Here is another thought about what is going on within the technology licensing business;
The firms that do the research and development necessary to invent and patent advances in wireless technology want to be be paid for the value those inventions contribute to products which use them. The expectation is to be paid some agreed percentage of the wholesale selling price on each device.
*** My observation about that perspective:
Licensing rates based on value contribution means there is actually no upper limit on how much a patent(or a portfolio of patents) might earn over time. If a patent gets licensed and practiced in 100s of millions of high dollar devices over it's 20 year life, it could generate many millions of revenue even at a very minimum(~1%) license rate. That's one of the reasons this investor is here by the way. Wanted to own a share of the patent rights on technology that gets used in billions of high dollar consumer products. (BTW- That idea is doing fine so far.)
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Over on the other side of the patent licensing negotiation table, wireless manufacturers like Nokia want to pay licensing fees for patented technology they need based on the costs incurred to develop that technology. They get everything else they need based on a comparison of the cost to do it themselves vs the cost to have somebody else do it for them. The components and cases they assemble are either made in-house or purchased from others based on cost comparisons. Even the actual assembly gets "outsourced" when somebody else will do it for less than the manufacturer can do with his own employees.
So why should we expect those green eyeshade manufacturing geeks to LIKE paying for outsourced research and development based on a "no upper limit" value basis?
News flash - They HATE the idea! IMO they are going bonkers over the idea of paying a fixed rate with no cumulative upper limit to use patents that they see simply as research and development work their own engineers could have/should have done,... AND that somebody else did for a cost totally unrelated to the value being demanded for the result.
Add in the fact that EVERY wireless manufacturer is being expected to pay the same "no upper limits" licensing rates to use those patents while the patent developer/owner incurs very little incremental cost for each new license,... and IMO you have pretty much described the situation that caused Nokia's upper management to declare war on patent licensing firms like our little IDCC.
**** Deep breath ****
Those two scenarios describe a complete disconnect in the management perspectives and practices at wireless manufacturers like Nokia and those at engineering development and licensing firms like InterDigital. My assumption as an IDCC investor is that we need to be prepared to see both sides exhaust all available legal alternatives before the loser takes a step toward reaching agreement with the other side. I "hope" things happen sooner, but I'm prepared to wait as long as it takes.
Tic, toc,....5+ years and counting so far....(counting my investment returns that is, LOL! 5X in 5 years so far)
AI
