InterDigital, Ericsson court date set
by Jeremy Feiler - Philadelphia Business Journal
16:17 EDT Friday
Wireless technology developer InterDigital Communications Corp.'s 9-year-old patent-infringment lawsuit against Ericsson Inc. will go to trial Feb. 10, 2003, InterDigital said on Friday.
King of Prussia-based InterDigital sued Sweden's Ericsson, one of the world's biggest cell-phone makers, for allegedly infringing on digital cell-phone technology without paying the Montgomery County company royalties.
As a result, InterDigital is demanding that Ericsson pay it royalties on those patents amounting to about 5 percent of Ericsson's handset sales and 3.5 percent of its infrastructure sales going back to the early 1990s, which could mean hundreds of millions of dollars.
InterDigital's announcement of the trial date boosted its shares 6.7 percent in Friday trading, or 53 cents a share, to $8.40 a share on the Nasdaq National Market.
In the lawsuit, pending at a U.S. District Court in Dallas, InterDigital alleges that Ericsson made far more cell phones based on InterDigital's patents than anyone else in the world.
Ericsson has denied the allegations. It countersued, alleging InterDigital hadn't invested anything new, but a European appeals court disagreed and upheld InterDigital's patents in 1998.
Those familiar with the situation claim that Ericsson, in a 1999 restructuring, dismissed a number of executives who could substantiate claims of conspiracy by Ericsson and others to infringe on InterDigital's patents. They also claim that InterDigital's lawyers identified the executives and took their depositions.
All the proceedings have been sealed except for a special master's final report, which InterDigital released in September 2000. The report appeared to indicate the suit was going in InterDigital's favor.
In early June, InterDigital released a statement that said the judge in the Ericsson proceeding ruled upon certain pre-trial motions, all under seal, removing some patent claims from further consideration to "narrow the issues remaining for trial."
"The company believes these rulings ... do not materially affect the relief sought by InterDigital," the company said at the time.
In recent years, InterDigital has concluded a number of lawsuits and mediations against other cell-phone makers and wireless companies, from Nokia to NEC. Most of those settlements involved tens of millions of dollars in payments, as well as development deals.
Meantime, court-ordered mediation continues between InterDigital and Ericsson.
The lawsuit is a frequent topic of discussion among investors on quarterly conference calls announcing InterDigital's earnings and at the company's annual meetings. Some investors hope for an outcome similar to a major patent-lawsuit victory in 1880.
At that time, shares of American Bell Telephone Co. soared from $50 to $1,000 in one week in 1880, turning Alexander Graham Bell and others into instant millionaires after telegraph titan Western Union Co. withdrew its legal challenge to American Bell's telephone patent.
Analysts who follow InterDigital, however, say that such an outcome in the case is far-fetched.
InterDigital's current focus involves developing "third-generation," or 3G broadband cell-phone technology that would transforms mobile phones into all-purpose remote controls.
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