Judge Gives InterDigital Some Teeth
By Dave Mock
December 6, 2007
There's nothing like having a court decree on your side to go after someone who owes you money. In Motley Fool Stock Advisor recommendation InterDigital's (Nasdaq: IDCC) case, a federal district court judge confirmed a $134 million arbitration award that the wireless innovator won against Samsung for royalties on past sales of wireless devices.
News of the court backing fueled an 18% rise in InterDigital's stock yesterday, as investors now see Samsung forced to pay up. While Samsung can appeal the court's declaration, InterDigital noted that the device maker would have to post a bond to do so.
InterDigital has been wrangling with Samsung for years, attempting to get paid for royalties on millions of devices being sold to carriers such as Verizon Wireless ---a joint venture between Verizon Communications (NYSE: VZ) and Vodafone -- and Sprint Nextel (NYSE: S) through 2005. One major point of dispute has been the level of royalty due. Samsung wants to use an agreement between Nokia (NYSE: NOK) and InterDigital as a yardstick to come up with an amount less than $134 million. But InterDigital has stuck to its guns, and it looks like it will take home the larger prize.
However, if InterDigital does manage to collect on this ruling, it will only represent a portion of what it thinks Samsung owes. The arbitration in this case only accounted for use of intellectual property for second-generation (2G) devices. Samsung is busily churning out advanced 3G devices, which according to InterDigital also use its patents.
These devices are also being sold across more carriers, such as AT&T (NYSE: T) and Deutsche Telekom's T-Mobile. Seeing how effectively Broadcom (NYSE: BRCM) has won arguments against Qualcomm (Nasdaq: QCOM) in front of the U.S. International Trade Commission (ITC), InterDigital has filed a complaint there to force Samsung into a corner as well.
While the lawyers at InterDigital can raise their glasses of bubbly and breathe a little easier today, the check isn't in the bank yet. Final payment may be dragged out further, and there's still plenty of work ahead, with many more legal battles remaining.
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