j70k re Nokia settlement versus an arbitration decision you said:
....”As we enter the final days before decision time, what is the feeling here as to arb award vs settlement. I'm sticking with settlement at 90% probability.”
I’ll have to take somewhat different view on this issue. I personally think that an arbitration decision is more likely than a settlement at this juncture. However I can see valid arguments for both sides. Some arguments that would favor an arbitration decision over a settlement as follows:
(1) We are so close to the last final possible date for an arbitration decision, that both parties could easily allow it to go its full course. Remember the actual decision could have been disclosed before the last possible date of May 31. You can’t count on the last possible date being the actual disclosure date. Therefore, it appears to me that if one party was real eager to settle, and not run the risk of an arbitration decision, then they would have done so by now.
(2) Nokia really harmed IDCC’s credibility and licensing efforts by its “scorched-earth” policies against IDCC. Perhaps IDCC would like to extract maximum vengeance on Nokia for what they have done or attempted to do. Therefore there can be no compromises with Nokia for 2G or 3G, although publicly IDCC might say that the past is past.
(3) A very large 2G/2.5G announced arbitration award for IDCC in the multi-millions would provide instant world-wide credibility for IDCC's claims. Also an arbitration award would provide a cash war chest for IDCC to continue the legal fight against Nokia for 3G, and all other patent infringers who don’t license, if necessary.
As far as some arguments that would favor a settlement over an arbitration decision as follows:
(1) Added RISKS. Companies, like individuals, are for the most part adverse to too much risk. Personally I believe that IDCC has more at risk than does Nokia. Therefore, I think that IDCC has to feel extremely strong about its position if they don’t settle. However the added risk and resulting pressures might cause IDCC to blink first and settle, if Nokia offers something reasonable or accepts a reasonable offer from us.
(2) More difficult to give or compromise on a 3G rate and /or 3G license extension going forward once the 2G/2.5G amounts are “cast in stone” by an arbitration decision. In a settlement, IDCC might sacrifice some past-due amounts from 2G for future 3G amounts and/or a contract extension. Once the 2G arbitration decision amounts are rendered, it would be much more difficult to compromise on 2G past-due amounts for 3G future amounts.
(3) Does a small company like IDCC really want to continue to fight against the largest handset manufacturer in the future? A settlement should require the dropping of all current lawsuits by Nokia against IDCC, and probably an agreement not to initiate any future lawsuits.
Merritt made some interesting comments in the last CC. These comments could be interpreted both ways, as either hinting toward an arbitration ruling or hinting toward a settlement. The question and Merritt’s comments thereon as follows:
Tom Carpenter, Hilliard Lyons - Analyst [36]
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I want to dovetail off the answers to one of your last questions, where you said you have a history of getting deals done, negotiating fairly and all that stuff. You guys have been in some discussions with Nokia for a long time. Unfortunately, with the arbitration about almost two years ago with them, and over the last year, maybe, it's taken a little bit of a turn for the words with a 3G lawsuit in Delaware. They have sued you guys on some 2G patents in the UK. We've got 25 days calculated since we might get a ruling from the International Court of Arbitration. Is this a relationship that can be repaired, because you guys need Nokia, not just for 2G but also for 3G going forward. They are the market leader. A lot of people -- a lot of other companies were to follow their direction if you guys did license them. Can you tell us, can you repair that relationship? How can you repair that relationship given there is some time constraints over the next month or two?
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Bill Merritt, InterDigital Communications - President and CEO [37]
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I think as far as the general question, can you repair relationships? I would just look to the situation we had with Ericsson. That was a long 10-year litigation with them that resolved very amicably on a deal that was good for both parties. I have a very good relationship with my counterpart at Ericsson. Ericsson is on the other side of the GD deal, so as far as a technology provider, so we're working with them there.
These things can do about-faces pretty fast once you get the right formulas in place. And with respect to the arbitration, as I discussed, I guess, maybe over a year ago we got into this, there is a process -- the arbitration process is a defining process. And along the way, you have points of pressure and you have points of clarity. And those are things that are necessary sometimes for the parties to get to the point where they decide if it is worthwhile to resolve them. That process continues, and within a word, there can be clarity and with that comes opportunity. And so we have remained open to fashion deals that make sense for us, but if there's not a deal in the offering, and the result is positive, then we would move forward on executing on the judgment. So we are a very flexible Company in the sense that we don't let past events necessarily color our future thinking.
AI
