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Updated June 15, 2006 Most recent posts are by: cls, ziploc1, plumear, nessco, revlis, Bill Dalglish, my3sons, olddog967, JimLur, Corp Buyer, mschere, laranger, sailfree, Learning 2vest, dmiller, lastcoice, GoDuke, Eric, MSC290, walldiver, JimLur, ellismd, my3sons, georgebailey, grither, longIDCC, laranger, whizzeresq, loophole, dmiller, artk, wilco244, floridian ggg, rmarchma, j70k. What these "best posts" on the Samsung Licensing of 2G and 3G below are about: With a Nokia-InterDigital settlement completed in April, 2006 (and a $256M payment by Nokia for 2G) Samsung, whose licensing terms are piggybacked on Nokia's, is almost certainly liable for about $100M in 2G licensing fees to InterDigital. But also, like Nokia, Samsung is now without any 3G licensing arrangement with InterDigital. Samsung may simply pay up for 2G based on Nokia's already determined fees, or may settle with InterDigital for 2G and possibly 3G, as well. Perhaps Samsung would enter into a technology development agreement with InterDigital. These would all be positive developments. A settlement including 3G would be a huge step forward in InterDigital's licensing efforts. Even greater than the 3G licensing agreement with top tier manufacturer LG, which has a market share of number 5 or 6. Samsung was a partner in the 1990's with InterDigital in the development of B-CDMA, a precursor to WCDMA. Posts here address what is happening in the conclusion of the arbitration process, efforts to license Samsung for 3G, and any other other Samsung news that might bear on future InterDigital revenue streams from this world-class market leader. See also: Links to "best posts" on these related topics: Nokia-InterDigital Settlement Nokia settled a long standing arbitration and federal court litigation over royalties on 2G/2.5G wireless devices with a Nokia payment to InterDigital of $253 on April 27th 2006. Future 3G Licensing and Royalties How is InterDigital doing in adding 3G licensees and a stream of royalties to its revenue? Risk and Reward: Investing in InterDigital How much risk is there that InterDigitals current share price will fall? What is the upward potential for the InterDigital share price? How about a balance sheet with hundreds of million in cash? Does InterDigital have the most favorable Risk to Reward ratio among mid-cap wireless communications firms?
Also see these other related WirelessLedger reports: Understanding Intellectual Property Understanding the Standards-Setting Process
Samsung Licensing of 2G and 3G POSTS and THREADS
Graphics/formatting added to many posts for clarity by WirelessLedger.com
Posted by: cls my3sons87, I bet Sammy "would like some of dat" (WL: HSUPA With HSDPA) to put in their phone :-) cls
Posted by: my3sons87 The following post from IDCC is worthy of a second read. Don't get lost on the word several. Rather focus on the words leading to and following "advanced". That connotates a industry leader. Press Release Source: InterDigital Communications Corporation InterDigital Presents Advanced HSDPA/HSUPA Architecture at HSxPA Conference
KING OF PRUSSIA, Pa.--(BUSINESS WIRE)--June 19, 2006--InterDigital Communications Corporation (Nasdaq:IDCC - News) today announced that Dr. Behrooz Lessani, Vice President of Business Development for InterDigital, will present findings from the company's advanced research and development of HSxPA solutions at the HSxPA Conference being held in Prague, Czech Republic, June 20-22.
InterDigital is among the first companies to develop a fully functioning HSDPA modem solution. InterDigital's HSDPA solution is currently being integrated by several leading semiconductor companies. In addition, the company is developing an HSUPA modem compliant with Category 6 capable of uplink data speeds of 5.76Mbps. Dr. Lessani's presentation on "Examining The Challenges In Combining HSUPA With HSDPA" highlights: Careful design considerations needed for future complex HSxPA-enabled converged devices
InterDigital frequently presents its technical approach to advanced 3G solutions at leading industry events around the world.
Posted by: enyaw TFWG...yesterday I posted, "But this is not your grandfather's IDCC". I stand by that. Any money manager who has any forward thinking ability at all can see clearly that with a Samsung deal, IDCC should reach close to $45 a share. How can they pass that up? And IDCC has yet to put the icing on the cake yet....and this is a five tier cake.
Posted by: ziploc_1 Spencer You stated:"Merritt says IDCC is awaiting arb decision regarding Samsung I think you're reading too much into that statement. Negotiations between Idcc and Sam on 2G and 3G have UNDOUBTEDLY been going on and are going on now. The ICC may have had a request for a delay in the announcement of the decision until the parties signal that they are ready to have this announcement. In a sense both parties may be waiting for the time to be right for the announcement of the panel decision or perhaps it will not need to be announced if a settlement is agreed to which would be in the interest of both parties.
Bill, Here is what (IDCC CEO Bill Merritt) had to say in the 3/09/06 conference call. When you combine the comprehensive nature of that offering, with the challenge that many market participants have faced in 3G development, we believe we have an excellent opportunity to gain meaningful market share and revenue. To further enhance the likelihood of our success with that offering, we intend to bring it to market in three complementary ways. The first market channel would be for offering a comprehensive set of technology blocks to the major semiconductor companies. We are already seeing a significant level of market interest in our offering.
The second market channel would be bundling as appropriate our terminal unit technology solutions with our patents and offering that bundle to major handset suppliers, either on our own, or in conjunction with a semiconductor partner. So, as an example, if a major handset company needs a 3G handset platform, which includes the reference design, basic software and all of the peripherals, we would work with one of our semiconductor partners to deliver to that manufacturer both the platform and a patent license on attractive combined economics. Or, if a handset manufacturer has a platform and the internal capability to develop and produce ASIC, we'd work with that manufacturer to develop its own internal 3G ASIC solution, and at the same time resolve any potential patent licensing issues.
revlis
Posted by: Bill Dalglish revlis: Excellent Gartner report. Major IDCC Implications (positive!) This Gartner market research on the semi conductor scene helps explain why InterDigital is moving with strength beyond being a royalty collector alone to also providing key solutions to manufacturers. IDCC could help the LITTLE GUYS facing extreme competition.
In an earlier post today, georgebailey reprinted KAJO quoting CEO Bill Merritt at the ASM June 1st: "on SAMSUNG. If they want to compete against Motorola, IDCC could help them quicker and better than they could do it inhouse. It looks to me like IDCC is increasingly involved in helping (both large and small?) firms fill in the gaps in areas that IDCC is ahead of EVERYONE else. Remember, a small firm like IDCC, which has been on the cutting edge of the air interface portion of wireless communication technology development for over a decade, can help even the biggies. Even giant Nokia needed help from IDCC with TDD/TDCDMA in 1999-2003. Design wins by IDCC add further proof that in IDCC's particular area of expertise (air interface, or how devices communicate over the radio waves with each other- especially involving communication of the huge chunks of data now rapidly increasing in importance. This is getting more exciting in possibilities for IDCC by the day! I can sure see why there is a tight lid on what is happening in negotiations between InterDigital and Samsung and perhaps others. Bill
Posted by: ziploc_1
There is no question that Sam has delayed and is going to delay as long as possible before signing a license with Idcc for 3G. It has witnessed Nok, Mot, and Ericy profit from this strategy and now it wants to rip off a little extra profit also, even if unethically.
Posted by: georgebailey Re: Samsung's seemingly precarious position as the world's #3 vendor, from the annual meeting courtesy of Kajo:
Q. What can you tell us about the Motorola purchase of TTPCom and its impact on IDCC? Also, what can you tell us about SAMSUNG?
ellismd You could be right. I have been posting that there could be a meaningful technology agreement along with a 2G/3G license agreement since the ASM.
Posted by: ellismd I'm starting to think ole IDCC has another chip deal coming down the pike and just maybe its with.....lets just say this all IMHO, Samsung!!!!
Posted by: plumear revlis, Thanks for bringing that back up. It's ironic that Samsung, by insisting that they were already signed for There may be others, who follow this more closely and have a better understanding, that can shoot holes in what I've just said but right now it makes sense to me.
Posted by: nessco After the cancelation of the Nokia pla samsung had to go back to the drawing board. Hence the delay of an agreement.
Posted by: revlis m3s, Lack of action by the tribunal is very encouraging. From the recent 10-Q Samsung In 2002, Samsung Electronics Co. Ltd. (Samsung) elected, pursuant to the Most Favored Licensee (“MFL”) clause in its 1996 patent license agreement with ITC (Samsung Agreement), to have its royalty obligations commencing January 1, 2002 for 2G GSM/TDMA and 2.5G GSM/GPRS/EDGE wireless communications products be determined in accordance with the terms of the January 1999 Nokia Patent License Agreement, including its most favored licensee (MFL) provision. In March 2003, ITC notified Samsung that such Samsung obligations had been defined by the relevant licensing terms of the Ericsson Agreement (for infrastructure products) and the Sony Ericsson Agreement (for terminal unit products) as a result of the MFL provision in the Nokia License Agreement. In November 2003, Samsung filed a Request for Arbitration with the International Chamber of Commerce against IDCC and ITC regarding Samsung’s royalty obligations to ITC for its worldwide sales of 2G GSM/TDMA and 2.5G GSM/GPRS/EDGE products (Samsung Arbitration). In this arbitration proceeding, IDCC and ITC claim that the Ericsson Agreement and the Sony Ericsson Agreement define the financial terms under which Samsung is required to pay royalties on its worldwide sales of 2G GSM/TDMA and 2.5G GSM/GPRS/EDGE products commencing January 1, 2002 through December 31, 2006. IDCC and ITC also seek a declaration that the parties’ rights and obligations are governed by the Samsung Agreement, and that the Nokia License Agreement dictates only Samsung’s royalty obligations and most favored licensee rights for those TDMA products licensed under the Samsung Agreement. In the arbitration, Samsung has claimed that its obligations are not defined by the Ericsson Agreement, the Sony Ericsson Agreement, or the Final Award in the Nokia arbitration. Samsung seeks a determination of the amounts owed to InterDigital by Samsung, which Samsung claims to be substantially less than the amount that IDCC and ITC believe is owed. Samsung also claims that there was a novation of the Samsung Agreement such that Samsung is now licensed to IDCC’s CDMA patents, including its 3G patents. If the arbitration panel were to agree with Samsung’s position on Samsung’s alleged CDMA rights, Samsung would be licensed to sell 3G products on the terms set forth in the 1999 Patent License Agreement between Nokia and InterDigital. In January 2006, the final evidentiary hearing was held. Post-hearing briefings have been completed and we are awaiting a decision from the ICC Arbitral Tribunal. mo
Posted by: my3sons87
Item 8.01. Other Events. On January 6, 2006, the evidentiary hearing in the arbitration proceeding between InterDigital Communications Corporation, together with its wholly-owned subsidiary InterDigital Technology Corporation (ITC), and Samsung Electronics Co. Ltd. (Samsung) concluded. The arbitration relates to Samsung's royalty obligations on its worldwide sales of 2G GSM/TDMA and 2.5G GSM/GPRS/EDGE products under its existing patent license with ITC. The procedural schedule in the arbitration sets forth a timetable for filing post hearing briefs. Thereafter, absent a resolution by the parties, the Arbitral Tribunal will render a decision.
Posted by: olddog967 Post # 156690 Jim: As you say , things change. While NEC was strong in the early implementation of 3G, apparently they have been having problems lately in their mobile phone business.
http://news.zdnet.com/2100-1035_22-6071095.html
Posted by: JimLur To all, Lots of posts lately comparing LG to Samsung as far as market share. I agree Samsung has done well in 2-G but things change.
In their report for 3-G handset sales for the last 1/2 of 2005 LGE and NEC have almost 50% of the pie. Samsung don't have any part of the pie so they must be included in the group called others. Also Nokia has a smaller portion than LGE or NEC.
3-g licensees according to this report have 50 % of the pie. http://wirelessledger.com/TelecomsReport.pdf
Posted by: Corp_Buyer Sam 3G license- "It didn't work that way for Nokia" - We know Sam wanted Nok's 3G license and Sam argued before the panel to get Nok's 3G license terms. For whatever reason, we know Sam does indeed want a 3G license with IDCC, and that was before the LG license and before Nok's 3G license was terminated. I think the Sam arb award is now overdue and the recent events (LG license, Nok 3G termination) set the stage for a negotiated Sam 3G license: http://www.investorshub.com/boards/read_msg.asp?message_id=10735387 MO,
Posted by: mschere Samsung has a HUGE Patent porfolio, including 802.xx, Wibro, OFDM and WCDMA/TD-SCDMA..There are many issues to be resolved in a Samsung/IDCC 3G License and WLAN product Alliance..The issue of 2G Monies is a no-brainer, but IDCC will have to be creative in their 3G/WIMAX negotiations with Samsung. The IDCC signing of LG for 3G was far less complicated, since LG has little or none of the above 802.xx, WIMAX, WIBRO issues..Keep in mind that while Ericsson is suing Samsung for GSM infringement in 4 Countries, they are not suing for 3G! The IDCC/Samsung arb hearing was held back in January and I am thinking that it should be about ready for final approval by the ICC's review counsel. If I remember correctly, that ICC's "final review" counsel meets at the end of each month and arb awards are sent out within a few days. I'm guessing that only gives Samsung a few more weeks to cut a 3G deal that leverages 2G payments due on their terms. After that, Samsung will have an ICC award nailing down their 2G payment obligations, AND,... they will STILL be at risk for infringement litigation on their 3G sales at Cingular right here in the good old U.S.of A. Tic, toc,... mschere
Posted by: laranger Sale. Remember. Shortly before the LG announcement, The Korean Times published the story about IDCC demanding large royalties from Korea manufacturers. Many of us thought it was bogus or premature. But our doubts soon turned into $285 million in gold. Sammy, with or without 3G, is just a matter of time, and Pantech will follow, if not before. After all, how can anyone doubt the latest article, when the author says "Samsung WILL PAY as much as $100 million", and quotes "a source who IS CLOSE TO THE DEAL"? LOL.
Posted by: sailfreeee
Ranger: First of all, let me say that I highly respect Bill and all his work he does on his website. But for a reporter to use Bill's web site, concerns me. Second, as L2V pointed out, this same reporter posted a story with some some mistakes in the story. I am glad the story is out there, but I doubt it will change anything. If anything, IDCC has driven home the concept, "show me the contract". Until then, I am going to try to keep my rose color glasses in check (which is difficult at time). Before anyone rips me, no I am not short, and yes I do own to many shares in IDCC.
Posted by: laranger After what happened with Nokia, Sammy could follow the same road and refuse to sign for 3G. But I like this wording in the article: "When contacted, a Samsung Electronics spokesman refused to comment, citing his firm’s policy of not talking about any ongoing royalty NEGOTIATIONS." (My emphasis). So, Sammy admits it is negotiating. But if they're not interested in signing a 3G agreement (even though they were pushing for 3G in the arbitration), what's to negotiate?
Posted by: Learning2vest Here is an earlier article by the same reporter. His opinion of InterDigital has improved since last October when his facts were a bit off(copied from post 130040 by revlis); Cell Phone Makers Face Higher Royalties By Kim Tae-gyu Korean mid-tier cell phone manufacturers are in a quandary over how to react to patent holders demanding high royalties for the use of their technologies. InterDigital Communications, a U.S.-based mobile technology firm, now requires Korean handset makers to pay 2 percent of cell phone prices in royalty despite having just a handful of patents. An official of a domestic mid-tier handset maker, who wanted to be identified just by his surname Song, yesterday said InterDigital is causing a industry-wide royalty woes with its request in Korea. ``InterDigital demanded the technology usage fee early this year and stepped up its pressure again of late after making deals with Nokia,’’ Song said. InterDigital recently sealed a licensing agreement with Nokia, the world’s foremost cell phone manufacturer, covering terminal units of the global system for mobile communications (GSM). GSM, predominant in Europe, is a mainstream, worldwide wireless telephony technique with code division multiple access (CDMA). ``InterDigital has just a few patented source technologies in GSM and some applied techniques, for which less than 0.5-percent royalty would be proper,’’ Song said. Song said his company can make a cross-license deal with other patent holders on the back of its own patented technologies, which the other players also need to make cell phones. But that is not the case with InterDigital. InterDigital does not make terminals so handset makers cannot challenge it. If the firm wants to rebuff critics, it can create a downswing in handset production in any headset manufacturer. ``Nokia recently gave in to InterDigital. And we learned Samsung also signed a deal with it. How can second-string companies like us confront a corporation, which even bigger players cannot challenge?’’ Song asked. Samsung, the world’s third-largest cell phone maker, declined to confirm that it had made a patent-licensing contract with InterDigital. Song said patent holders other than InterDigital are also attempting to gain royalty revenues from Korea’s mid-sized handset producers. ``Siemens has asked for 1.5 percent in technology usage fees and Lucent Technologies are also squeezing Korean makers to get royalties. If we accept all the demands, we cannot continue our business,’’ Song said. Yi Cheol-sang, chief executive of Korea’s handset vendor VK, also said during a recent interview with The Korea Times that the royalty nightmare is becoming real. ``Up until now, we could counter royalty threats based on our source technologies. But actually we do not have weapons against some patent holders that do not produce mobile phones,’’ Yi said. 10-17-2005 18:22
Posted by: mschere The "source" did not rule out a 3G deal.. http://times.hankooki.com/lpage/biz/200605/kt2006051417360611870.htm By Kim Tae-gyu Samsung will strike a mega deal with InterDigital soon for its royalty obligations for the currently-dominant second-generation (2G) GSM handsets, the source who is close to the deal said. InterDigital, a U.S. high-tech corporation, retains a strong portfolio of patented technologies. It licenses the techniques to handset manufacturers worldwide. mschere
Posted by: dmiller GoDuke...Nice find! The Korean times is reporting it like it's pretty much a done deal. Too bad the source didn't mention anything about a 3G deal being imminent.
Posted by: plumear lastchoice, I just logged on and the first two posts I read was your's and GoDuke's. It's very interesting that Wirelessledger.com was cited. I don't know if GoDuke's post was the first to make note of this as I have been away from lurking for a few days. Regardless, the article accomplished several things that should be positive. It publicly stated that Samsung should be paying soon. It also pointed it's readers to a website that gives unparallel coverage to the positives of IDCC. Both of these should act to give the stock very positive momentum besides perhaps cause other publications to cite the website. Congratulations and thanks to Bill Daglish!
Posted by: lastchoice cites wirelessledger.com. is this circular reasoning? Billion--with a 'B' Posted by: GoDuke Interesting link. http://www.smartbrief.com/news/ctia/companyData.jsp?companyId=2863 Korea Times, The | 8 hours 28 minutes ago
Posted by: GoDuke
Samsung to Pay $100 Mil. in Royalties to InterDigital By Kim Tae-gyu Samsung Electronics, the world’s third-largest cell phone producer, will pay as much as $100 million in royalties to wireless technology company InterDigital Communications, according to an industry source. Samsung will strike a mega deal with InterDigital soon for its royalty obligations for the currently-dominant second-generation (2G) GSM handsets, the source who is close to the deal said. InterDigital, a U.S. high-tech corporation, retains a strong portfolio of patented technologies. It licenses the techniques to handset manufacturers worldwide. ``Given the Nokia-InterDigital agreement last month, the amount between Samsung and InterDigital would be about $100 million for 2G phones alone,’’ he said. Last month, Nokia, the world’s foremost handset vendor, agreed to pay InterDigital $253 million for the use of its 2G cell phone technologies. ``The Nokia deal has implications for Samsung, which is embroiled in a very similar dispute with InterDigital. Samsung would go down a similar path,’’ the source said. ``Then it is an easy calculation. Nokia rolled out about 2.5 times more 2G phones than Samsung. Subsequently, Samsung would pay about 40 percent of the Nokia payout, or about $100 million, to InterDigital,’’ he said. When contacted, a Samsung Electronics spokesman refused to comment, citing his firm’s policy of not talking about any ongoing royalty negotiations. Expectations on Imminent Deal But the source’s remarks are in line with a recent report by WirelessLedger.com, a Web site that comprehensively covers intellectual property rights and patents on mobile techniques. (bold/color by WL ed) ``Samsung has been in binding arbitration with InterDigital, with evidentiary hearings completed in January, 2006 and an arbitration award likely in May or June 2006,’’ the report said. ``Samsung, whose licensing terms are piggybacked on Nokia’s, is almost certainly liable for about $100 million in 2G licensing fees to InterDigital,’’ it continued. On a more negative note for Samsung, the outfit may have to shoulder other royalty burdens due to InterDigital’s patents for next-generation 3G techniques, called wideband-code division multiple access, or W-CDMA. The 2G phones refer to most models currently available across the world while 3G handsets are gadgets with which wireless Internet connection is possible at a good speed. In fact, Samsung’s cross-town competitor LG Electronics showed how the royalty amount can soar when both 2G and 3G royalties are involved at the same time. Unlike Nokia that doled out just a 2G contract with InterDigital, LG Electronics, the world’s fourth-biggest handset maker, agreed in January to give $285 million in royalties to InterDigital for licensing both 2G and 3G technologies. Under the contract, LG will pay $95 million each year from 2006 to 2008 in return for gaining licenses for all 2G and 3G InterDigital technologies for the next five years. InterDigital receives most of its revenue from royalties on patents. The outfit, which had revenue of $103.7 million last year, is set to have a banner year thanks to the big back-to-back deals with LG and Nokia and the envisioned one with Samsung. voc200@koreatimes.co.kr 05-14-2006 17:36 http://times.hankooki.com/lpage/biz/200605/kt2006051417360611870.htm Posted by: Eric LG CU320 (l) and Samsung ZX10 UMTS (WCDMA) in the USA RE:
Best, - Eric - Posted by: MSC290 Samsung Pocket PC Phone Leaked By FCC . The FCC today approved a new Pocket PC phone from Samsung. The i770 operates on GSM 900/1800/1900 with EDGE data and has Bluetooth. It also appears to have WCDMA 2100. From small pictures in the test documents, it appears that this phone features either a SureType keyboard like on the Samsung T719 and RIM 7100 series or a butterfly keyboard like on the Sony Ericsson M600. One half of the phone's hinge is also rather large, but it is unclear whether this is a dual pivot hinge to use the phone in landscape mode or a large side-facing camera. Little else is known about the i770 and Samsung has requested that all additional records be kept confidential for another 6 months. http://www.phonescoop.com/news/item.php?n=1725 Samsung T719 Posted by: walldiver Would .80/ unit be conservative? Hence, isn't 42 or 43 per share low?>>
Posted by: JimLur hlee5, IMO the ICC won't make a decision on the Samsung arbitration. All Samsung wanted was the same rate as Nokia and that rate has been established. They also wanted the same 3-G rate as Nokia but the PLA has been cancelled so Samsung can't ask for what Nokia doesn't have so look for Samsung to settle this week or next and IMO I'll go with IDCC's estimates. I think IDCC guessed Samsung owed 100 to 120 million,.
Posted by: JimLur Yep, That's because the bubble is about to burst. Look at the shares today? Our company has roughly 170 million dollars to buy shares and the shares drop $1.15 ? Guess what. IMO, they can't buy shares and thus the drop. But stay tuned because Samsung is done.
Posted by: ellismd I repeat does anyone find it strange IDCC has not come close to providing the level of disclosure on the Samsung Case as they did on the Nokia case.
Posted by: my3sons87 As per IDCC's 10Q filing, the samsung arbitration post hearing briefings have been completed and they are awaiting the decision from the panel. (3rd paragraph below). Makes one think IDCC is in serious negotiations with Samsung, on their terms, or will simply await the decision. If anything it can come any day or as late as the Nokia decision. That is unless the parties come to an amicable resolution. Samsung In 2002, Samsung Electronics Co. Ltd. (Samsung) elected, pursuant to the Most Favored Licensee (“MFL”) clause in its 1996 patent license agreement with ITC (Samsung Agreement), to have its royalty obligations commencing January 1, 2002 for 2G GSM/TDMA and 2.5G GSM/GPRS/EDGE wireless communications products be determined in accordance with the terms of the January 1999 Nokia Patent License Agreement, including its most favored licensee (MFL) provision. In March 2003, ITC notified Samsung that such Samsung obligations had been defined by the relevant licensing terms of the Ericsson Agreement (for infrastructure products) and the Sony Ericsson Agreement (for terminal unit products) as a result of the MFL provision in the Nokia License Agreement. In November 2003, Samsung filed a Request for Arbitration with the International Chamber of Commerce against IDCC and ITC regarding Samsung’s royalty obligations to ITC for its worldwide sales of 2G GSM/TDMA and 2.5G GSM/GPRS/EDGE products (Samsung Arbitration). In this arbitration proceeding, IDCC and ITC claim that the Ericsson Agreement and the Sony Ericsson Agreement define the financial terms under which Samsung is required to pay royalties on its worldwide sales of 2G GSM/TDMA and 2.5G GSM/GPRS/EDGE products commencing January 1, 2002 through December 31, 2006. IDCC and ITC also seek a declaration that the parties’ rights and obligations are governed by the Samsung Agreement, and that the Nokia License Agreement dictates only Samsung’s royalty obligations and most favored licensee rights for those TDMA products licensed under the Samsung Agreement. In the arbitration, Samsung has claimed that its obligations are not defined by the Ericsson Agreement, the Sony Ericsson Agreement, or the Final Award in the Nokia arbitration. Samsung seeks a determination of the amounts owed to InterDigital by Samsung, which Samsung claims to be substantially less than the amount that IDCC and ITC believe is owed. Samsung also claims that there was a novation of the Samsung Agreement such that Samsung is now licensed to IDCC’s CDMA patents, including its 3G patents. If the arbitration panel were to agree with Samsung’s position on Samsung’s alleged CDMA rights, Samsung would be licensed to sell 3G products on the terms set forth in the 1999 Patent License Agreement between Nokia and InterDigital. In January 2006, the final evidentiary hearing was held. Post-hearing briefings have been completed and we are awaiting a decision from the ICC Arbitral Tribunal.
Posted by: georgebailey grither- your points are well taken. However, I believe the 100 million is derived, by our analysts and IDC, from Nokia's arbitrated rate structure. I think WM has the leverage, therefore, I expect a good CEO to execute a 3g deal. Nonetheless, I will temper my expectation, thanks.
Posted by: grither Whoooooo. Slow down.
Posted by: JimLur LongIDCC, 1. I think we will see a Samsung deal for 2-G in less than a month but 3-G is questionable because of Nokia's deal. 2. Yes 3. I think Samsung if they signed for 3-G now could get the same rate as LG but if they wait they might pay more. 4. I don't think IDCC will give anything back to Samsung of the original amount owed. However they could give them back the prepaid discount, interest penalties and also could also only charge them for 3-G devices made after a certain date as the did in the Nokia settlement. I look for a settlement in the 100 to 120 million range.
Posted by: ellismd I will give a go on 4. I think it is well within reason and a strong possibility IDCC could forgive some 2G money in xchange for a 3G license with Samsung because as I understand the current situation all of the 2G MFL clauses are OBE.
Posted by: LongIDCC FOR SERIOUS PLAYERS ONLY - ANY COMMENTS IN ITEMS BELOW: 1) What are everyone’s thoughts on the likelihood of IDCC announcing in the next month or so that IDCC and Samsung have settled all 2G disputes and Samsung has also signed a 3G contract? 2) This type of announcement is exactly what all of us were hoping for with Nokia, but it obviously didn’t work out that way. Is it naïve to think that Samsung might surprise everyone and give us the announcement we were hoping for with Nokia? 3) What is in it for Samsung to go ahead and sign a 3G contract now, before Nokia signs? 4) Could IDCC forgive a portion of the Samsung 2G payment in exchange for a 3G contract now? a. What amount of 2G forgiveness would it take to get the 3G deal done now? b. Would that forgiveness be seen as unfair by any existing licensees? c. Does it send a bad message to the market? 5) Given the MFL issue is now out of the equation and every 3G licensee will end up paying the same 3G rate (for the same volume), isn’t it a question of pay-me-now or pay-me-later? Are we all just assuming that Samsung will choose the latter and pay later, but only if Nokia does?
Posted by: laranger Whizz. I believe they meet on the 25th or 30th. Posted by: whizzeresq Help on ICC process--As I recall from the original IDCC/Nokia arbitration, the ICC Court had final review of the arbitration panel's award and that the ICC Court met on a certain date every month. I would think that IDCC communicated its settlment with Nokia to the Samsung panel and that the panel should be issuing a decision shortly for review by the ICC Court. It would be helpful if someone who remembers could post when the ICC Court meets. That might give us an idea of when we could expect an ICC award if Samsung doesn't settle with IDCC. Posted by: my3sons87 Loop, I am only referring to Samsung forgiveness if the Arb panel rules they were entitled to Nokia's 3G PLA MFL clause. Otherwise, I am not into forgiving any thing.
Posted by: loophole73 my3 IDCC is not going to voluntarily give Samsung a 4+ year moratorium on 3g devices. This is the mid 2000's management team, not the mid 90's team. These guys have learned the hard way about the effects and meaning of MFL clauses with existing licensed and paying customers. MO Posted by: my3sons87 Artk, all I am saying about Samsung is that they wnated the MFL rights of Nokia's PLA and the rate(s). Well they now can have it. And a forgiveness on 3G right up to April 26th, after which time they will not be licensed if in fact they were considered licensed for 3G by the arb panel. It is every man for himself in the world of OEM's.
Posted by: dmiller artk...that's the chance Samsung took by riding on Nok's coatails. No more PLA so why should they be entititled to the same discount?
Posted by: artk my3, wish samsung were as black and white as that, but a lot of grey has been introduced. If you think about all of the give and takes in the final agreement with Nokia, the Samsung agreement may not be as straightforward as it seems. Samsung may argue that the final amount had a "built in and undisclosed" premium (sound familiar to the ERICY settlement?) for the 3g money that IDCC forfeited through April 26, 2006 and opens the door for Samsung to ask for a discount on 2g or ask for the exact same 3g deal. IDCC will then counter that the 3g money was in exchange for the dropping of the UK courts, and then Samsung will want a monetary value placed on that in order to determine their fair value. Then again, none of the details of Nokia may be relevant to Samsung's case and they may just sign on the dotted line for both 2g and 3g. My feeling is that when Samsung is resolved, it will be for both 2g and also include a full 3g going forward.
osted by: my3sons87 Based on this December 23, 2002 8K relating to Samusng being related to Noki's PLA by the MFL, Samsung is done now that Nokia has paid. Samsung is money waiting to be put in the bank. SEC Filings 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------------------------------------------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) DATE OF REPORT (Date of earliest event reported): December 23, 2002 InterDigital Communications Corporation InterDigital Communications Corporation today announced that the International Chamber of Commerce (ICC), International Court of Arbitration has rendered a decision in the arbitration proceedings between InterDigital’s subsidiary InterDigital Technology Corporation (ITC) and Samsung Electronics Co. Ltd. (Samsung). The arbitration decision, received December 23, 2002, relates to a complaint filed by ITC against Samsung in February 2002. The decision resolved a dispute between the companies which, among other things, related to the manner in which ITC’s patent license agreement with Nokia should apply to Samsung under Samsung’s most favored licensee (MFL) rights included in its 1996 patent license agreement with ITC. The dispute dealt with specific contractual terms in the Samsung patent license agreement and did not involve any issue of validity or infringement of ITC’s patents. The decision of the arbitration panel is binding, subject to limited appeal rights. Under the terms of the ICC decision, Samsung’s prior royalty credit of $18.7 million ($11.5 million of which had previously been recognized as revenue by InterDigital) will be reduced to $6.7 million to account for royalties due on sales of licensed TDMA products up through December 31, 2001. As a result of the ICC decision, InterDigital expects to recognize approximately $0.5 million of revenue in the fourth quarter 2002 related to Samsung’s royalty obligations through December 31, 2001. Also, pursuant to Samsung’s election regarding the Nokia patent license agreement under its MFL rights, Samsung’s royalty obligations (against which the $6.7 million credit would apply) for sales of 2G and 2.5G TDMA wireless communications products commencing January 1, 2002 will be determined in accordance with the terms of the Nokia patent license agreement. By reference to the Nokia patent license agreement, in the absence of agreement on royalty rates between the ITC and Samsung, Samsung’s royalty obligations for sales of 2G and 2.5G TDMA wireless communications products commencing January 1, 2002 will be defined by the relevant licensing terms between ITC and certain other leading manufacturers of wireless telecommunications equipment, none of which are yet licensed by ITC. Like Nokia, Samsung also will have the option to elect to apply the relevant licensing terms applicable to certain other manufacturers. When a royalty rate is determined, the starting point for calculating Samsung’s royalty obligation will be January 1, 2002.
Posted by: wilco244 I think it is 120 days since arb ended and speculation is the decision should be rendered within that time frame. Nothing official from company, just speculation......z
Posted by: floridian ggg Reiterating Spencer's question... Who says May 6 is the Sammy arb deadline?
Posted by: mschere IDCC has not provided SAMSUNG amnesty from 3G Infringement Liability! ONLY LG and Samsung are currently selling WCDMA handsets in the U.S. IMO:Samsung is now between a rock and a hard place in relation to 2G/3G Licensing with InterDigital. IMO: Both Nokia and IDCC had to approve each others Official news releases as per the terms of their 2G Settlement.. From the IDCC Official news release "InterDigital also agreed to relinquish Nokia from infringement liability for sales of unlicensed 3G wireless units through April 26, 2006."
Posted by: rmarchma Jimlur re Samsung's royalty obligation you said: ..."My guess is about 110 million" I agree. Some of my previous posts on this issue as follows: Posted by: rmarchma Quartzman Samsung's 2G royalties should be over $100m Samsung will NOT owe IDCC $35m for 2002-2006, it should be well over $100m. IDCC reaffirmed previous Samsung guidance AFTER the Nokia arbitration ruling in a press release on July 5, 2005 as follows: "Based on InterDigital's application of the Nokia Tribunal's award and updated information as to Samsung's sales for the years 2002 through 2004, the company updated guidance relative to Samsung's royalty obligations. Specifically, prior guidance had stated that Samsung would owe InterDigital approximately $22 million to $27 million for 2002 sales of covered product. In addition, based on Samsung prepaying its 2003 and 2004 royalties, the company previously estimated that it would have recorded revenue of approximately $20 million to $24 million for 2003 sales. The company reaffirmed the original guidance but indicated that the actual amounts should be somewhat higher based on prepayment discounts for past sales no longer being available." Thus IDCC has reaffirmed that the Samsung royalty would be at least $42m to $51m and probably higher for only two years 2002 and 2003. IDCC has not updated any guidance on Samsung's 2G royalties for 2003, 2004, 2005, or 2006. However, you can easily extrapolate that the Samsung 2G royalties should be well over $100m. I previously estimated around $115m for Samsung. Evidently Samsung can not achieve the lowest volume royalty rates, which the arbitration panel ADDED to the Ericy PLA. This added volume discount, which evidently only Nokia can achieve, was also indicated in the July 5 press release as follows: "In identifying the applicable handset royalty rates, the Arbitral Tribunal took into account Nokia's higher level of sales volume as compared to Sony Ericsson." In the July 5 CC, it was made very clear that the arbitration panel awarded Nokia added volume discounts beyond what was specified in the Ericy PLA. In other words, the arbitration panel added something to the contract that was not originally there, in order to appease Nokia and compensate them for much higher sales volume than Ericy. This was how the arb panel "split the baby". I would suggest that you read IDCC's July 5, 2005 press release in its entirety. Some reposts of mine on the Samsung and Nokia royalty issues as follows: Posted by: rmarchma Pochemunyet Nokia + Samsung at least $350m in royalties, and that doesn't even include any awarded interest. Samsung's projected royalty for 2002 using Sony Ericy handset rates and no prepaid discount was $22m to $27m. Therefore 2003 and 2004 should also be between $22m to $27 each year, due to no prepaid discounts. Therefore conservatively Samsung is about $75m through 2004. There will be two additional years of 2005 and 2006. With prepaid discounts Samsung's royalty might be somewhere around $20m per year for the remaining last two years. Therefore I preliminarily estimate Samsung's royalty at $115m through 2006. Nokia is being estimated at $230m to $250m. Posted by: rmarchma Rox appears that Nokia got a lower rate than S/E only due to its much higher sales volume. From the transcript of the CC as follows: ...."Compared to our March 2003 press release, the royalty amount is lower than we anticipated due to the tribunal setting a lower handset rate for higher volumes of handset sales. Other than this, the tribunal adopted all of InterDigital's positions as to how to set Nokia's period 2 rate." There is no other factor or matrix mentioned for Nokia's lower royalty rate in the press releases or the CC, only sales volume. Probably only Nokia can achieve the necessary sales volume to get this arbitration-determined lowest royalty rate. Samsung apparently does not have the sales volume to get the lowest Nokia rate, and thus Samsung will pay the higher S/E handset royalty rate. Therefore, NO other existing 2G MFL clauses should be affected by this arbitration ruling IMO. Posted by: rmarchma Spencer re Samsung's estimated royalties you said: ...."If the estimated royalties for Samsung have not changed since 2003, and Samsung has sold more phones than was estimated in 2003, then doesn't that mean that Samsung gets to pay a lower rate?" From the IDCC CC on July 5 as follows: ...."As to Samsung, in the March 17, 2003 press release dealing with Ericsson and Sony Ericsson license agreement, we provided some guidance on Samsung's royalty obligations based on the terms of those agreements. Specifically, we stated that Samsung would owe InterDigital approximately 22 million to 27 million for 2002 sales. In addition, based on Samsung prepaying its 2003 and 2004 royalties, we would have recorded revenue of approximately 20 to 24 million for 2003 sales. Based on our application of the Nokia tribunal's award and updated information as to Samsung's sales for the years 2002 through 2004, we believe those original estimates are still valid and the actual amounts could be somewhat higher based upon prepayment discounts for past sales no longer being available." I think that IDCC is trying to be very conservative on the possible Samsung royalties. I don't think that they are even trying to factor in Samsung's increased 2G market share yet. I believe that Samsung will be paying the S/E handset royalty rate, not the leading volume-based Nokia royalty rate. Samsung's sales volume is much more comparable to S/E rather than to Nokia. If Samsung was entitled to the lowest Nokia rate based upon its own sales volume, then Samsung's estimated royalty would have been roughly one half of the initial estimated royalties in 2003, which were based upon the S/E royalty rates. Posted by: rmarchma Some reflections on the ICC ruling press release (1) Ericy is an automatic trigger for Nokia’s infrastructure royalty rates, and Sony Ericy is indeed an automatic trigger for Nokia’s handset rates. The worst-case scenario of E and S/E not being automatic triggers for Nokia’s rate is now obliterated. Therefore a 3G license agreement with Ericy and S/E will automatically trigger Nokia’s 3G royalty rates. Another possible bad-case scenario re IDCC’s patent validity is also made moot, at least through the 2006 license period. From the press release as follows: ….”Based on the royalty rates established by the Tribunal, InterDigital estimates that Nokia's royalty obligations for covered infrastructure and handset sales from….” Let’s hope there is truth in the theory that Ericy’s framework for a 3G license agreement with IDCC is set in motion by the favorable arbitration ruling on infrastructure and handsets, and resulting validation that as E and S/E are in fact automatic triggers for Nokia. Now Ericy and S/E know if they pay 2G and 3G royalties to IDCC, then Nokia will also have to pay also. (2) The ICC determined a 2G/2.5G royalty rate for Nokia. Evidently this arbitration determined rate is somewhat lower than the contractual Ericy and S/E royalty rates. I think the difference is probably attributable to the arbitration panel awarding Nokia some additional reduced rates beyond the Ericy rates for the additional handset sales volume of Nokia. A couple of excerpts from the press release as follows: …“InterDigital Technology Corporation (ITC), one of the company's wholly-owned subsidiaries, and Nokia Corporation (Nokia). The Tribunal has established royalty rates which are applicable to Nokia's sales of covered products for the period beginning January 1, 2002 through December 31, 2006 and reflect Nokia's leading market position. Based on the royalty rates established by the Tribunal,….. and based on Nokia achieving sales volume that entitles Nokia to obtain the lowest applicable royalty rate. I think that the Ericy license probably had the lowest royalty rate tied to a sales volume that was obtainable by S/E, but not nearly as much as Nokia’s sales volume. I think the arb panel graduated the lowest royalty rate even further to reflect a sales volume that probably only Nokia can achieve. Therefore, I expect the effective 2G royalty rate for Samsung to be more comparable to S/E’s effective royalty rate than to Nokia’s effective royalty rate. Samsung’s sales volume is more comparable to S/E rather than to Nokia. Of course if Samsung could achieve Nokia's sales volume, then they would also be entitled to the lowest volume-based Nokia effective royalty rates. (3) The projected royalty amounts by IDCC do not yet include an interest factor. From the press release as follows: ….”The above amounts are exclusive of awarded interest, net of any applicable contractual discount and based on Nokia achieving sales volume that entitles Nokia to obtain the lowest applicable royalty rate.” It is clear from the above that there will be some awarded interest probably based on Nokia’s delayed royalty payments in phase 2. I believe that the interest calculation will retroact all the way back to the January 1, 2002 starting date for phase 2. Other possibilities are for the interest calculations to retroact back to the Ericy settlement date in March 2003 or to the arbitration starting date of July 2003. Perhaps in the CC on Tuesday IDCC will elaborate on the interest calculation as to interest rate and starting date, and on any other “contractual discount”. It’s not clear to me from the above statement whether other contractual discount is a function of sales volume or something separate from sales volume, such as prepaid discounts. (4) It is evident that Nokia can only get prepayment discounts for the last 18 months of the contract from July 1, 2005. I would imagine that Nokia would have to prepay for the last 18 months, in addition to all the past amounts from January 1, 2002 through June 30, 2005, very soon in order to be entitled to any prepayment discounts. From the press release, the immediate preceding sentence to the sentence quoted in (3) above, as follows: ….”In addition, InterDigital estimates that royalty obligations for covered infrastructure and handset sales for the period January 1, 2004 through December 31, 2006 will be in the range of $120 million to $140 million depending upon whether Nokia avails itself of a prepayment option for the eighteen month period from July 1, 2005 through December 31, 2006.” (5) I think IDCC might be anticipating even more stalling tactics by Nokia. Hence IDCC filed a preemptive legal action to enforce the arbitration ruling. Also from the press release as follows: …”William J. Merritt, InterDigital's President and Chief Executive Officer, added, "While Nokia maintained a very aggressive position in this matter, we are hopeful that Nokia will comply with its contractual requirements and pay past and future amounts owed. Nonetheless, to enforce the ICC's decision, today we filed an action against Nokia in the U.S. District Court for the Southern District of New York." The possibility of further payment delay by Nokia and the preemptive legal action by IDCC might cause a delay as to when IDCC will recognize and record Nokia’s royalty obligation. From the press release: …”The Final Award relates to Nokia's royalty obligations on its worldwide sales of 2G GSM/TDMA and 2.5G GSM/GPRS/EDGE products under its existing patent license agreement with ITC. The company expects to recognize revenue associated with the Final Award after all criteria for revenue recognition have been met.” Hopefully the Tuesday CC will clear-up this remaining issue.
Posted by: plumear IMO, Samsung will be faced with the following negotiation terms: 1) Sign now for 2G and 3G and recieve NOK's actual payment rate for 2G and forgiveness for prior 3G infringement or; 2) Wait for arbitration to conclude and pay the 2G rate that was determined before NOK recieved a discount from the arbitration commitee due to their market leading position.
Posted by: my3sons87 If IDCC immediately releases Nokia from the 1999 PLA agreement for all 3G sales after April 26, 2006, then the MFL clause is gone right along with it. And only available to others, who claim those rights, up to April 26, 2006. I think Samsung and all others will have to sign their own license agreements. In addition, this resolves all of the trigger company issues and everyone is on their own. The boys at KOP have finally thrown a few cinder blocks and bricks. I bet Samsung is right behind this.
Posted by: j70k Good Bye TRIGGERED CONTRACTS and the Goldberg era is finally thru. Issue is now moot whether Sam has a 3g contract-just pay up and start negotiating 3g on your own. Great day IDCC-thank you UB.
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Editor's note: The 
HSxPA technology describes the third generation (3G) cellular High Speed Packet Access protocol that combines both the High Speed Downlink Packet Access (HSDPA) and High Speed Uplink Packet Access (HSUPA) modes for high performance WCDMA systems. HSxPA brings dramatic improvements to the overall capacity and data speeds of 3G networks and provides a true broadband experience for mobile voice, data, and multimedia.
Also, the converged device market, which combines cellular and non-cellular technologies such as wireless land is attracting a lot more interest. But those semiconductor companies that have not historically participated in the cellular space. We are in an excellent position to enable those companies with a complete cellular-base span solution which they can, then, integrate with their wireless land offering. Based on these and other positive market dynamics, we are hopeful that we can sign a number of modem agreements this year.
The third market challenge is supplying ASIC and software directly to suppliers of advanced terminal unit products. While somewhat further out on our road map, this channel would represent an excellent synergy between our advanced technology development efforts while we are driving higher value through price, power and performance advantages, and those manufacturers that produce lower volume, data oriented products that require the most advanced data rate oriented solutions.
But also, IDCC could help very large outfits like SAMSUNG, filling gaps that may well exist in their tech development. Samsung and IDCC were partners before in the days of the development of B-CDMA (a precursor of W-CDMA, for fixed location wirelss applications)
Loop: You stated" If I was Samsung, I would be very concerned that IDCC will no longer play the games and enter Judge Ward's court much quicker than in the past. IDCC has the war chest to make an example of a major OEM and Panasonic and LG have recognized the necessity to use IDCC IPR in their standards compliant products. This drag out game is not going to cut it."
UB - same answer. Whether the price of the protocol stack may go up or down is pure speculation as a result of the Motorola purchase.
at least part of the 3G IPR, may have forced themselves into negotiating a 3G rate. It could explain why IDCC released NOK from their earlier license; to clear the way for a "deal that makes sense". It also could help explain the series of events that led to an LG license which laid the groundwork for negotiations between Sammy and IDCC. It also could explain why we have not heard from the ICC since perhaps they are delaying to allow for negotiations. This too could help explain the run-up on such strong volume. Perhaps those who know enough about the situation have been putting 2+2 together.
From IDCC 8K filing on January 9, 2006 re: Samsung arbitration.
"NEC said it would take a more disciplined approach to the mobile phone market, aiming to ship only 9 million units in 2006/07, down 17 percent. Unit shipments are seen flat in Japan but are expected to fall 40 percent overseas."
Review this Bristol York report on page 13 and look at the pie chart or figure 8.
Like I said things change and I expect Nokia and Samsung to be more aggressive but for now 2 of IDCC's 
