InterDigital Inc. (IDCC) won an appeals court ruling reviving its effort to force Nokia Oyj (NOK) to pay patent royalties on the third generation of mobile-phone technology. InterDigital rose to the highest since April.
The U.S. Court of Appeals for the Federal Circuit today overturned a U.S. International Trade Commission decision that cleared Nokia (NOK1V) of claims it infringed InterDigital patents, and sent the case back to the agency for further review. The ruling was posted on the court’s website.
The commission “erred in construing certain critical claim terms in both patents,” the appeals court said. The patents in the case, first filed in 2007, cover power control and high- speed data transmission, InterDigital contends.
InterDigital has said it asked the ITC to block imports of Nokia’s 3G phones because the Espoo, Finland-based company refuses to pay patent royalties on networks that allow mobile- phone users to hold videoconferences, download music and browse the Internet. It has another ITC case pending against Nokia scheduled for trial in October. Patent royalties accounted for almost all of the $301.7 million in revenue InterDigital reported last year.
“This strengthens their position in front of the October trial,” said Kevin Stadtler of Stadtler Capital Management LLC in Fort Worth, Texas, which owns 18,000 InterDigital shares and said Nokia should settle the case based on today’s ruling. “One of the specific reasons they were unable to collect from about half of the 3G licensing pool is Nokia, which has the biggest share.”
InterDigital rose $3.88, or 14 percent, to $31.18, its highest closing price since April 25, in Nasdaq Stock Market trading.
In the ITC case, the trade commission sided with Nokia, saying the patents weren’t infringed. Nokia, whose sales have declined amid smartphone competition from companies including Apple Inc. (AAPL), had also claimed the InterDigital patents were invalid.
The appeals court decision “confirms the strength of InterDigital’s wireless research contributions and the applicability of our patents to 3G technology,” InterDigital Chief Executive Officer William Merritt said in a statement. “This ruling represents a significant step toward our stated goal of achieving $800 million in sustainable annual revenue from licensing in the next three to five years. Technologically, it validates InterDigital’s role at the heart of the future of wireless technology.”
Nokia said it disagrees with the court’s decision.
“We are now reviewing the court’s ruling in detail and will consider all legal options, including further appeals if appropriate,” Mark Durrant, a company spokesman, said.
InterDigital’s second complaint at the trade commission against Nokia also targets ZTE Corp. (000063) and Huawei Technologies Co., accusing the Chinese phone-equipment makers of infringing patents related to 3G wireless technology. That case involves other InterDigital patents.
The ITC is a quasi-judicial agency whose job is to protect U.S. markets from unfair trade practices, such as infringement of intellectual property. It has the power to order products halted at the U.S. border.
InterDigital put itself up for sale last year, and then decided instead to sell portions of its patent portfolio. In June, it agreed to sell about 1,700 patents to Intel Corp. (INTC) for $375 million.
InterDigital, based in King of Prussia, Pennsylvania, said in its annual report that it received royalties from more than half of all 3G mobile devices sold last year, including ones from Samsung Electronics Co. (005930), Apple, Research In Motion Ltd. (RIM) and HTC Corp. (2498)
Nokia had a license with InterDigital for second-generation and some third-generation technology that expired in 2006. Nokia paid $253 million in a settlement reached in 2006. The companies were unable to reach a new agreement, InterDigital has said.
The case is InterDigital Communications v. ITC, 2010-1093, U.S. Court of Appeals for the Federal Circuit (Washington). The ITC case is In the Matter of Certain 3G Mobile Handsets and components thereof, 337-613, U.S. International Trade Commission (Washington).
The pending ITC case is In the Matter of Wireless Devices with 3G Capabilities, 337-800, ITC in Washington.
To contact the editor responsible for this story: Bernard Kohn at email@example.com