InterDigital Inc (IDCC)

[Learning2vest]

mschere - re ref question. My hunch is that Nokia has TWO very significant issues on the table with QCOM right now.

The first well publicized issue is to have QCOM accept Nokia's argument that 5% is a reasonable royalty cap for all IPR not available through cross-license and also that a firm's IPR licensing rates should be in proportion to their relative contribution within each wireless standard.

In other words, IMO Nokia's W-CDMA rate position vs QCOM is something along the lines of "5% is the total royalty we think is fair and reasonable and since you contributed less than let's say 1/2 of the total IPR in W-CDMA, you should be happy with half of the total royalty or 2 1/2%.(i.e., like you agreed in China.)"

In addition, my guess is that Nokia also has a second, less publicized issue regarding QCOM's business practice of passing through patent rights to wireless manufacturers who buy their semiconductor products. As I understand that practice, QCOM negotiated cross-license agreements with most of the major wireless manufacturers which to my amazement includes the right for QCOM to pass those IPR usage rights on to customers who buy semiconductor products from QCOM.(What were those manufacturers thinking back when they agreed to grant that? Duh!)

While that is a mighty sweet deal for QCOM and it's customers, it has to be causing a serious heart burn at Nokia and the other manufacturers who signed those "cross-license with pass through rights" agreements. Why would anybody negotiate directly with Nokia for Nokia's IPR rights when they already get them thrown in for free with the products they buy from QCOM?

That thought process leads me to think that there is good chance Nokia also wants to limit, and then to shut down, QCOM's business practice of passing through cross-licensed IPR. IMO Nokia wants to set a lower rate AND to strike that pass-through rights clause before signing a new W-CDMA license agreement with QCOM. That fight could go the distance and we have ring side seats!