Ronny and all. I just sent this to David Pringle at the WSJ. I hope he thinks IDCC is worth a follow up.
Hi David:
I wrote to you almost 2 months ago concering your article on InterDigital Communications (IDCC) in the online edition. With the upcoming trial between Ericy & IDCC scheduled to start on 2/10/03, I was hoping you could do a follow-up article. Below is a link to the Ericsson 2002 Rights Offering Prospectus. If you go to page 15 (which shows up as 18 in adobe) you will see the paragraph shown below which details Ericy's 2 significant lawsuits. Now that one of the trials mentioned in the prospectus is over (the Harris trial) which Ericy lost, what do you think Ericy's chances are of winning the other trial which concerns IDCC. In the Harris trial, Harris was awarded $62 million for Ericy's willful infringement which can be double or tripled by the judge.
Another thing for you to consider is the fact that just recently the judge who has been presiding over the IDCC case for the past 9 plus years just transferred the case to the same judge that presided over the Harris case and is now charged with deciding whether or not to award punitive damages for Ericy's willful infringement. The final motions are due to be filed with the court concerning the Harris case on Jan 6 so by the start of the IDCC trial, the judge may rule on the Harris motion for enhanced damages.
According to the rights offering, Ericy was certain they would prevail in both cases. Well so far they are batting .000 and I fully believe that will be the same after the IDCC case is decided upon. Obviously I have a vested interest in IDCC since I have been a longtime shareholder since 1994. I do think that readers of the Wall Street Journal would love to find out about the potential that IDCC has to offer. The trial is just one aspect of IDCC's potential. IDCC has almost $100 million in cash and no debt. It has increased its cash position for the past 4 years and would have last year also had NEC paid its obligation timely which you can read about in a recent SEC filing and a press release by the company. How many other tech companies can report such a sound balance sheet while over the last 3 years doubling its engineering staff? Its increase in cash was the result of operations and not stock offering.
Anyway here is the referenced pararagraph from Ericy's rights offering concerning their litigation exposure:
"Like other companies operating in the telecommunications industry, because our products comprise complex technology, we experience litigation regarding patent and other intellectual property rights. Third parties have asserted, and in the future may assert, claims against us alleging that we infringe their intellectual property rights. If we do not succeed in any such litigation, we could be required to expend significant resources to pay damages, develop non-infringing products/technology or to obtain licenses to the products/technology which is the subject of such litigation. However, we cannot be certain that any such licenses, if available at all, will be available to us on commercially reasonable terms. Also, defending these claims may be expensive and divert the efforts of our management and technical personnel. In particular, we are currently party to two unrelated lawsuits where plaintiffs allege that we have infringed one or more of their U.S. patents through our sales of certain GSM and TDMA products in the United States. While we are confident that we will prevail in each of these two lawsuits, there can be no assurances thereof. If we do not prevail, we may have to expend significant resources to pay damages and we could be enjoined in the United States from selling any products found to infringe unless we either modify those products or obtain licenses to the patents found to be valid and infringed."
Thank you for your consideration and I hope to decide IDCC and its upcoming trial is a compelling story for your research. Based on the fact that Harris was awarded $62 million for a 2 year infringement, the award to IDCC for many more years of infringement could be staggering. The award alone could be more than the current market cap of IDCC. With a positive verdict, Nokia and Samsung will then be obligated to pay royalties which accrue beginning 1/1/02. For 2002 alone the amount owed by Nokia and Samsung alone could be about $200 million. That would flow directly to the bottom line of IDCC whose stock currently at $16.06 could easily hit triple digits.
Thanks again and if you have any questions feel free to call me at xxxxx or on my cell at xxxx.
Your truly
Chris Weinell
AI
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