Sometimes, you have to win just one crucial battle to come out on top. For wireless innovator InterDigital (NASDAQ:IDCC), validating only one of dozens of patents as essential to a key next-generation wireless standard could be enough to win its war with licensee Nokia (NYSE:NOK), though the top phone maker differs on its assessment of the legal ruling.
An English High Court has ruled that a claim in one of InterDigital's patents is indeed essential to making any wireless device using a worldwide next-generation standard called UMTS. That verdict boosted InterDigital's stock by more than 11% on Friday. But the same ruling also declared that another claim in the patent, as well as three other patents, were not essential to the standard. That's what gave Nokia ammunition to claim victory in the ruling as well. It even cited the result as "extremely favorable" for the entire industry.
Having a patent declared as "essential" to a standard carries a lot of weight in the world of intellectual-property licensing. It basically means that a device cannot possibly be built using the standard without infringing upon the invention deemed essential. Considering that Nokia has close to a 40% market share in wireless devices worldwide and that a growing portion of those devices are based on the UMTS standard, InterDigital investors are seeing green.
Of course, the decision may be appealed or contested in other bodies. But InterDigital believes that it has other patents that could also be deemed essential and thereby bolster its licensing program.
A single patent has been enough to cause serious damage in many recent IP cases. Telecom giant AT&T (NYSE:T) got $39 million out of Web telephony provider Vonage (NYSE:VG) for infringement of a single patent. Research In Motion (NASDAQ:RIMM) was near to invalidating the last NTP patent relating to its wireless email service before coughing up $612.5 million to the small company. And Broadcom's (NASDAQ:BRCM) International Trade Commission-sanctioned injunction against Qualcomm (NASDAQ:QCOM) came down to a ruling on a single patent.
But even though one patent may be all that InterDigital needs, Nokia certainly won't go quietly in the night. The handset maker desperately wants to shake the grip of the scrappy company that has managed to sink its teeth deeper and deeper into the pockets of many mobile giants using its inventions.
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