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NOKIA: Past and Future Licensing and Royalties
Updated: June 22, 2006 Most recent posts are by: loophole73, Data Rox, Ed Ferrari, mschere, Learning2vest, Ghors, olddog967, my3sons87, bulldzr, jimlur, lastchoice, ed ferrari, nieves, alalud, kikoboer, bulldzr, Wilco244, loophole, Whizzeresq, Dave Davis, Ziploc 1, my3sons, j70k, spencer, rmarchma. ams13sag, sinnet, vg future, Desert dweller, songion, Ricardo Montalban, Slacker711 and orientbull.
What these "best posts" on Nokia 3G Licensing and Royalties Progress in licensing cell phone market leader (35% share) Nokia for 3G.In the opinion of WirelessLedger.com, Nokia is sueing InterDigital in Delaware (US) (Lanham Act) and in the UK for the purpose of gaining a better bargaining position vis a vis the royalties they will eventually pay InterDigital for 3G. This topic also includes comments on the April 27, 2006, InterDigital announcement of a long-awaited 2G agreement with Nokia. (Nokia has paid InterDigital $253 million for paid-up royalties for all 2G infastructure, cell phones and other wireless devices that Nokia has or will manufacture. InterDigital also agreed to release Nokia from infringement liability for its worldwide sales of 3G terminal units and infrastructure through April 26, 2006, but not thereafter.) Follow this link to read some of the most informative IHub posts related to the very important ongoing battle for huge 3G liceninsing/royalties between Nokia and InterDigital. WirelessLedger's current focus stock is InterDigital Communications Corp. (IDCC). Posts and threads are culled from the most useful investment message board on the Internet (it is hosted by Investors Hub). For a listing and links to other "best posts" topics click here. T
See also: Links to "best posts" on these related revenue catalysts: 3G Licensing and Royalty Collections Samsung 2G/3G Licensing Observors believe that Samsung, already in an arbitraion process with InterDigital over licensing fees, will the the next big revenue producer. How is progress on that front? What are the implications?
Also see these other related WirelessLedger reports: Understanding Intellectual Property Understanding the Standards-Setting Process 30 Year Evolution of InterDigital's Business Model: The Nokia-InterDigital Relationship Watershed Event: Settlement of the Ericsson-InterDigital Litigation
NOKIA: Past and Future Licensing and Royalties POSTS and THREADS
Graphics/formatting added to many posts for clarity by WirelessLedger.com
Posted by: loophole73 Bulldzr
Whether you or I post on this board is no longer important. The truth and the word has finally been delivered to the people that count. The important thing is that we remain focused on the additional accomplishments of IDCC because we can now evaluate IDCC with the street based on the information contained in the announcements of the company. The amount of recurring revenue is the only issue from LG forward. Each new licensee will guide us to new minimum higher levels of value by the street. IDCC has moved from one of the most confusing companies to a very transparent money making machine. Besides the recurring license revenue stream, we are on the verge of revenue from engineering service agreements and product revenue sharing agreements. Depending upon the ability of IDCC to project these new revenue sources to the Bottom line is forget the posters that desire to annoy us and stay the course with posters that can assist us in our evaluation process going forward. We have come to far to leave the game now. MO (Bolding and graphics added by WL)
Posted by: loophole73 olddog Nok must prove that the false or misleading statements were made "knowingly". This case is a problem from a cost perspective and IDCC should not stand for this continued course of action by Nok. I am wondering if Nok is selling 3g products in the UK and the USA at this time. If they are, then IDCC has jurisdiction for a cross action for willful infringement. If they are not, then IDCC must wait until Nok places infringing products into commerce in these areas. A review of the patents involved can get into medium double digit millions fairly quickly. IDCC needs to declare Colonel Nathan Jessup as the person with the most knowledge regarding the essentiality declarations and have him testify "you are GD right I declared the following patents as being essential to 3g standards. I did it on x date and I am doing it here today. You want reasons? You cannot handle reasons. My men work diligently inventing and discovering technology that makes your life easier as the leading manufacturer of mobile communications equipment. While you make billions from our inventions, you want to criticize and ridicule me as a toll taker and a commerce blocker during your parties around bonus time or anytime a member of the press corp is within earshot. Well, you have f88ked with the wrong nerd mister. I will tear off your sliderule and pen holder and shove them up your *ss and send you back to Finland singing our National Anthem". MO RE:
Posted by: olddog967
§1125. False designations of origin and false descriptions forbidden (1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which-- .....(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or .....(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act. (2) As used in this subsection, the term "any person" includes any State, instrumentality of a State or employee of a State or instrumentality of a State acting in his or her official capacity. Any State, and any such instrumentality, officer, or employee, shall be subject to the provisions of this Act in the same manner and to the same extent as any nongovernmental entity. (3) In a civil action for trade dress infringement under this Act for trade dress not registered on the principal register, the person who asserts trade dress protection has the burden of proving that the matter sought to be protected is not functional. http://www.bitlaw.com/source/15usc/
Nokia’s original claim regarding the Lanham act violation is on page 34 of the following filing: http://wirelessledger.com/bfm42C2.pdf The Judge's decision allowing Nokia’s claim under the Lanham act to proceed is on page 11 of the following; http://wirelessledger.com/25-Opinion.pdf The Scheduling Order for the various phases of the trial: http://wirelessledger.com/42-Scheduling_Order.pdf And finally, here is a good summary of how Complex Cases are handled by the Courts: http://www.lectlaw.com/files/lit11.htm
Posted by: Ghors To All: For the new or newer posters and lurkers who might not be totally up to date on the Nok lawsuit against IDCC in Delaware, I thought I would present a short outline.
This statute is basically a law intended to protect persons or companies from deceptive and fraudulent practices. The remedies for violation can very from injunctions to money damages. One part of the laws covers false advertising about the uses and benefits of ones products. The case has been designated as complex under the Federal Rules and discovery is now proceeding. To date, both sides have sent out Interrogatories (questions requiting a written response) to opposing counsel and same have been answered. NOK has recently sent a Notice for Deposition to counsel for IDCC requiring IDCC to designate a person(s) with IDCC (or formerly with IDCC or an outside expert witness) who will explain why our patents are essential or potentially essential. They will also have to testify as to the process IDCC used in making such a determination. This deposition(s)will probably be very technical and lengthy as these person(s) will be testifying as to each claim of each of the 180 patents we have identified as essential or potentially essential. Once these depositions are concluded, IDCC will then get to take the depositions of all persons NOK will use to testify that NONE of our patents are essential and why. In essence these witnesses will be attacking the very core of IDCC's business and calling all our patents useless and of no benefit to 3g. They will be testifying that every statement IDCC has ever made about its patent portfolio is fraudulent with intent to deceive and harm NOK and others. I would assume they will also be attacking our joint ventures with other companies on 3g protocol stacks and other products. I would also assume they will testify that we threatened ligitation and/or deceived all our licensees. IDCC will then also get to take the depositions of each and every person NOK will present on the issue that they lost business and how much money they lost as a result of IDCC's allegedly false and fraudulent statements regarding their patent portfolio. Once depositions are concluded, I would assume both NOK and IDCC will move for summary judgment on all issues. Finally, if there is an interest in exact language of the act, the lawsuit or a timetable of events, maybe olddog or Dave will repost the pleadings, scheduling order and other information on the Lanham Act and Federal Rules on complex litigation. IMO Ghors
Posted by: Data_Rox
We should get some good meat from the reply if made available. IMO, others will be watching too. Gotta go
Posted by: ed_ferrari L2V, as I stated before I think NOK's real objective is to get that list of patents whittled down as much as possible and negotiate a 3G rate based on whatever's left.
Posted by: mschere Good post..IMO:IDCC will also provide legal input in the Delaware action to blow away the U.K. narrower 3G issue..The only difficult fight that IDCC will encounter is "Internet paralegal FUD"! In a separate action on July 29, 2005, Nokia filed a claim in the United Kingdom High Court of Justice, Chancery Division, Patents Court against InterDigital Technology Corporation (ITC), a wholly-owned subsidiary of InterDigital Communications Corporation.Nokia's claim seeks a Declaration that the importation, manufacture and sale of mobile phones and/or infrastructure equipment compliant with the 3GPP Standard TS 41.101 Release 5 without license from ITC does not require infringement of any of thirty-one of ITC's UMTS European Patents registered in the UK, such that none of the patents are essential IPR for that standard. InterDigital believes the filing is without merit and intends to vigorously defend its position.
Posted by: Learning2vest Have to take exception to your opinion re a finding that will "narrow" the scope of IDCC's "essential" patents. IMO we could see the special master render a finding that 100% of IDCC's declarations are on target.
Nokia's Lanham gambit could backfire big time is what I'm saying. Nokia's Delaware litigation could end up handing IDCC a legal validation of their "essential to the standards" claims on ALL(or almost all) of the firm's 3G patent claims. We could end up hearing KOP call "Bingo!", and then inform the unlicensed that "3G rates are going up"? LOL! The legal knife cuts both ways.
Posted by: Ghors Bulldzr: I believe I posted that after discovery is complete and within the time frames identified in the Scheduling Order, IDCC will file a motion for summary judgment. The judge can then decide if their is a genuine issue of fact to send to a jury. If there is none, he can rule as a matter of law against NOK and throw the case out. This determination can be as to a Lanham violation or damages. IMO Ghors
Posted by: Ghors Olddog: Good find. All our members should read the article as it clearly shows how much proof you must have to prevail. These cases are tough from a plaintiff's standpoint unless you catch a real thief. It's not going to hurt a legitimate business making reasonable claims about their products.
Posted by: olddog967 Ghors: Just to add some more information in regard to proving false advertising under Lanham. http://www.rkmc.com/Lanham_Act_Also_Applies_to_False_Advertising_Claims.htm
Posted by: Learning2vest That list of patents IDCC has declared to be essential puts Nokia's folly in perspective for all to see IMO. In order to prove that IDCC's statements re their 3G IPR portfolio are false as Nokia is charging, Nokia must now gain the special master's agreement that NOT EVEN ONE CLAIM in any of those 180 patents is "essential" to the 3G standards. That is a steep burden! Remember the special master's order requiring Nokia to provide each public statement made by InterDigital AND to give a "detailed response why it is false"? Well, good luck proving that IDCC does not have even one claim that is essential. Also, let's not forget that the ITU "working groups" DOCUMENT their progress in defining the wireless standards, and that each member firm gets access to that documentation. Would expect those working group notes include the group's technical considerations as well as their final decision re what to do with each of IDCC's patent contributions. Should make for some interesting reading when IDCC's legal team gives a copy to the special master.
Posted by: my3sons87
IDCC has declared a 180 patents as essential or potentially essential to the 3G standard, as listed in the Delaware court filing. That is an awful big burden to try and overcome on Nokia's part. There is no way that any number of these patents are not essential or potentially essential. The companies that have signed 3G licenses with IDCC most assuredly had the testament of their "Engineers" to the standard essentiality. Multi-national corporations do not just give money away. And we all know that they are not impressed with the threat or filing of litigation against them. The companies that signed the licenses realize it is less costly to sign early than to delay. After all there are some honorable people in some of these companies. The ball is in Nokia's court.
Posted by: Data_Rox bulldzr - it's pretty much the same list we've seen from the ETSI database - narrowed to the UMTS project and the US as applicable country.....
Posted by: bulldzr The list contains 180 US patents that IDCC considers essential or potentially essential. The filing refers to non-US patents as well, but these are not listed. I believe this is the first time we have seen a specific listing of the patents IDCC feels important.
Posted by: JimLur To all, Here's a couple of new pacer files from the Nokia Delaware suit. http://wirelessledger.com/56-1_Notice_of_Depositions.pdf http://wirelessledger.com/56-2_Attachments_A-C.pdf
Posted by: lastchoice
idcc has put nok to bed on 2g... samsung and s/e would sure blow the 50% number through the roof! Billion--with a 'B'
Posted by: lastchoice BS! I doubt they will try to invalidate a significant number of idcc patents. what would be the point? go through 322 claims of 91 patents and leave all the others? are they going to find a UK-type way of declaring them NON-ESSENTIAL? BS again. there's no point other than delay--which has a point. even so, it wouldn't effect the rate one iota. nok isn't going to be able to put idcc's ipr portfolio on defense, (unless judge ito is presiding). nok will OBVIOUSLY be infringing, any legal action will be for leverage--which might--MIGHT--indirectly affect rates. your comment, "where they are undoubtably going to try to invalidate a significant number of IDCC's patents (which would directly affect any royalty rate)." is undoubtely ridiculous. Billion--with a 'B'
Posted by: ed_ferrari Don't forget that Nokia also has the Delaware proceedings coming up in 2008, where they are undoubtably going to try to invalidate a significant number of IDCC's patents (which would directly affect any royalty rate).
The "news" that many of these "best posts" on the Nokia-InterDigital Settlement below are about: The Philadelphia Business Journal reported the news this way: Nokia battle no more: InterDigital to get $253M paymentPhiladelphia Business Journal - 4:33 PM EDT Thursday by Peter Key'InterDigital Communication Corporation's long international nightmare is finally over. The King of Prussia, Pa., company said Thursday that Nokia Corp.has agreed to pay it $253 million Thursday or Friday to settle their royalty dispute. InterDigital (NASDAQ: IDCC) thinks it will recognize the entire sum in its 2006 income statement, but will analyze the matter. The payment will give Nokia (NYSE: NOK), an Espoo, Finland, maker of wireless-communications equipment, a paid-up patent license covering sales of second-generation, or 2G, wireless products based on a standard called TDMA. Additionally, InterDigital will release Nokia from infringement liability for its worldwide sales of 3G equipment through Wednesday, and the two companies have agreed to terminate their 1999 patent license agreement, which was due to expire at the end of this year. That will make Nokia's sales of 3G products after Wednesday unlicensed, although InterDigital said it expects to continue negotiating about them with Nokia. ... The agreement ends a mammoth dispute between Nokia and InterDigital, which develops the software that runs the chips in wireless communications systems.After InterDigital settled another long-running dispute in 2003 with wireless phone makers Telefonaktiebolaget LM Ericsson, Ericsson Inc. and Sony Ericsson Mobile Communications AB, it contended that Nokia was legally bound to pay it royalties according to the terms of that settlement. Nokia disagreed and it and InterDigital went to an international arbitration panel and then, after Nokia disliked that body's ruling, to court. InterDigital contended that the arbitration panel's ruling meant Nokia owed it from $232 million to $252 million in royalties. Under the agreement reached Thursday, Nokia will dismiss its appeal in the U.S. Court of Appeals for the Second Circuit regarding the award and InterDigital will withdraw its arbitration demand with the International Chamber of Commerce. Also, Nokia has agreed to withdraw its challenge to three InterDigital TDMA-related patents before the High Court of Justice of England and Wales. In exchange, InterDigital won't assert the three patents against Nokia and will give Nokia a worldwide paid-up license for single-mode TIA/EIA-95 products.
Also see: Transcript of the InterDigital Conference Call (April 28, 2006) on the newly announced 2G/2.5G $243 settllement with Nokia, hosted by IDCC Pres/CEO Bill Merritt (left)
Posted by: nieves NOKIA AND INTERDIGITAL SETTLE; FUTURE BATTLE LOOMS Nokia and Interdigital have drawn a line under their disputes over 2G and 3G licenses, after Nokia agreed to pay Interdigital $253 million – roughly the amount decided on by the International Chamber of Commerce’s Court of Arbritration in autumn 2005. The resolution means Nokia is fully paid up on all 2G licenses from Interdigital, and is so in perpetuity. It also wipes the slate clean for 3G licenses up to the present day. However, the companies are still in negotiation over future 3G licenses, and many close to Interdigital see the resolution as clearing the decks for further battles on 3G. Interdigital claims that the 3G license fees up to this point, which were effectively thrown in for free into the 2G deal, were not that substantial, reflecting Nokia's own sluggish sales of 3G devices. Nokia says that the agreement shows the worth of fighting “unrealistic expectations” of technology licencers. The agreement also has implications for Samsung, which is involved in a very similar dispute with Interdigital, albeit for lesser amounts. Interdigital clearly hopes that the Nokia example will persuade Samsung to go down a similar path. An Interdigital spokesperson said that the amount Nokia paid was “in line” with their expectations, and showed the resolve of the company in defencding its IPRs. Nokia painted the settlement as a climbdown for Interdigital from previous inflated demands. With Nokia also in dispute over ongoing patent licensing with Qualcomm (Qualcomm recently informed the markets there is a risk it may not renew licenses with Nokia after April 2007) the company clearly faces a period where it needs to sort out its licensing policy. We have tried repeatedly to speak to Nokia but it has been unable to put up a spokesperson. If you're interested in the background to this dispute then follow the links below. Daniel Nieves
Posted by: alalud Loop, could not agree with more. However the go along to get along approach of the past has cost IDCC dearly. I too, wonder where we woulda been if...but that is water under the bridge. Now I am concerned that the past will continue. Do you have any opinion at what a reasonable time would be to allow NOK, SAM et al to negotiate before pulling the trigger? Having tried several punitive damage cases, and even winning a couple of them, I can not image a motion in limine prevailing. Evidence of past behavior would be critical in establishing whether punitives should be awarded. Further, what a perfect chance to establish whether the evil "cabal" has really been conspiring to fix costs and/or delay payments. Thanks Loop for everything you add to this board.
Posted by: kikoboer L2V: The best reasoning I have heard to describe Nokia's behavior towards IDCC, yet.
Posted by: loophole73 Woulda and coulda Has anyone thought about where our share price would be today if Nok and Samsung had paid beginning in the second Q, 2003? Can you imagine their money being credited as recurring revenue over the last 3 years? I believe IDCC was very wise in getting rid of that worthless 1999 PLA regardless of the "modest amount" of cost. These two companies are now in a position of willful infringement which carries punitive damage possibilities. I also believe that if we are forced to the courthouse again by these two companies, the past dealings in 2g will be admissible evidence during the willful presentation before the fact finders. I do not believe that efforts to exclude these facts via a motion in limine will be granted. These two companies have a lot to think about as they proceed through life without a colour of license. IDCC has made the right moves for the company and its shareholders. MO
Posted by: bulldzr L2v, Interesting... In other words you're saying that the 3G concessions might be seen as a quid pro quo for NOK's payments for development of the TDD technology. I believe as you inferred, that the PLA and the TDD development work were two separate animals. If Nokia in fact has "unofficially" accepted the 3G concessions as indirect compensation for the TDD development moneys and any claim to a paid up license for TDD, then great. Since it seems that NOK was doing little to "push" the TDD standard anyway, it seems we have lost little or nothing in that regard. However, now TDD will have to stand up and walk on it's own legs. Posted by: Learning2vest
Let's get past the "shock and awe" phase of wondering how "BIG" the 3G concession was that Bill Merritt/IDCC made to Nokia in the recent settlement, and take a closer look at what it could mean. My thought is "OK, we know that a "concession" was made, and that Bill Merritt is nobody's fool, so what did it BUY us?" Here comes one interested observer's theory on that FWIW. Did anybody else pick up on what Bill Merritt's answer to the following CC question might mean? (I edited the "ENTS" on the transcript copy to say "ETSI", and added some punctuation); "Question - I know you all did a lot of early work in the Tdd area. Is the strategy when you are doing the 3G license agreements, the ETSI standards-related license agreements, i.e., do they cover both FDD AND Tdd, or do you partition - you know, is your license comprehensive, or is it sort of partitioned out? Bill's answer - It is comprehensive." IMO that exchange confirms this observer's theory about what set Nokia off into open hostility toward IDCC, and it also goes a long way toward explaining why Howard was let go so abruptly. Nokia's 1999 licensing agreement with IDCC addressed three significant topics; i.e., licensing of 2G IPR, licensing of 3G IPR, and a TDD development contract. We have spent a lot of time talking about those 2G and 3G licensing provisions, but let's focus on that TDD development contract for a moment. In exchange for paying IDCC something like $58 million, Nokia expected to get a commercially ready version of the TDD cohort of W-CDMA "FDD" AND, Nokia also expected to enjoy "free use" of the IDCC IPR necessary to manufacture products which comply with that TDD standard. All wireless manufacturers would be able to manufacture those kind of W-CDMA FDD/TDD products, but in exchange for their $58 million of development funding, Nokia expected to enjoy a competitive cost advantage equal to IDCC's IPR licensing rate on the "TDD" portion. Here comes the punch line - We have talked a lot about Nokia having a "free use" competitive advantage on IDCC's TDD IPR in the past, and now we know for sure that it's gone. Bill Merritt confirmed above that IDCC now has a "comprehensive" licensing policy for W-CDMA, i.e., one rate gets the whole package of FDD and TDD IPR. That means EVERYBODY is effectively getting "free use" of the "TDD" IPR Nokia paid IDCC to develop. Somebody at IDCC yanked the competitive advantage on "TDD" IPR licensing rates out from under Nokia AFTER THEY AGREED TO PAY ~$58 million to get it! In addition, it's safe to assume that Nokia's engineers collaborated with IDCC on the TDD development program and then helped sponsor those efforts in the standards definition working group. Nokia expected a TDD rate advantage would help deliver a return on all of that investment. My theory is that Nokia had a significant investment in TDD when their development "partner" Howard stabbed them in the wallet on the way to the payoff. He did that by deciding to "bundle" W-CDMA licensing under one "comprehensive" rate, i.e., one price gets all. No more free ride for Nokia on TDD, and they actually end up paying for it within IDCC's new "comprehensive" rate policy. "OUCH!" I think that is why Nokia reniged on doing the "commercial launch" of TDD they had agreed to do when it was ready, and I also think it goes a long way toward explaining the change in Nokia's behavior that we saw about that time. OK,... NOW let's get back to talking about the 3G "concession" to Nokia. IMO WHATEVER amount the concession was is not anywhere close to being as important as what it bought for us. My hope is that it was generous enough to buy Nokia's satisfaction. If Bill Merritt managed to get the TDD issue out on the table and then made it go away by effectively "refunding" enough of Nokia's TDD development investment to repair the damage in that relationship, it was a terrific investment. Seeing the recent transition from open hostility to a possible "exit mode" of mediation in the Delaware venue is encouraging evidence of that satisfaction. The really good news is that in my experience, big firms like Nokia do not act the way they have been toward IDCC without just cause. Once those issues have been addressed to their satisfaction, reason returns to the relationship. Fingers crossed!
Posted by: wilco244 What is often being forgotton is Nokia and Ericy both believed they would never have to pay for 2G from IDCC. The settlement with Nokia allows Nokia to save face while paying 253 million for that privilege. IDCC has cleared the past and collected almost a half billion dollars, Includes 100 million expected from SAM,on IP the industry beleived they would not have to pay IDCC after the MOT debacle. I like the settlement and I think we have made "friends" with a very powerful enemy. To me the future has never been brighter and the share price will take care of itself as the company continues to execute their business plan. MO Z
Posted by: loophole73 Amended to all My first response to the annoncement and CC is reprinted below. However, please note the addition of a section 5. After reviewing the PR and listening to the CC, I believe the following issues have created a much different playing field for IDCC as it moves forward with its goals:
2. MFL rights of Nok will cease with respect to our other 3g licensees. This is a very important change in the game because IDCC can now protect its current licensed and paying customers and insure that Nok will not have an economic advantage over them. I believe this will serve as a goodwill booster with our existing licensees and the industry as a whole. 3. The additional monies from Nok and Samsung will put the industry on notice that IDCC is not only firm and serious about getting paid for their inventions, it now has a legal warchest that will place them on equal footing with the giants in any litigation enforcement matters. 4. The royalty concession for 3g is very small as of yesterday and IDCC could enter into such an agreement under its old 3g license without affecting the MFL clauses of our licensees. The reason for this is that the Nok 1999 license pre-dated all of the existing 3g licenses held by IDCC. 5. As many of you know, I have been very concerned about the Matushita 3g license with respect to its application to the Nok 3g license. This settlement puts my fears to bed because IDCC and Nok are now unlicensed for 3g and the execution of the new license will be post the Matushita license. I believe this places Matushita in the first position in our 3g licensing chain and is no longer a threat to affect any of our subsequent licenses we have closed down the chain via MFL clauses. This is a huge relief to me and any other investors who truly grasp the meaning of MFL rights. In conclusion, IDCC has received a very impressive sum of money and Nok has received the risks of an ordinary infringer moving forward. This shift in leverage cost IDCC peanuts. Further, our former CTO and others in the industry still believe that TDD will still make a huge mark in wireless and what better company to promote same exists than Nok. "Amicable" is the buzz word and I believe that the recent transaction with Nok will force them to be much more "amicable" due to the shift in the risk/reward ratio of legal challenges down the road. The settlement is very good for IDCC. Finally, Matushita is no longer a time bomb capable of blowing up a parade had another named major licensed 3g causing a trigger of potential royalty rates for Nok. It was in the best interest of IDCC to cancel its 1999 3g license with Nok. MO
Posted by: whizzeresq Dave--The referral of the matter to mediation at the same time as the settlement of the arbitration is a definite positive development that signals a different approach to this matter by Nokia. One thing to keep in mind is the impact of the termination of the Patent License Agreement. The fact that Nokia was a licensee of IDCC played a large role in the Deleware Judge's decision to dismiss Nokia's declaratory judgment invalidity/non-infringement action against IDCC. Now, with that license terminated, it would be possible for Nokia to try to reassert those claims. In the previous "scorched earth" approach, one would expect that from Nokia. Instead, we have mediation. I believe the 2G settlement should be evaluated in part, on a hopeful change in the relationship between IDCC and Nokia. I firmly believe that Howard Goldberg and company poisoned that relationship by their immediate announcement after the Ericy settlement that Nokia owed IDCC a huge sum of money (which sums were almost cut in half after arbitration). We do not know (and will never know) how Howard and Rip conducted any settlement negotiations during that period. Perhpaps, they refused to budge and that caused Nokia to engage in their all out war. It seems that current managment has gone a long way to repairing that damage. I would imagine that there is probably some sort of a "cease fire" agreement during mediation where neither Nokia nor IDCC will file any additional actions.
Posted by: Dave Davis New PACER entry in Delaware case. No document, it just says 'Case Referred to Mediation.' Works for me. 1:05-cv-00016-JJF Nokia Corporation, et al v. Interdigital Comm., et al
Posted by: ziploc_1 If Idcc really did leave $100 million on the table for the first 4 months of 2006 as some posters suggest, just think of what's left on the table for the future. Both nok and idcc are familiar with the facts and each others positions on the 3G dispute. Idcc is the Walmart of IPR and, as such, offers a refreshing opportunity for nok to work with them. With 2G out of the way, we should be able to reach a compromise VERY SOON on 3G. Posted by: olddog967 Data: In Nokia's Delaware court action the suit initially included a challenge to IDCC's patents. However, that part of the suit was thrown out. What is left is a Markham act claim that IDCC made false and misleading statements that harmed Nokia. I'll leave it up to the lawyers to comment on whether the Delaware court would be given jurisdiction if IDCC filed an infringment suit in Texas. BTW: I can come up with subscriber numbers from reputable organizations, that differ greatly with each other for the same date. BTW - if anyone wants to follow along with 3G subscriber numbers, here is a month by month as reported by operators. One should also note that the number of subscribers does not equal the number of units sold....there are always replacement units sold each year. http://www.3gtoday.com/wps/portal/!ut/p/kcxml/04_Sj9SPykssy0xPLMnMz0vM0Y_QjzKLN463dAHJmMUbxBub6keiij...
Posted by: my3sons87 Ziplic, the 1999 "PLA" with it's named triggers may have in fact created the infringing 'cabal'. That being you don't sign I won't sign etc. To me this blocking effect of the 1999 PLA has been removed. It is back to everyone for themselves. If licensing efforts and negotiations fail with any of the OEM's they can separately be dealt with. This is better than everyone being tied together in one PLA. If a then b, if not a then not b or c, etc. Posted by: Data_Rox od - maybe you have something there....Nokia's WCDMA sales of handsets to date may have been modest (15M units or so minimum), but Nokia WCDMA basestations were certainly considerable - 40-50K units. Now - CDMA2000....Nokia hasn't shipped any IS-95 handsets for quite a while (now paid up license anyway in the settlement). CDMA2000 subscriber shipments are close to 100M units My question to Eric....since mschere likes his numbers http://www.siliconinvestor.com/readmsg.aspx?msgid=22399500 IMO, with the DE and UK 3G litigation still ongoing, we won't have that license until it is resolved. Latest schedule from DE shows 2008 also - posted on the other board re: Nokia 3G not included in settlement By my estimates through the years Nokia has shipped Approx 100M CDMA (IS-95 and 2000) handsets Approx 10M WCDMA handsets Approx 40-50K WCDMA basestations note that I'm using some 8 month old S/A reports....do those numbers jive with you? His reply http://www.siliconinvestor.com/readreplies.aspx?subjectid=2772&nonstock=False&msgid=22399500 Nokia Shipments ... Hi Data, << the cc discussed the 3G negotiations >> I had hoped to listen, but was diverted. Hopefully it will be archived. << By my estimates through the years Nokia has shipped .... do those numbers jive with you? ... Approx 10M WCDMA handsets >> Other numbers look about right but I think that through Q1'06 Nokia probably has shipped closer to 15m UMTS (WCDMA) handsets than 10m. I peg them at ~20% of 49-50 million UMTS (WCDMA) handsets shipped globally in 2006 (or worst case just a tad less), perhaps upwards of 1m units before that, and 3.5m to 4+ million out of 19-20m units shipped globally in Q1 (35 to 40% of non-Foma handsets). They shipped almost 2 million of just the N70 in Q1. Tom Dailey of GfK is speaking at 2:00 at the Lehman Brothers May 22 Worldwide Wireless, Wireline & Media Conference ... http://www.lehman.com/conferences/2006WWW Hopefully that's webcasted or at least abstracted well by Lehman Brothers because he should be able to supply some good data points that can be pieced together with others. Best, - Eric - Now - if Nokia didn't owe ANYTHING for CDMA2000, then UB's "modest" comment makes some sense (other than infra)....so what do we want to use as a premise for the board...? 1. The company wasn't counting CDMA2000 as applicable to 3G infringing products (could be....anyone have the PLA handy to see if CDMA2000 was mentioned...or is it all classified as IS-95 for which we gave N full paid up license?) 2. That Nokia didn't ship much of any CDMA2000 products (industry stats show different) So, IMO, if we were looking to collect from Nokia on CDMA (IS-95 and CDMA2000) and WCDMA ...in the settlement we gave up royalty revenue from 115 MILLION subscriber units (ASP $150+) and 40,000-50,000 WCDMA base stations ($100,000 min each)....I estimate that to be easily $100,000,000 in royalty revenue even below the lower end of what mschere would even consider. Subtract that number - or whatever number you want from the "settlement" to see what we really got...and didn't get. Thanks if you have some corrections.
Posted by: j70k Data Rox-I think you are missing the key component to the settlement and that is that the trigger was a huge detriment to not only getting 3g rates from nok but from the other companies that were named as triggers. Just an opinion, but I think it is pretty clear who the indemnifier was and that game could have been played out endlessly-even IF a trigger was ever established, arb would have lasted at least 3 years-now each company is on its own and doesn't draw the ire of nok for having triggered and nok saves face by negotiating their own rates. Just my opinion and we will have to see how it plays out, but I feel that we just gained a tremendous amount of flexibility to structure our 3g rates and enforce them. Posted by: Data_Rox bulldzr - it's pretty obvious by the market reaction that more than just DD were a little disapointed in the "settlement" ...that once again we had to read between the lines of to see that while we "won" the 2G contract issue, in cancelling the 3G PLA and forgiving infringing 3G sales, we forgave well over 100M subscriber devices in phase 2 (CDMA2000 and WCDMA) and (well) over 40,000 WCDMA basestations. I'm not sure what royalty rate metric some would like to apply to those forgiven sales....but the net loss to our revenues is over $100M at a sub .5% rate. UB did great bringing this part to closure, and I'm sure he offered to structure the settlement the other way around (give 'em the old 2G portion and move forward with 3G), but since it didn't happen, and 3G suits are still in force (eliminating us bringing infringement suit), one would assume Nokia will still fight, and now no trigger can lock them in. We made the deal we had to make....just like LG finally got the deal they couldn't refuse....UB is doing everything right to move us, but I'm afraid we'll need to be patient to see the big rise in PPS.....maybe until after 3G patent scrub in DE at the least. I'm here for 3G....and seeing a big portion (that could truly drive the stock price) given away to support their previous 2G settlement "guidance" sucks....IMVHO. But I don't consider it the company's fault, just the way it is. No, DD isn't alone... Posted by: spencer Sony-Ericy and Motorola 3G licenses must not have been close. I really doubt that Merritt would terminate the Nokia license and its triggers if he was about to sign S-E or MOT to 3G.
Posted by: loophole73 To all After reviewing the PR and listening to the CC, I believe the following issues have created a much different playing field for IDCC as it moves forward with its goals: 1. The door has now been opened for Nok to demonstrate how serious they plan to take the 3g patent challenge. As of Monday, Nok is now free to challenge the validity and non-infringement issues of the IDCC 3g patent claims. The licensee status which blocked such actions in the USA has been erased and a declaratory judgment action may now be maintained. However, Nok certainly can no longer hide behind the licensee status for protection against a willful infringement finding by a judge or a jury. This has added to the risk column substantially and I believe IDCC has gained leverage as a result of the cancellation of the 3g portion of the 1999 PLA. A loss by Nok now can result in punitive damages because willfulness has been added to the equation. 2. MFL rights of Nok will cease with respect to our other 3g licensees. This is a very important change in the game because IDCC can now protect its current licensed and paying customers and insure that Nok will not have an economic advantage over them. I believe this will serve as a goodwill booster with our existing licensees and the industry as a whole. 3. The additional monies from Nok and Samsung will put the industry on notice that IDCC is not only firm and serious about getting paid for their inventions, it now has a legal warchest that will place them on equal footing with the giants in any litigation enforcement matters. 4. The royalty concession for 3g is very small as of yesterday and IDCC could enter into such an agreement under its old 3g license without affecting the MFL clauses of our licensees. The reason for this is that the Nok 1999 license pre-dated all of the existing 3g licenses held by IDCC. In conclusion, IDCC has received a very impressive sum of money and Nok has received the risks of an ordinary infringer moving forward. This shift in leverage cost IDCC peanuts. Further, our former CTO and others in the industry still believe that TDD will still make a huge mark in wireless and what better company to promote same exists than Nok. "Amicable" is the buzz word and I believe that the recent transaction with Nok will force them to be much more "amicable" due to the shift in the risk/reward ratio of legal challenges down the road. The settlement is very good for IDCC. Before I sign off, I believe I must address the recent postings by Desert Dweller. While I can relate to the frustrations because of the length of time I have been associated with this investment, I find no excuse for the treatment toward JP and management via the email. "Bush league", "third class" and "way out of line" fail in an effort to describe the document. Chris, you and I go back several years now, and out of respect I request that you send another email apologizing and seriously suggest that you provide this board with a copy. MO Posted by: rmarchma Lastchoice re accounting for Nokia's royalties you asked: ...."ronny, how is idcc able to post the entire amount in '06? do they mean revenue and earnings?" Yes they mean that all of the $253m of Nokia royalty will be recorded as earned revenues in 2006. IDCC had not recorded any of this royalty in previous years, because they felt that the revenue recognition criteria had not been fully satisfied. Now clearly they have, as there is no more uncertainty over amounts and collectibility. The remaining questions deal with whether the entire $253m will be recorded into income in the second quarter of 2006, or be spread over the remaining 3 quarters in 2006. Another accounting question is what line of the income statement will IDCC report the Nokia royalties, "Licensing Revenues" or "Other Income". Personally I think all of the $253m will be recorded into income in the second quarter of 2006, as none of the royalty amounts apply to any periods after the second quarter of 2006. Secondly I think that the $253m will be reported as top-line Licensing Revenues and not as "Other Income". IDCC's guideline is to use Other Income only for settlements from patent infringement litigation with unlicensed parties.
Posted by: ams13sag I also agree fully with you. It takes a brave person to stand up and say what they honestly feel knowing that the pumpers and dreamers will attack you. It appears to me that the management have given away the company silver and received very little. Unless UB can shed some light on the subject today, I for one will have my finger on the trigger just waiting for the insiders to sell. on this occasion it will be my final sale. They did the same after ericy and engaged in massive insider selling. ams Posted by: sinnet14 I think we have different understandings about nokia's 3G MFL. your opinion is that if we fail to sign any named trigger for nokia's MFL before 12/31/06, Nokia's 3G past due before 12/31/06 will be waived automatically. my understanding is that nokia doesn't need to pay if there is no trigger before 12/31/06. However, that doesn't waive nokia's obligation to pay if in the future a trigger is signed. now I don't know which one is right... sinnet
Posted by: olddog967 Desert dweller: You keep throwing around statements that we have given away hundreds of millions of dollars of 3G royalty. IMO you are significantly overstating any possible amount. I would appreciate a detailed analysis, not general statements, to support your statement. In addition, I think you forget that in the absense of signing a 3G trigger license before YE 2006, IAW with the PLA Nokia would end the year owing us nothing for 3G. We could then sue for infringement but that would apply for 2007 onward, as opposed to now infringing from the current date. From the PLA: "D. The procedure for applying Nokia’s MFL rights shall be as follows: (i) Until ITC signs a Major Competitor License Agreement, or Nokia selects a non-Major Competitor Agreement as an MFL Agreement Nokia will have no obligation to pay"
Posted by: vg_future The same people who are complaining now would have complained more had this not occured today and the "appeals n hearing" saga, in one form or the other, had dragged for another year or so. -vg_future
Posted by: Desert dweller I guess I am in the minority here today. Hasn't management learned a thing from past forgiveness. We keep forgiving huge amounts of money and are never able to seal the deal. How could they have given up all past royalty obligations for 3g without signing a new 3g agreement. They just gave up all their leverage. Now Nokia knows that all they need to do again is delay signing a new agreement and wait a few years then force management to sue them, delay the suit a few years or even a decade like Ericy, then settle for pennies on the dollar just like Ericy just before the court case comes up. We keep doing it time and time again. Here is today's email to Janet along with her response at the end. She is the communications director? I guess she is a woman of few words. I would have had more respect for her if she ignored the email instead of responding the way she did. Hi Janet I wish I could have been happier about today's announcement but I am disgusted with it. How can we have a binding arbitration decision decision which awarded us $253 million PLUS interest and today we settle with the thieving bastards for the arbitration award only, WE FORGIVE THE INTEREST AND WE FORGIVE ALL PAST 3G ROYALTIES? How is that in our best interest? How can we agree to forgive 3g royalties through this week WITHOUT INSISTING ON A 3G AGREEMENT ON A GOING FORWARD BASIS? I sure hope Bill is able to turn this into a good thing tomorrow. Nokia's attorneys are much better than I originally gave them credit for. When the Ericy settlement was announced, we stated that Nokia was going to owe us about $500 million. Their attorneys were able to get the panel to cut that in half so they won $250 million just for the arbitration. Then they appeal the decision which every lawyer that I know said was unappealable so it was just going to be a matter of time before we were paid. Now management in its infinite wisdom agrees to forgive how many hundreds of millions of 3g royalties JUST FROM NOKIA? Nokia's attorneys were able to wring $250 from the arbitration, another $20 million or more of forgiven interest and another couple hundred million in forgiven 3g royalties. If NEC paid us north of $100 million to date for 3g, how much would have been owed by Nokia that management just gave away. Now that they gave it away to Nokia, they will have to give it away to everyone else that is currently unlicensed. Now we have to begin negotiations with a company that has tied us up for the past 7 years in litigation/negotiation hell for 3g. They have publicly cried out loud that they don't want to pay anyone royalties on 3g and we just gave away any bargaining position we had. What is wrong with management of IDCC? Obviously I don't know what is going on in the licensing department but when you constantly give away tens of millions and hundreds of millions, you are setting your potential customers to not only expect free rides but require them before licensing. So how many more hundreds of millions will be forgiven before Nokia signs a 3g agreement? What decade will we be in by then? We settled with Ericy over 3 years ago and were told then that they were a company of integrity and you would be working on resolving all remaining 3g issues. Today we are no closer to word of any agreement with them. Can management give us any assurance that 3 years from now we won't still be waiting on them along with Nokia now? Some definitions of insanity is doing the same thing over and over and each time expecting different results. Is management insane? They keep doing the same type of settlement and expect different results each time. Why would anyone every sign with you willingly when you are so willing to give up so much as long as the other party continues to delay signing. I sure hope tomorrow you can shed some light on why management gave away hundreds of millions of shareholders money today. As I stated at the beginning, I wish I could have been happier about today's news but unfortunately management dropped the ball again. Frustrated investor since 1993 Now her response: Hmmm. Thought so.
Posted by: songioan Terminating the 3G agreement means that if NOK does not negotiate in a good faith, they will be hit with an infringement lawsuit. I can smell the 3G license coming.
Posted by: Ricardo Montalban The settlement is only for the past 2G and its $253 million. The are still negotiating the 3G licensing so this is only a good beginning, Way to go. Now get Samsung and the rest.
Posted by: Dave Davis "We recognize and respect other companies' intellectual properties, and likewise we expect others to respect our intellectual property," says a Nokia representative.
Posted by: slacker711 Nokia WCDMA handset sales Question..How many of the 25 million WCDMA handsets sold in 2005 were Nokia's? I actually screwed up in my first response. I meant to say that Nokia actually sold 1.9 million N70 handsets alone during the quarter. I'm not sure where you are getting your numbers but the total number of WCDMA handsets sold during '05 was 50 million units. I believe that Nokia claimed to be first in share and that was somewhere close to 30%.....so 15 million units in '05 would be a good estimate. They are aiming for 40 million units in '06. Slacker
Posted by: mschere IMO:IDCC will be paying some 35% tax on the Nokia money.. mschere
Posted by: orientbull $5 instant cash (per share - WL ed.) to IDCC..not counting Samsung..Samsung will have no leverage on 2g/3G anymore, they have to pay...eom
Posted by: lastchoice recognized in its 2006 Based upon its preliminary review of the accounting treatment for this matter, InterDigital believes that the entire $253 million payment will be recognized in its 2006 income statement. The company will provide additional detailed disclosure upon the completion of its analysis. C Posted by: loophole73 To all For the first time in a long time I am at a loss for words. I am very happy for everyone who has shared this 2g journey with me. Samsung is a lock to fold in now and 3g will be bigger than I ever dreamed. I am heading over to tip a few for all of us and my old buddies who left this world before they had a chance see we were right 20+ years ago. loop
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Editor's note: The 
Do not allow the trash talkers to silence you now that IDCC has arrived. These guys are just frustrated because they cannot overcome the about face the company has experienced as a result of the LG license. All doubts have been dispelled regarding the recurring revenue issues at the end of 2006. This was and has been the governor on the IDCC rocket over the years. Like it or not, the company lived on temporary band-aids from the Mot decision until the LG announcement. The street is now convinced that IDCC will replace the 2g recurring revenue with 3g recurring revenue. The street also now recognizes that additional licenses under the same format as LG will provide clear guidance for future recurring revenue growth that can only err in an understatement of earnings. IDCC has ceased to be a gamble and has left the "beat the clock" game. The Nok threat has 
been reduced to a level playing field. Nok can no longer hide behind confusing contingency clause disections and interpretations to avoid its ultimate obligations. Nok now knows that a cross action for infringement significantly increases its risks going forward. They have been stripped of their flame throwers and are left with a few kitchen matches during the remainder of their scorched earth plans.
street, the evaluation can only increase adding additional value to our investments. Now is not the time to be distracted by other posters. Now is the time for us to be able to recognize the economic results from each new revenue source that IDCC identifies over the next year or so. We must be very alert in order to make informed decisions regarding our estimates of the future share price of IDCC based on the information provided by the company. Our job is to formulate a plan to maximize our profits from our investments. We must be willing to sell our shares at some point to other investors who may reach a higher evaluation of IDCC.
Ghors:.For those interested, here is the section of the Lanham Act that Nokia claims IDCC violated. The Act is primarily concerned with trademarks, but this one little section covers false advertising.
Nok Sued IDCC alleging IDCC violated certain provisions of the Lanham Act by claiming their 3g patents were essential to products made to 3g standards. The lawsuit claims that NOK has lost business and suffered monetary damage as a result of this false advertising.
bulldzr - if I'm reading the attachment A correctly, Nokia is asking IDCC to tell them the reasons why IDCC listed those patents as essential (or potentially essential), and to which particular standard (or work item) they apply...as well as to explain the process IDCC used to determine essentiality, and who at IDCC made the determination.
The question to be answered is how conservative IDCC has been in making their declarations. The management strategy at some firms might be to throw everything they have up on the wall and hope something sticks, but IMO that is not IDCC's style.
does anybody remember framework? (does anybody remember laughter?) when Ericsson and Sony-Ericsson signed, there was talk of a framework, (and a company of intergrity). i always operated under the assumption that s/e would not license 3g until nok paid for 2g. that was my framework.
1. The door has now been opened for Nok to demonstrate how serious they plan to take the 3g patent challenge. As of Monday, Nok is now free to challenge the validity and non-infringement issues of the IDCC 3g patent claims. The licensee status which blocked such actions in the USA has been erased and a declaratory judgment action may now be maintained. However, Nok certainly can no longer hide behind the licensee status for protection against a willful infringement finding by a judge or a jury. This has added to the risk column substantially and I believe IDCC has gained leverage as a result of the cancellation of the 3g portion of the 1999 PLA. A loss by Nok now can result in punitive damages because willfulness has been added to the equation.
