Stockholders in wireless technology developer InterDigital Communications (NASDAQ:IDCC) found themselves 22% poorer after yesterday's market close. Investors were celebrating impressive gains over the past year, with shares more than doubling before yesterday's drubbing.

The cause: fourth-quarter results below analyst expectations -- quite a bit below, actually. Before the market opened, the company reported earnings of $1.1 million in the fourth quarter -- analysts had expected more on the order of $3.8 million.

Notwithstanding the lackluster quarter, 2003 was a great year for IDC, with a 30% rise in revenue over 2002. It had already warned that costs would rise, so the dent in the bottom line was not a surprise. Analysts and investors hoped for a better showing in revenue, however. Mean estimates called for $28 million for the quarter, and the company only delivered $24.7 million.

Basically, IDC's stock became a victim of early success and subsequent bad timing. The company successfully negotiated a windfall license agreement with Ericsson (NASDAQ:ERICY) back in March 2003. It hoped to capitalize on the agreement and quickly ink similar deals with major wireless equipment manufacturers. Rather than accept the terms of the Ericsson license, however, Nokia (NYSE:NOK) and Samsung instead chose to enter arbitration to resolve fee disputes.

The delayed progress in securing a few major license agreements from industry giants and increased expense outlook for 2004 weighed heavily on IDC shares. It now looks as if proceedings with Nokia will only begin in Jan. 2005, and Samsung even later. A recent lawsuit filed against Lucent Technologies (NYSE:LU) claiming patent infringement will also keep the company's legal team busy.

IDC shareholders are used to this kind of action, though -- companies with a significant portion of revenue coming from license fees tend to have volatile stock swings punctuated by huge up-and-down gaps predicated on pertinent legal news. With the stock shooting up 42% the day of the Ericsson license announcement and then plunging 25% on Nokia's balk, IDC's stock chart looks a lot like that of memory IP player Rambus (NASDAQ:RMBS).

All in all, though, many of the major intellectual property players in the wireless sector -- IDC, Research In Motion (NASDAQ:RIMM), ARM Holdings (NASDAQ:ARMHY), and Qualcomm (NASDAQ:QCOM) -- have had a great year. For investors willing to stomach the volatility, it's been a wild ride.

Motley Fool contributor Dave Mock holds near-daily arbitration hearings for disputes between his two-year-old and four-year-old offspring, as legal recourse is not a viable option. He owns shares of Lucent.