the first to enter the B-CDMA Alliance in 1994. InterDigital and the other members of the B-CDMA alliance have worked together to generate a core product that allows each company to springboard off of and develop their own versions for the WLL market. InterDigital calls its version TrueLink, and is the first to test B-CDMA technology in the United States with Pioneer Holdings L.L.C. and North West Rural Electric Cooperative in Iowa. The field trial uses PCS frequencies to serve 24 NWREC customers. Joe Gifford, executive vice president of InterDigital, said the system is providing voice service at 32 kilobits and data services at 28.8 kbps. “We’re now in discussions for the next phase to roll out 2,000 additional subscribers,” said Gifford. “There is a phenomenal opportunity for
businesses using WLL in the U.S. that want to bypass local incumbents … For some of the outlying areas like Iowa and Kansas, B-CDMA has a good advantage. “If we are able to expand upon the market opportunities that CLECs offer us and others as a way to get around local exchanges, we will be successful.”
InterDigital’s hopes to ramp up commercial production of TrueLink in 1998 were dashed as international economies began to fall, said Gifford. As a result, it is focusing more heavily in the U.S. market.“Unfortunately, a lot of things went wrong, including the Asian financial crisis. There’s been a lot ofchallenges there,” said Gifford. And B-CDMA technology will live on in mobile 3G systems. Parts of the technology lie in the WP-CDMA standard-the combined W-CDMA and WIMS standard-that lies with the International Telecommunication Union. InterDigital also entered into a long-term agreement with Nokia to develop 3G products designed for high data applications, such as Internet access. B-CDMA technology will play a role in the development, said InterDigital.
http://www.rcrwireless.com/19990315/carriers/pacs-and-b-cdma-struggle-to-survive
Gamco: I think that our license with Sierra Wireless may have expired last year without a renewal. Here are some posts on the subject:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=127266315&txt2find=
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=129264430
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=129281181&txt2find=SIERRA|WIRELESS
This is what the10-K had to say about licenses that expired last year. So far this year IDCC only announce a renewal with Panasonic.
Expiration of Patent License Agreements
Our patent license agreements with a number of licensees expired during 2016. Collectively, these agreements accounted for $19.4 million, or approximately 3%, of our total revenue in 2016. Individually, none of these agreements accounted for more than 2% of our total revenue in 2016. A portion of our first quarter 2017 revenues will be comprised of royalties from these licensees due to the timing of when we receive royalty reports, as described in Note 2, "Summary of Significant Accounting Policies," in the Notes to Consolidated Financial Statements.
Gamco: The clause you site is one of several that allows conversion of the notes prior to the period at the expiration date. It almost became applicable during the current quarter based on closing prices during the 1st qtr 2017, but fell short.
According to the 1st qtr 10-Q (below), the required 20 day closing prices over a 30 day consecutive period was approximately $94.08. During the 1st qtr when the stock shot up the only time when the closing price was more than $94.08 was during the period from 2/3 - 2-22, when the closing price exceeded $94.08 for 12 trading days.
http://www.nasdaq.com/symbol/idcc/historical
From 1st qtr 10-Q
"Prior to 5:00 p.m., New York City time, on the business day immediately preceding December 1, 2019, the 2020 Notes will be convertible only under certain circumstances as set forth in the indenture to the 2020 Notes, including on any date during any calendar quarter (and only during such calendar quarter) if the closing sale price of our common stock was more than 130% of the applicable conversion price (approximately $94.08 based on the current conversion price) on each applicable trading day for at least 20 trading days in the period of the 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter."
Gamco: As you say there is no requirement to provide an update. The notice was by a press release, not an SEC 8-K filing. Since nothing else to report, apparently just something to show the company is still in existence.
As was noted the change in the conversion rate was related to recent dividend payments. The following is the requirement in the note issue that calls for the change (the formula is a little complicated):
"If the Company pays any cash dividends or distributions paid exclusively in cash to all or substantially all holders of its Common Stock (other than dividends or distributions made in connection with the Company’s liquidation, dissolution or winding-up or upon a merger, consolidation or sale, conveyance, transfer, lease or other disposition resulting in a change in the conversion consideration as described under Section 10.05), other than a regular quarterly cash dividend that does not exceed $0.20 per share (the “Dividend Threshold Amount”), the Conversion Rate shall be increased based on the following formula:"
jeffree: Here are some comments on the rate of return on IDCC's short term investments. I don't know how intelligent they are.
The data you posted was as of 31 Dec 2016. With short term investments there is a constant turnover and reinvestment. The 0.8% rate return that you show was in line with short term rates as of that date. one guide that is used is a Federal Reserve computed One-Year Treasury Constant Maturity daily rate index, which is defined as:
"What it means: An index published by the Federal Reserve Board based on the average yield of a range of Treasury securities, all adjusted to the equivalent of a one-year maturity. Yields on Treasury securities at constant maturity are determined by the U.S. Treasury from the daily yield curve. That is based on the closing market-bid yields on actively traded Treasury securities in the over-the-counter market."
http://www.bankrate.com/rates/interest-rates/1-year-treasury-rate.aspx#ixzz4kgfqnWs7
As we know, the Federal Reserve, has taken action to push short term rates higher. The following site has a chart of the daily One-Year Treasury Constant Maturity rates. As can be seen on the chart, during most of 2016 the rate was in the 0.6% range, and then in late Nov jumped to the 0.7-0.8% range, with the current rate being approximately 1.2%. So IDCC’s reported 0.8% rate as of 31 Dec was not unusual.
https://fred.stlouisfed.org/series/DGS1
clamcakes: It is not misinformation, you just have to be aware of what is being reported. For example
Yahoo's IDCC summary reports the P/E ratio based on the Trailing Twelve Months (TTM) earnings
PE Ratio (TTM) 9.11
https://finance.yahoo.com/quote/IDCC?p=IDCC
While NASDAQ reports both the current P/E, (although not stated obviously based on TTM); and, a forward P/E based on projected future one year earnings.
P/E Ratio 9.09
Forward P/E(1y) 22.76
http://www.nasdaq.com/symbol/idcc
clambakes: The low PE ratio is calculated on last year's earnings which were based on the signing of licenses that included significant revenues for past sales. Profits based on these one time past sales revenues, are not valued as highly as those based on regular recurring revenue. The following is a comparison of 2015 and 2016 financial statistics:
..........................2015............2016
Revenues (millions):
...Past Sales.......$ 69............$310
...Recurring.........372..............356
...Total.................441..............666
Profit Per share....$3.88...........$8.78
For current year (2017), unless new licenses are signed with significant past sales payments, profits will only be in the $3.50 -$4.00 range, which based on current price would result in PE of 20-23.
The following site has some very interesting statistics that is seldom publicly available. It lists the top 14 smartphone suppliers for 2016 and also their sales for 2015 and 2014. Now we can see more clearly who IDCC has to license, and the possible effect their licenses would have on IDCC's reveue.
the following are the headline and sub heading:
June 15, 2017
7 of the Top 10 Smartphone Suppliers Headquartered in China
China accounted for 10 of top 14 leading smartphone suppliers in 2016, share grows to 39%.
http://www.icinsights.com/news/bulletins/7-Of-The-Top-10-Smartphone-Suppliers-Headquartered-In-China/
Ia-idcc-fan: The answer you other question: "Why is normalized cash flow target for 100% of target payout so low? ($400 million for 2016 and a total of only $700 million for THREE years ending 12/31/2016), is that the amounts are for two different incentive plans.
The $400 million for 2016 was the target for the one year SHORT Term Incentive plan (STIP), while the $700 million was for the three year LONG Term incentive plan (LTIP). The goal for the three year LTIP was set in 2013, while the goal for the one year STIP was set in 2015. The goals would have been set based on anticipation as of those dates.
As I stated, the bonus plans are complicated.
Ia-idcc-fan: To answer your specific question as to whether “all prepayments are included in calculation of "normalized" cash flow.”, if you are referring to the inclusion of the total payment amount in the year when the payment is made, the answer would be no, As stated below from the proxy statement, large up front cash payments are amortized in the calculation of normalized cash flow over the term of the license.
“For example, when using normalized cash flow as a measure, if a patent licensing agreement includes a large up-front payment, in order to avoid having that payment disproportionately drive cash flow for the performance period, the payment is spread out over the term of the license agreement, mimicking what would happen if the cash was received pursuant to a running royalty-based license agreement.”
Various bonus payment computations are complicated. As you stated the proxy statement has a great deal of information regarding the awards. The explanation of normalized cash flow on pages 53 and 54 gives an example of how normalized cash flow is computed when cash prepayment are received.
https://www.sec.gov/Archives/edgar/data/1405495/000119312517145529/d379392ddef14a.htm
I'm surprised no one has posted this. Below 8-K reports the numerical votes on the BOD election and the approvals requested.
Broker non-vote means that for stock held by brokers in street name, voting instructions from the owner were not received by the broker,
https://www.sec.gov/Archives/edgar/data/1405495/000140549517000018/a2017_06x14-2017planand201.htm
jjff: The following is my take on whether the Hillcrest acquisition is earning accretive.
Based on financial information in the 2016 10-K (note 15,page 100) it doesn’t look like the Hillcrest acquisition, by itself, will be accretive to earnings. According to the 10-K if the acquisition had happened effective 1 January 2015 revenues would have increased by $10.4 million in 2015, and $6.8 million in 2016. On the other hand, earnings would have decreased by $9.4 million in 2015, and $3.8 million in 2016, after accounting for $7.7 million in transaction costs.
For the 2017 1st quarter report specific amounts were not shown; however the following information was reported:
“Current technology solutions revenue increased by $4.5 million primarily due to increased shipments by one of our technology solutions customers and the inclusion of revenue from Hillcrest.”
“The $2.6 million increase in costs associated with commercial initiatives is primarily related to the acquisition of Hillcrest during fourth quarter 2016. The $1.7 million increase in depreciation and amortization primarily related to the growth in our patent portfolio driven by both internal patent generation and patent acquisition, largely due to the Hillcrest acquisition"
In regard to the $48 million purchase price paid by IDCC, as described below, it was all for intangible assets, with Hillcrest’s other liabilities exceeding their other assets.
“Purchase price allocation
The following table summarizes the purchase price allocation made to the net tangible and intangible assets acquired and liabilities assumed on their acquisition date fair values, with the excess amount recorded as goodwill, which is representative of the expected synergies from the integration of Hillcrest Labs and its strategic fit within our organization (in thousands):”
Net tangible assets and liabilities:
Deferred tax assets and liabilities.....$2,221
Net working capital..........................(8,893)
........................................................(6,672)
Identified intangible assets:
Patents/existing technology..............36,200
Trade name...........................................600
Customer relationships.......................1,700
Goodwill...........................................16,172
........................................................54,672
Total purchase price........................$48,000
(My comment: except for goodwill the valuation prices are scheduled to be amortized over a 9 or 10 year period. Goodwill is required to be analyzed annually and written off as appropriate.)
I believe that around the time of acquisition Hillcrest was close to insolvency and had run out of cash. As previously described, Hillcrest’s revenues apparently decreased from $10.4 million in 2015 to $6.4 million in 2016, and there was a net working capital deficit of $8.9 million. In addition, it was stated that the $48 million in cash paid by IDCC was net of $0.4 million cash acquired. In regard to the $0.4 million cash acquired, IDCC acquired the company on Dec 20, Just one week before, on Dec 13, Hillcrest filed that they had received a cash funding of $0.45 million. To me it is obvious that Hillcrest had run out of cash and this cash infusion was to keep Hillcrest going until the acquisition was finalized.
LTE: All the briefs have been filed. They are trying to set an oral argument date.
Latest filing (yesterday):
06/13/2017 48 Notice from Appellees IPR Licensing, Inc., InterDigital Communications, Inc., InterDigital Holdings, Inc. and InterDigital Technology Corporation regarding conflicts with oral argument (Unavailable on September 5, 2017). Service: 06/13/2017 by email. [438676]
Ia-idcc-fan: In regard to the statement that license negotiations " becomes harder in the case of a company whose cell-phone business is declining ", in addition to LG, Lenovo and Xiaomi also have seen their smartphone sales decline significantly.
Lenovo
"Phone shipments, including Motorolas, dived more than 30 percent in 2016, Counterpoint Research estimates. The company was ranked ninth globally during the holiday quarter, ahead of Alcatel but behind South Korea’s LG. Lenovo has said it expects the smartphone business to turn profitable this year, though a paucity of new models cast doubt on its outlook, Yim wrote in a note ahead of the earnings."
https://www.bloomberg.com/news/articles/2017-02-16/lenovo-profit-misses-estimates-as-
pc-rivals-erode-global-lead
Xiaomi
"That has driven down Xiaomi’s share of the home market. Oppo’s smartphone shipments more than doubled to 78.4 million units last year as it took top spot with a 16.8 percent share, according to IDC data. Huawei Technologies Co. and Vivo both rose at a double-digit pace to rank second and third. Xiaomi’s shipments slumped 23 percent and had just 8.9 percent after topping the market two years earlier."
https://www.bloomberg.com/news/articles/2017-02-10/xiaomi-goes-all-in-on-retail-to-revive-china-smartphone-sales
As far as ZTE, I believe a key factor affecting negotiations, is the forthcoming CAFC decision on ZTE's appeal of the District Court jury infringement finding.
max: The specific voting results are required to be reportd by an 8-K within 4 business days.
Item 5.07 Submission of Matters to a Vote of Security Holders.
If any matter was submitted to a vote of security holders, through the solicitation of proxies or otherwise, provide the following information:
(a) The date of the meeting and whether it was an annual or special meeting. This information must be provided only if a meeting of security holders was held.
(b) If the meeting involved the election of directors, the name of each director elected at the meeting, as well as a brief description of each other matter voted upon at the meeting; and state the number of votes cast for, against or withheld, as well as the number of abstentions and broker non-votes as to each such matter, including a separate tabulation with respect to each nominee for office.
Paulee: for some background information:
https://www.courthousenews.com/high-court-takes-fracking-patent-dispute/
What I found interesting in the decision are what I think are extremely low royalty rates that the Judge came up with for the license.
The judge came up with separate rates for end user devices and for infrastructure. The rates are further subdivide by standards, i.e. 2G, 3G and 4G, and then by a defined “Major Markets” (OM) category, and an “Other Markets or China” (OM) category. The rates ranged from a high of 0.064% to a low of 0.004%. The following comment in the decision illustrates the effect of these low rates in dollar terms:
“An important factor Huawei emphasise is the effect of the decision about the OM and China rates. Taking 4G multimode handsets the judgment was that for Major Markets (MM) the rate should be 0.052% whereas for China and Other Markets (OM) the rate should be 0.026%. Of course, 0.026% is lower than the 0.040% benchmark contended for by Huawei and that has an important effect which Huawei were entitled to emphasise. In simplistic terms if the licensee's total sales were $1 million in Major Markets and $1 million in Other Markets including China, then the royalty due using the two rates set by the court would be $520 (MM) plus $260 (OM) which is $780 in total. You could express the $780 total as a single percentage of global sales of $2 million. It would be 0.039%. In other words, just below the 0.040% benchmark rate. If the sales mix was shifted to favour the OM and China markets, this notional global blended equivalent rate would fall even further towards 0.026%. Mr Lasinski performed a more sophisticated version of this calculation based on estimates of Huawei's actual sales mix in the relevant periods. The notional global blended rate he comes to for 4G handsets is 0.030%. Huawei pointed out that 0.030% is lower than certain figures used in their FRAND Statement of Case as benchmark numbers.”
English Court judge finally issues a conditional injunction related to infringement of a SEP patent. This is the case where previously “InterDigital CEO hails Unwired Planet v Huawei decision “an extremely important development”
http://www.iam-media.com/blog/Detail.aspx?g=fa7bffb1-39fe-4fa8-8fbd-2c9f32379a9e
A copy of the decision is available at:
http://www.bailii.org/ew/cases/EWHC/Patents/2017/1304.html
Below is the first comment on the decision that I have seen:
Unwired Planet v Huawei: a new FRAND injunction
European Union, United Kingdom June 7 2017
Mr Justice Birss has once again broken new legal ground by granting what he has termed a ‘FRAND injunction in Unwired Planet v Huawei.
As a reminder, in April Mr Justice Birss handed down the first UK court decision determining a FRAND royalty rate (see here). A post-judgment hearing took place in May to establish whether or not Huawei should be subject to an injunction in the UK and the issue of permission to appeal.
The FRAND injunction
At the post-judgment hearing, Huawei had argued that the judge should not grant an injunction. As Huawei intended to appeal the decision, it said that it could not enter into the FRAND licence agreement at this stage, in case the Court of Appeal determined that different FRAND terms were appropriate. Huawei claimed that to grant an injunction now would effectively be punishing it for exercising its right to appeal. It also noted that if an injunction was granted, it would last until 2028 (when the patent found valid and infringed in the first patent trial expired), despite the FRAND licence agreement expiring in 2020. Therefore, Huawei would be forced to negotiate a new licence from an extremely weak position – it would automatically be injuncted if terms could not be agreed.
Huawei requested that the judge accept undertakings in lieu of granting an injunction, offering to: (a) enter into the licence following its appeal, and (b) to comply with the terms of the licence as if it was in effect (including paying royalties) until its appeal was finished.
Mr Justice Birss essentially took the view that the offer of undertakings now was too little, too late. He decided that an injunction should be granted. However, he recognised the risk that this might affect negotiations or disputes about the terms of the licence in later years. To resolve this, he granted a new kind of injunction, which he called a “FRAND injunction”. This would be like a normal injunction, but with the following extra features:
• A proviso that it would cease to have effect when the defendant enters into a FRAND licence; and
• Express liberty to return to court to decide whether the injunction should take effect again at the end of the FRAND licence (if it ends before the relevant patents expire, or ceases to have effect for any other reason).
The injunction is to be stayed pending the result of the appeal, on terms that provide for appropriate royalty payments from Huawei to Unwired Planet in the meantime.
Permission to appeal
Mr Justice Birss granted Huawei permission to appeal on three main issues:
1 The global licence: including: (i) whether more than one set of terms can be FRAND, (ii) whether a UK only licence was FRAND, (iii) whether the court is able to determine FRAND terms, including rates, for territories other than the UK, and (iv) whether it is appropriate to grant an injunction excluding Huawei from the UK market unless it took a global licence.
2 Hard-edged non-discrimination: Huawei have permission to appeal the finding that a distortion of competition is required for the non-discrimination aspect of FRAND to apply, but not whether or not there was a distortion of competition in this case.
3 Huawei v ZTE (Article 102 TFEU): regarding the judge’s findings on abuse of dominance and injunctive relief.
This permits a fairly wide-ranging appeal, especially as regards the competition law elements of the latter two issues. The trial judgment appeared to downplay the importance of competition law in FRAND issues (see here for more information); the appeal may enable a renewed focus on it.
The FRAND licence
In his main trial judgment, Mr Justice Birss settled the terms of the FRAND licence to be entered into by Unwired Planet and Huawei. This latest judgment annexes a copy of the final form of that licence. Given the shroud of secrecy that usually surrounds such patent licence agreements, this is a unique insight, reflective of the judge’s desire throughout the case to ensure as much transparency as possible.
Transparency is likely to be helpful as the law in this area continues to develop. With the advent of new technologies developed for 5G and the Internet of Things, new companies may need to enter the FRAND licensing field for the first time. Without being able to draw upon any previous experience of negotiating licences in this area, they will be at a disadvantage in negotiations.
If other judgments follow Mr Justice Birss’ lead and annex copies of any FRAND agreement determined by the court, these would provide useful points of reference for negotiating parties. It might also reduce the requirements for third party disclosure (a costly, time-consuming exercise) in any subsequent litigation. Otherwise, such disclosure will be essential in FRAND cases involving relatively new entrants to the market – they are unlikely to have many licence agreements that can be used by the judge as comparables as part of the process for determining a FRAND rate.
Conclusion
Yet again, Mr Justice Birss provides plenty of food for thought. Assuming that Huawei does go ahead with its appeal, it will be fascinating to see how the Court of Appeal responds to these issues
http://www.lexology.com/library/detail.aspx?g=dff5d4f3-b6e8-4edd-8cd1-f2af2e81f240?
Jim: Gartner and IDC publish quarterly mobile phone market share by vendors; however, their publicly available reports only list the top five, with the remainder grouped as Other, which would include Panasonic.
From what I remember, several years ago Panasonic stopped manufacturing their mobile phones in Japan, and basically dropped out of the Japan market which was a key market for them.
Currently almost all of their phones are manufactured in India. For some more information on Panasonic and the India market:
http://economictimes.indiatimes.com/tech/hardware/panasonic-expects-to-double-revenues-from-mobile-phones-on-the-back-of-4g-aggressive-launches/articleshow/51887262.cms
Anyone have access to IAM Magazine? It's latest issue has a feature article on IDCC. The following is the teaser introduction:
IAM Magazine issue 84
July/August 2017
Size is not everything
After it opted against a sale five years ago, InterDigital has been on a licensing roll with a series of headline deals. The question now is whether it can maintain this growth
At first glance, InterDigital is a mass of contradictions. It is a high-tech pioneer, yet its suburban Delaware HQ is far removed from the sun-dappled campuses of Silicon Valley. Its workforce of around 300 is packed with talent, but is dwarfed by the giants of the wireless world, such as Ericsson and Qualcomm. It is a licensing business which has continued to sign deals and grow revenues at…
http://www.iam-media.com/Magazine/Issue/84
Paulee: The way I understand the judge's decision in the Microsoft anti trust case that the article quotes, is that it was not a final decision, but only applied to IDCC's motion to dismiss and to strike Microsoft's complaint. Note the following highlighted wording from the article:
"The district court’s opinion in Microsoft Mobile Inc. v. InterDigital Inc. is notable because it is one of only two courts to recognize that a patent holder can monopolize a patent licensing market.[11] While this theory of monopolization remains untested in other judicial districts, and is subject to disagreement,[12] the District of Delaware has embraced it as viable at the pleading stage."
The case was still active up to it's dismissal as a result of the settlement agreement. the latest action at that time was the parties getting ready to obtain statements from interested parties in Finland
FISH: Qualcomm apparently has no problem in signing licenses.
Qualcomm Signs 3G/4G Patent License Agreement with Smartron
Adding to More Than 330 Existing Qualcomm Licensees Around the World
Apr 23, 2017SAN DIEGO
https://www.qualcomm.com/news/releases/2017/04/23/qualcomm-signs-3g4g-patent-license-agreement-smartron
Another ridiculous USPTO IPR review action. In this case the ITC had found that certain Arista products had infringed a valid Cisco patent, and issued an exclusion order. The USPTO has now invalidated key claims of the patent.
Arista wins round in Cisco patent fight over network technology
By Jan Wolfe
Arista Networks Inc (ANET.N) won a ruling on Thursday in its legal battle with Cisco Systems Inc (CSCO.O) over networking device technology, setting the stage for Arista to undo a U.S. agency's order blocking importation of some of its products.
Arista had asked the U.S. Patent and Trademark Office to review the validity of a patent it granted to Cisco relating to network device security. The Patent Office sided with Arista on Thursday, invalidating key claims in the patent.
A week earlier, the Patent Office invalidated claims in a different Cisco patent on a way to improve processing in network devices.
San Jose, California-based Cisco and Arista are fierce competitors in the multibillion-dollar market for ethernet switches that connect computers and servers.
Last month, the U.S. International Trade Commission concluded that Arista's switches had infringed the Cisco patents and said it would issue an order banning Arista from importing the infringing products into the United States.
Arista general counsel Marc Taxay said on Thursday that the company "will now seek complete suspension" of the ITC's import ban, which is slated to go into effect in July.
Cisco did not immediately return a request for comment.
Cisco did not immediately return a request for comment.
Thursday's ruling is the latest development in a years-long legal battle between Cisco and Arista.
Cisco brought multiple lawsuits against Arista in 2014, alleging it has a "culture of copying" Cisco's intellectual property. Arista has denied the allegations and accused Cisco of a smear campaign.
The ITC ruled last year that Arista had infringed three other Cisco patents relating to managing and securing communications networks. Arista redesigned its switches, and U.S. Customs and Border Protection said in April that the company could resume importing its redesigned products.
Shares of Santa Clara, California-based Arista closed at $148.52 on Thursday, up 0.7 percent, after dropping below $145 a share earlier in the day. Cisco shares ended the day 0.9 percent higher at $31.82.
(Reporting by Jan Wolfe; Editing by Noeleen Walder)
http://www.reuters.com/article/us-cisco-systems-arista-networks-idUSKBN18S6HQ?il=0
WayHaw: My problem with computer generated "research" reports is that from the ones I have read the data and ratings conclusions appear to be based on financial comparisons with what is considered to be a standard business operation, or the operations for specific industry groupings. Since IDCC's research/licensing business model is relatively unique, the use of preprogrammed standard criteria to evaluate the company may not apply. On the other hand, "real" analysts , as you say may use quantitative modeling; however, their reports are (or should be) based on specific circumstances related to IDCC.
Maybe I am just too old. I started working with computer generated output when punch cards were used to input data. Since the technique was relatively new, GIGO (not GOGO) was a very common acronym at that time. I believe it still applies.
WayHaw: As I suspected, the "analyst" reports are not from individual analysts, but are computer generated reports based on what is called a "quantitative model". On the below Fidelity site there is a box on the upper right side where you can get summaries of the methodologies used by the different firms.
As an old computer related saying goes "GOGO - Garbage In, Garbage Out"
http://research2.fidelity.com/fidelity/research/reports/release2/Research/evadimensions.asp
WayHaw: Interesting since IDCC reports that only five financial firm analysts follow the company. Could the other five supposed "analysts" just be some automated computer driven rating service?
InterDigital, Inc. is covered by the following analysts.
Firm
Analyst
B. Riley & Co
Eric Wold
Barclays Capital
Darrin Peller
Benchmark Capital
Scott Searle
Dougherty & Company LLC
Charlie Anderson
Sidoti & Company
Matthew Galinko
http://ir.interdigital.com/CustomPage/Index?KeyGenPage=1073751480
Paullee: While I can see IDCC possibly increasing it's dividend, for the writer to label IDCC as an "income stock", makes me want to question his comments.
NASDAQ definition of an Income Stock
Income stock
Definition:
Common stock with a high dividend yield and few profitable investment opportunities.
http://www.nasdaq.com/investing/glossary/i/income-stock
JohnSamuel: The CNBC site don’t explain what the “Percentage of Total Holdings” means. Based on the following calculation, i believe it means the percentage of the total of all the reported institutional holdings that the named institutional holder has, not the percentage of the particular institution’s total holdings. For example, based on the amounts shown for IDCC and Blackrock:
Total Number of IDCC Shares Held by all reporting institutions…..25.2 Million
IDCC Shares held by Blackrock ………3.6 million
3.6 divided by 25.2 = 14%