InterDigital Inc (IDCC)

[olddog967]

jeffree: While legally IDCC granted a patent license to Convida, in some respects the effect is almost like granting a license to itself.

According to the last 10-K, Convida is accounted for by IDCC as a variable interest equity:

“Convida Wireless is a variable interest entity. Based on our provision of M2M research and platform development services to Convida Wireless, we have determined that we are the primary beneficiary for accounting purposes and must consolidate Convida Wireless. For the year ended December 31, 2014, we have allocated approximately $2.9 million of Convida Wireless's net loss to noncontrolling interests held by other parties.”


A variable interest equity refers to a company (entity) in which the investor holds a controlling interest that is not based on the majority of voting rights. The following is from a Financial Accounting Standards Board (FASB) summary rule interpretation on accounting for variable interest equities

“An enterprise that consolidates a variable interest entity is the primary beneficiary of the variable interest entity. The primary beneficiary of a variable interest entity is the party that absorbs a majority of the entity's expected losses, receives a majority of its expected residual returns, or both, as a result of holding variable interests, which are the ownership, contractual, or other pecuniary interests in an entity.”

http://www.fasb.org/summary/finsum46.shtml