Replies to post #40041 on InterDigital Inc (IDCC)

[mschere]

Question..How do you reconcile the statement made by IDCC in their 10K ..with your analysis of their licensing page?Are you stating that in 1995 IDCC had all the ESSENTIAL patents for the 3G standards and they were granted to Qualcomm?.. What am I missing?TIA

What you say..
..Using Qualcomm as an example, they have sublicense rights to a certain fixed set of patents, correct? yes (with and without the sale of the ASIC too)

IDCC feels those patents are applicable to CDMA, CDMA2000, WCDMA and TD-SCDMA, correct? yes (per IDCC's licensing page showing standards licensed to Qualcomm).


What IDCC says..In their SEC filing..

The Qualcomm agreement excludes, among other things, any rights under our patents as regards TDMA standards, any rights under our patent applications filed after March 7, 1995, as well as any rights to any patents relating to cellular overlay and interference cancellation. Based on these limitations, the Siemens and the Qualcomm agreements do not provide a license under all the ITC patents or IPR Holdings Patents which we believe to be essential to 3G, including CDMA 2000, or all of the inventions which we believe will be essential and which are contained in pending patent applications. The Qualcomm license agreement grants Qualcomm the paid-up right to grant sub-licenses under designated ITC patent and patent applications to Qualcomm’s customers. For some of the ITC patents, Qualcomm’s sublicensing rights are limited to those situations where Qualcomm is selling ASICs to the customer. For a limited number of patents as to which applications were filed prior to March 8, 1995, Qualcomm may grant licenses under such ITC patents regardless of whether the customer is also purchasing an ASIC from Qualcomm.

[The Count]

Data, thanks for your analysis

I do believe that QCOM is the indemnifier. Your breakdown...

the "indemnifier" can only indemnify for those patents IDCC has given them the right to do so with, or 2)the indemnifier could be saying, all of IDCC's patents are not applicable if you use ours instead.

I tend to believe the prior is happening.

...makes sense to me, as well as your explanation of the hold up in 3G licensing (paying twice for the same IP). While it's disappointing to see that IDCC may not get paid for some of it's patent portfolio (because QCOM has already included some in it's bundle), I do believe that IDCC holds valuable IP that QCOM does not have the right to sublicense, and therefore there will be 3G licenses, just not for the rates I'd been hoping for.

Your post really clarified the situation in my mind. I could be wrong, but at least now I have a complete scenario that is logical and plausible. Thanks for your contributions.

Frank

[0nceinalifetime]

Data, with all due respect, I think you are making the indemnification issue more complicated than it is. It's really quite simple, the indemnifier has researched IDCC's patents and determined that their licensees do not need to sign a CDMA license with IDCC. It doesn't matter if it's because IDCC has already cross-licensed the applicable patents to the indemnifier or because IDCC simply doesn't have any necessary IPR for CDMA. Which it is doesn't matter, as long as the indemnifier is willing to put his money where his mouth is, it's all the same.

Like you, I believe the only logical indemnifier is QCOM, after all, they ARE cdma. QCOM has some of the best patent attorneys in the world and you can bet they would not be willing to indemnify anyone if they didn't have a defensible case. This CDMA indemnification issue is something that has not fully sunk in with holders of IDCC. It is much bigger than anyone is admitting. Unless the indemnifier backs down or 3G turns completely away from a CDMA solution, well, IDCC is essentially dead in the water.

End of story.

Once

[rmarchma]

Rox re the 3G indemnifier

Pardon my naiveness, but let's see if I'm finally understanding what you are saying. In your opinion, the 3G indemnifier is not providing indemnification for an entire standard, but only for certain specific patents within that standard. Thus if the indemnifier has sublicense rights to let's say 5 essential IDCC CDMA patents that apply to the IS-95, CDMA2000, and WCDMA standards, then they would only indemnify those 5 patents, if IDCC subsequently sued for infringement.

However IDCC could still have let's say 4 more essential patents aplicable to CDMA2000 and 24 more essential patents for WCDMA, in addition to the 5 sublicensed patents. These additional essential CDMA patents would NOT be subject to indemnification. Therefore a potential licensee would still need an IDCC license to produce standard-compliant CDMA2000 and WCDMA products. However, the potential licensee would want to pay a lower royalty rate so as not to double-pay for the same 5 essential patents, used in my illustration, which are already licensed through the indemnifier.

I have said previously that IDCC's worst mistake was the 1994 agreement with Qualcomm IMO. That is the only contract that IDCC sublicensed any patent rights, and it caused them to almost completely lose out on any IS-95 royalties. Evidently IDCC is still suffering from that contract even today as they try to license for 3G. There is no doubt that QCOM is the indemnifier, and is using the sublicense rights under the 1994 settlement as their basis. BTW the second-worst contract in IDCC's history is the 1999 agreement with Nokia IMO. But the deficiencies in that contract will be the subject matter for another day.