I love the tone of this article on english.chosun com.
InterDigital Wins Massive Royalties from Samsung
Global cell phone makers are on high alert on news that InterDigital Communications of the U.S., which owns core GSM technologies, has been awarded massive royalties from Samsung Electronics, LG Electronics and Nokia in arbitration proceedings. A U.S. Arbitral Tribunal determined Wednesday that Samsung Electronics has to pay US$134 million in royalties to InterDigital. Samsung has appealed the decision to a district court and is also negotiating with the U.S. firm.
Last year, the International Chamber of Commerce ordered Nokia to pay InterDigital $250 million in a similar dispute. The royalties Samsung and Nokia are to pay only cover phones they sold until last year; the two have to pay more if they are to continue using InterDigital's technologies. Earlier this year, LG Electronics concluded it has no chance of winning and agreed to pay $285 million including past royalties.
Established in 1972, InterDigital is based in Pennsylvania, and employs some 320 employees. Most of its staff are researchers, and the company has no manufacturing facilities. InterDigital owns 4,200 core patents related to GSM wireless technology, registering eight core technologies including air interface solutions that assist wireless communications between mobile handsets and base stations with the European Telecommunications Standards Institute (ETSI). Nokia, Samsung and LG are its major customers. Samsung Electronics signed a patent contract with the U.S. firm in 1996 and has paid $35 million in royalties so far. But with the rapid growth of the global cell phone market, InterDigital demanded some 1.5 percent of their phone selling prices in royalties, which caused the present conflict.
A series of decisions in favor of InterDigital in patent disputes with international electronic giants are boosting its morale. “We are pleased with the tribunal’s decision,” said InterDigital president William Merritt. “The tribunal's findings in this contractual dispute are consistent with our beliefs as to Samsung's obligations.” As a result, its performance is improving rapidly, posting $348 million in sales in the first half of this year alone, up from $100 million in 2004.
Korean phone makers are worried InterDigital will become another Qualcomm -- the U.S. firm that owns core CDMA wireless technology. Qualcomm earned W3 trillion (US$1=W956) in royalties from Korean cell phone manufacturers until last year. With InterDigital, they also face a significant financial burden on top of their sluggish performance.
