KING OF PRUSSIA, Pa.-InterDigital Communications Corp. scored another court victory as a New York judge confirmed a ruling that calls for Nokia Corp. to pay InterDigital around $250 million for patent licensing and technology development.
The ruling stems from a contractual disagreement between Nokia and InterDigital that stretches back to 1999. In February of that year, Nokia signed a patent licensing and development agreement with InterDigital. Nokia paid $31.5 million up front to InterDigital at that time to cover sales through the end of 2001. The companies agreed that royalties owed after 2001 would be based on any agreements InterDigital subsequently signed with Nokia’s competitors.
In March 2003, InterDigital signed a licensing agreement with L.M. Ericsson and Sony Ericsson Mobile Communications L.P.-after several rounds of legal wrangling. InterDigital then notified Nokia that it would be subject to the same licensing terms as Ericsson and Sony Ericsson. Nokia disagreed, and took the issue to an arbitral tribunal. The tribunal sided with InterDigital in a June ruling.
This latest ruling from the U.S. District Court for the Southern District of New York further solidifies InterDigital’s position against Nokia. A Nokia spokesman declined to comment on the ruling.
The ruling was apparently expected, however; InterDigital’s stock remained relatively unchanged at $18.89 per share after the announcement.
InterDigital is no stranger to the courtroom; the company has taken on some of the wireless industry’s largest players over patent-licensing issues. Still outstanding is InterDigital’s legal tussle with Samsung Electronics Co. Ltd., which involves the same issues as InterDigital’s fight with Nokia.
“Our valuation model assumed that InterDigital would prevail in its litigation against Nokia and that the company would be successful in collecting what it expects from Samsung,” wrote Frank Marsala with First Albany Capital. The firm provides non-banking services to InterDigital.
InterDigital also entered into a $60 million, two-year, unsecured revolving credit facility with Bank of America, N.A. and Citizens Bank of Pennsylvania. The company plans to use the money to respond to future business opportunities.”We are pleased that our strong balance sheet and cash flow generating ability has enabled us to secure an attractive and flexible financing arrangement,” said Richard Fagan, InterDigital’s chief financial officer. “Our plan is to effectively manage our capital structure in order to both lower our overall cost of capital and provide flexible and important access to capital that supports the growth of our business. The establishment of this credit facility is an important first step along that path.”
