Good evening, caballeros.
I tried to post this on Yahoo, but it was too long.
I composed this little crib sheet because I had a hard time explaining the NOK/IDCC history, and latest developments to my wife.
Hope you don't mind. I can now transfer it by link.
It's called, "Nokia's Viewpoint":
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We, Nokia, owe nothing to IDCC for anything:
a. Yes, we used IDCC patents for 2G and 2.5G for several years, without paying royalties. However, in 1999, we paid them about $40 million for past infringment.
b. By agreement, we have paid nothing since December 2001, since royalties thereafter were predicated on IDCC signing a "named" manufacturer to a 2G license. This has come to be known as the 2G "Trigger".
c. Much to the surprise of our lawyers, Ericy signed such a license in 2003, after an 11 year Texas shootout with IDCC. Yes, Ericy was named as one of the "trigger" manufacturers in our agreement. However, prior to signing their license, Ericy merged its handset division with Sony's, and a new 50/50 joint venture was formed. Therefore, Ericy may be a trigger for base station royalties, but Sony/Ericy does not qualify as a trigger for 2G phones, which is our primary source of revenue. Ergo, we are free to use these patents until a valid trigger is activated, or until the current arbitration panel decides otherwise.
d. If the panel decides against us, we will challenge its ruling, whether or not we have a sound basis. If you believe otherwise, you have only to review four other legal actions filed by Nokia, which directly or indirectly involve IDCC.
e. One action aims to invalidate certain 2G patents in the UK. Another involves the production of Ericy documents in connection with the arbitration hearing. Two others involve Nokia requests for production of documents by Ericy in connection with the UK lawsuit. So far, we have lost only two of the three U.S. actions, and may soon lose the third. But out lawyers are lovin' it.
f. You should also know that we signed a 3G agreement with IDCC in 1999, and have been shipping 3G products to countries other than the U.S., using patents allegedly owned by IDCC.
g. But we owe nothing to IDCC for these products. Why? Because they have not yet signed a "trigger" to a 3G license. Also, lucky for us, we are free to challenge 3G patents in court, rather than resort to arbitration, as we were required to do for 2G.
h. Most important, we don't want to risk another surprise, like the Ericy settlement!
i. e., If we dilly/dally, IDCC might sign a 3G license with a different "named" manufacturer, such as Lucent or Motorola, which might trigger payment of 3G royalties by Nokia.
So we decided to beat them to the punch, and filed an action in Delaware. This action aims to invalidate certain 3G patents, or otherwise obtain a declaration that we are not infringing. We admit this may seem strange to the arbitration panel, since we paid IDCC about $60 million for development of 3G, and have incorporated some of their inventions in our current products. But 3G is none of the panel's business, so they have to butt out.
i. Regardless of how Delaware is decided, we won't renew our 3G license with IDCC when it expires at the end of 2006.
j. In that connection, we regret that we have lost our U.S. leadershhip to Motorola. They are shipping 3G phones to America, which is the largest market in the world, while we are not. However, if we shipped certain duo-mode phones to America, IDCC might claim infringment. So, to avoid this, and to hedge against a loss in Delaware, we are designing around IDCC's patents, and will not sell such phones in the U.S. for about two years.
k. This is driving our sales people nuts because, for the next two years, they have to work harder in other countries to keep our world-wide market share on target. But we believe saving $1.00 a phone is worth it, even though we're deliberately conceding that huge market to Europe, the Japanese, the Koreans, and the upcoming Chinese.
j. By the way, you may be wondering about the UK lawsuit. Well, here's our theory:
In the event we lose in arbitration, we are hedging our bets and suing to invalidate certain IDCC 2G patents in the UK. This may also seem strange to the arbitration panel, because we have previously paid royalties to IDCC for 2G. Nonetheless, we're disputing not only the Ericy 2G trigger in the U.S., but also the validity of 2G patents in the UK. If that's confusing, talk to our lawyers. They think it's great.
At the moment, it appears that only one thing can straighten out this huge mess that IDCC has created:
It's called a settlement.
Our lawyers don't think that's great. But we're thinking it over, because the arbitration hearing has concluded, and they tell us time is running out.
AI
