Reasons for a settlement.
I believe a settlement will happen prior to the Jan. 05 hearing with past due money substantially reduced.
First, we all expected a windfall from the Ericsson suit. Hundreds of millions of dollars in back due revenue was the expectation.
In June of 2002 we got this from IDCC.
"As previously reported in the Company’s filings with the Securities and Exchange Commission, each party has filed pre-trial motions with the Court under seal seeking to limit issues at trial and to dismiss the other party’s case in whole or in part. The Judge has ruled on portions of the pre-trial motions of both parties, removing certain patent claims from further consideration with regard to the infringement issues in the District Court case, the effect of which is to narrow the issues remaining for trial. The Company believes these rulings, which remain under Court seal, do not materially affect the relief sought by InterDigital Technology Corporation. Court ordered mediation continues and no trial date has been set."
The removal of these patents may very well have led to the reduced settlement.
Now after the Ericson deal with all orders presumed vacated, IDCC declares this.
"Based on the Company's application of the MFL provision, currently available third party estimates of Nokia's and Samsung's sales of covered products in 2002, and the Company's assumptions regarding such items as Nokia's and Samsung's sales mix, selling prices, and market share, the Company projects that Nokia's royalty obligation for 2002 could be in the range of $100 million to $120 million and Samsung's royalty obligation for 2002 could be in the range of $22 million to $27 million. Further, based on the application of the MFL provision and assumptions noted above, recent market forecasts, and the prepayment of royalties (net of related discounts) consistent with the terms of the Ericsson and Sony Ericsson agreements, the Company projects that 2003 royalty revenue from Nokia could be in the range of $80 million to $90 million, 2003 royalty revenue from Samsung could be in the range of $20 million to $24 million, and the aggregate prepayment of royalties from Nokia and Samsung for 2003 and 2004 could be in the range of $180 million to $220 million. "
IMO, yesterday the game changed for IDCC. Now they have a weaker case due to the reinstatement of some adverse ruling. But they still have a case and very, very valuable 3G IPR.
I also believe that IDCC management anticipated problems from the Nokia motion to reinstate and that is why they have backed off publishing and talking about these past due amounts.
Nokia wants the $500 million (2002-2006) reduced make no mistake about it, they stated this during the December hearings. Nokia also wants a reduced 3G rate. IDCC wants to collect past due royalties starting from Jan. 2002 onward. IDCC also wants a complete rate set for 2G/3G going foward.
Time for a WIN-WIN deal like the Ericsson settlement so both sides will be happy. I would not be surprised if a creative deal is worked out and Samsung is left holding the bag just like Nokia was left holding the bag after Ericsson. Something like 2002 money removed, the $58 million dollar engineering money applied to the 2003 revenues and all rates based on the .4% pre-payment discount. Hopefully this will be bundled with a 3G rate. IDCC walks away with some cash but more importantly FOWARD REVENUES from the date of the deal on. Samsung is then left all by itself WITHOUT ANY 3G LICENSE and illegally infringing on IDCC 3G IPR on a daily basis.
DIVIDE AND CONQUER.
AI
