InterDigital Inc (IDCC)

[Corp_Buyer]

OD- yes, quotes from the Court. Also, note this statement by the Court: "The Ericsson litigation settled. Thereafter, Federal demanded full reimbursement in the amount $27,886,576.64, which represented the amount Federal HAD PAID to InterDigital toward InterDigital’s litigation expenses."

So, Federal is not claiming a percentage of the Ericy result, rather they are claiming "full reimbursement" of their actual costs as agreed by IDCC under the Reimbursement Agreement.

The only way I can possibly understand the numbers promulgated by IDCC is that IDCC wants to impose some limitations around the SOURCE of funds used to reimburse Federal's claim i.e. 9% of the 1st $50M, 10% of the rest (resulting from the patent litigation only with Ericy).

So, it seems IDCC has reserved, about $3.4M, which may reflect 9% of the 1st $34M(?) of the E/SE settlement? As to the rest of the reimbursement, it seems IDCC does not count the E/SE licenses as part of the "settlement" so IDCC may not view these licenses going forward as a bona fide SOURCE of funds for any further reimbursement to Federal. Perhaps IDCC is correct in this view, and Federal should be limited to 9% of the 1st $50M. Apparently, Federal does not see it this way. So, yes, an arbitration is in order to address this matter.

And, I suppose IDCC could make some further arguments that the settlement pertains to past infringement only, which is what the Ericy litigation was all about, and that the licenses going forward are necessary but unrelated to the Ericy litigation and settlement since the case was only about past infringement?

But then, according to the Court's opinion, it seems Federal is entitled to "FULL reimbursement".

Now, it seems to me that IDCC is pursuing some very incredible arguments to frustrate Federal e.g. (1) lack of consideration, (2) RA unenforceable, (3) only the up front cash settlement for past infringement can source Federal's reimbursement, (4) the E/SE licenses are not a source of funds for the reimbursement, and (5) Federal is not entitled to full reimbursement (for whatever reasons). And, so far, the Court seemed to brush back IDCC's lack of consideration and lack of enforceability arguments very easily.

So, WHY is IDCC pushing on this string? To avoid truly improper costs? To delay paying for the Ericy litigation? To avoid a bad deal (the RA)? Or, is this yet another cost to defend management's stock sales in 2003 while the RA and Federal's claim were still hidden from investors?

I just don't know how to square the Court's indication that Federal is due full reimbursement versus IDCC's purported cap of $3.4M, apparently derived from ~9% of the 1st $34M?

MO,
Corp_Buyer