Replies to post #310440 on InterDigital Inc (IDCC)

[bim524]

If one doesn't think that IDCC can command a better rate with a positive appeal, then I don't think they are paying attention that closely.

MO
bim524


Michael Ciarmoli - Boenning & Scattergood

A question, Bill I guess just to elaborate on the Nokia. Why would Nokia be incentivized to settle here. I mean, they could make a number of arguments to say, that they are losing market share to the iPhone, you got the Android based phones coming out soon. It seems that their incentive would be to just spend a couple of million dollars, whether its $20 million a year on legal fees, make a claim that they are losing market share, watch handset ASPs continue to fall and even if they have to settle, then they have got a more favorable kind of economic picture in the out period. I mean just help me understand why they would actually settle, say any time soon, six months or a year from now?

Bill Merritt

There is a couple of thing right. At first I think you look at it from the standpoint of , as we continue down the one path which is this legal path, the portfolio is getting actually proven up in a sense through Nokia’s activities as we get patents out of the patent office that resolved all the concerns that they've raised.

If we move forward and then appeal in an eight or 10-month timeframe turns around the ITC decision. I think what happens in that situation is the cost of a settlement to Nokia is going up significantly because the portfolio is being proven up. Then I think if you're on their side you're going, is it worthwhile taking it all the way to those points where InterDigital can actually command perhaps a much higher royalty at that point in time.

So I think they have to manage what they're doing because sometimes while you may be winning some of the battles along the way, ultimately you're putting yourself in a very bad position to lose that war because of all the proof the other side is putting together.

Separately, on the business side, I think that there are a number of things that we're doing on the R&D side that could be attractive to Nokia. Yes, they are losing market share, and some of the things that we're doing with respect to our technology could be innovative things that Nokia could apply to their products.

So the question is do they want to work with us on that stuff to bring it to market sooner, to drive that, and as part of that can we work out a creative solution with respect to the patent opportunities. We're not an unknown technology vendor to Nokia. We're a very good technology vendor to Nokia. They remember those projects we've done well, and I think that as we move forward with these projects I think we can create some opportunity there.

On top of that I think there are other things that we can do to create incentives in the market for them to want to deal with this issue sooner rather than later. So I kind of look at the legal path as kind of one path we can put down and one timeframe we can establish, but I want to establish that as sort of the longest timetable and do other things that will drive it to conclusion sooner than that, and I think we've got some really good opportunities.

Then Nokia at the end of the day, you don't get to be market leader without being a rational organization, and I think they can understand these risks and manage their way through them, and I think part of that management in my mind would be for them to do things somewhat sooner rather than later because I think later it becomes more expensive.

[infinite_q]

JMS, I would also like to see some clarification from Data_Rox on this post.

IMO, anyone who thinks that the terms under discussion between NOK and IDCC will not change based on the ruling from the CAFC is out of touch with reality here. An adverse ruling against NOK, even if it doesn't result in an immediate ban, will have significant effects on the IDCC share price. This is simply because of the change in dynamics in negotiations between the parties, if nothing else.

The market clearly believes that IDCC has the upper hand at this point. Perhaps one could argue that the upside is already priced into the stock, but I think there are big players betting there is additional upside. I'm holding my shares based on that. The fundamentals are strong and the technicals point to further upside.

You can debate the procedural details of what happens next even with a favorable ruling all day long. But that doesn't have anything to do with the negotiating leverage that IDCC will enjoy after a positive ruling.

Validity and enforcability are not at issue here.

FRAND does not come into play in a settlement negotiation.

JMO

[olddog967]

jmspaesq: In regard to a redetermination of validity on remand, please read my recent post on the subject that contained pertinent comments by whizzeresq, a poster whose legal background included a lot of US appeals court work.


http://investorshub.advfn.com/boards/read_msg.aspx?message_id=59359589&txt2find=whizzeresq


quote:
_____________
DataRox:The patents were held valid and enforceable already, right?

I don't think that would be up for redetermination upon remand.

[h48]

Data,

Like many here, I'm curious how you reconcile your statement regarding the CAFC decision going in IDCC favor:


"pretty much a board myth in this area of FRAND"

with:

Bill Merritt's statement:


If we move forward and then appeal in an eight or 10-month timeframe turns around the ITC decision. I think what happens in that situation is the cost of a settlement to Nokia is going up significantly because the portfolio is being proven up. Then I think if you're on their side you're going, is it worthwhile taking it all the way to those points where InterDigital can actually command perhaps a much higher royalty at that point in time.

Then Merritt repeats himself later:


Then Nokia at the end of the day, you don't get to be market leader without being a rational organization, and I think they can understand these risks and manage their way through them, and I think part of that management in my mind would be for them to do things somewhat sooner rather than later because I think later it becomes more expensive.