Molly - '863 being essential vs revenue:
'863 is essential for those users that have recognized IDC's patents as being essential. The 400 million TDMA users in the world (GSM, PDC, TDMA) are comprised of a lot of different and varying standards; some of which have recognized IDC's involvement to date, most of which have not (TDMA 3g involvement, however, is changing that)
i think you know all this, so i don't know why you bring it up. PDC is comprised of 55 million users in Japan. Many of IDC's Asian licensees, NEC, Matsushita, Mitsubishi, Japan Radio, Denso, Kyocera (and more) - agreed to pay IDC royalty streams for TDMA phone sales and infra outside Japan. Inside Japan, the issue for PDC royalty payments is currently being negotiated as a result of IDC's patent revalidation process - both in the U.S. and abroad (Japan). Several years ago NTT basically controlled the standard picture for all of Japan. Japan developed and approved the PDC standard while IDC was in negotiations with several players there. Some of the players (due to NTT's influence) agreed to pay IDC royalties on PDC outside of Japan, but would only pay within Japan based on (a) Motorola and ERICY developments, and (b) NTT's insistence that PDC was a separate standard from international standards on TDMA (IS-54, IS-136, etc.). We know what happened in the MOT case. Since that time, IDC has made significant inroads into having their TDMA patents re-validated in Europe (German Court Case), the U.S., China and Japan.
Nevertheless, many of IDC's NEW Asian licensees have agreed to pay IDC licensing revenue on both sales within Japan and outside Japan. The new players, I believe, do not want to get caught in a post-ERICY settlement problem in regard to PDC within Japan. And other Asian players, due to developments abroad (3g, US revalidation, need for extending 3g agreements) are now in a phase of renogiating agreements with IDC - much as NOK has done.
ETSI members who utilize the GSM standard have been largely exempt from paying IDC royalties. Why? Even though the German Court Case clearly indicated that IDC owned the rights to TDMA (as applied to GSM) within the GSM standard, it became a matter of the biggest offenders settling with IDC on this front. Nokia settled in exchange for work on 3g products. That leaves the biggest TDMA offender of all - ERICY who has failed to settle, even though IDC's patents were reaffirmed in Sweden as well. Siemens never came to terms with IDC - they made an attempt to bypass their obligations under TDMA by getting involved with IDC's broadband CDMA applications for WLL. Alcatel did the same. Phillips was believed to have made a declaratory statement that if ERICY settles "we'll settle." The ERICY case is being closely watched by Europe. Many, like Bosch and Nokia, agreed to settle anyway in exchange for other developments (3g).
So although all 400 million users (actual TDMA/GSM/PDC based phones sold is more like 800-900 million) are out there, only a 15-20% fraction of Asian, European and U.S. players have agreed to pay IDC reocurring royalties. IDC did settle with AT&T for a modicum; but if you read the documents carefully in relation to that original signing, you'll find that there is a contingency clause based on future signees; the clause of which was interpreted by some to mean ERICY.
It is not that the revenue base derived from the patent is small, it is that past infringement remains large. In the MOT case, MOT was not arguing that they were using IDC's TDMA system; they clearly stated they were - the argument was a priori - who invented what first.
Will TDMA players continue to come to the table? The bottom line is certainly yes (it has to do a lot with current 3g practice and standards being laid down). Hughes is one company that has paid IDC reocurring royalties for many years. Few want to get caught in a Post-ERICY struggle for fee derivation. NEC's royalties will begin to bloom this year as their "baloon" payment ran out last year - same is true with other players.
Will all those 55 million PDC users WITHIN Japan come to the table and pay IDC royalties now? The answer to that question is very, very likely; IDC's involvement in the 3g process has given IDC another golden coin by which to do some horse trading. |
