dws
6 days ago
More than half of connected devices will be haptic enabled by 2028, revealing exciting opportunity for immersive video
Company Release - 8/20/2024
New research from Futuresource and InterDigital details how the latest generation of haptic technology is redefining immersive experiences and evolving digital devices
WILMINGTON, Del., Aug. 20, 2024 (GLOBE NEWSWIRE) -- Haptics, or the sense of touch, is increasingly being incorporated into the connected experience to enhance communications, services, and entertainment, and was spotlighted in a new white paper commissioned by mobile, video and AI technology research and development company InterDigital, Inc. (Nasdaq: IDCC) and written by market research firm Futuresource. The report reveals how, for the first time, haptics is being considered as a first order media type, alongside audio and video, opening the doors of perception to help consumers not only hear and see their content – but feel it too.
The white paper, Haptics: The Next Modality in Immersive Entertainment, examines the current inflection point in the haptic technology development lifecycle that now has haptics being regarded as an essential element in modern entertainment systems. This shift is attributed to digital devices becoming ever more ubiquitous, and with it, haptic technology has become more accessible to the wider public. From a commercial standpoint, many within the diverse ecosystem of innovators, device makers and content creators have high hopes for haptics: advancements in standards and innovations such as advanced actuators, improved tactile sensors, and more realistic feedback mechanisms are propelling market growth.
The report uncovers:
The addressable market for haptics is growing rapidly: across audio/visual, personal electronics, and wearables, forecasts reveal there will be 4.1 billion haptic-enabled consumer devices in use by the end of 2024
Looking ahead, 53% of consumer devices will be haptic enabled by 2028
Personal electronics drive opportunity. While the smartphone is the natural starting point for haptic use cases, it is expected that greater device variety will characterize the market in the future in areas like gaming consoles, tablets, headphones, smartwatches, and virtual reality (VR) headsets
Extended Reality (XR) is a key market for haptics as the sense of touch heightens the experience of the user. By 2028, worldwide shipments of XR devices are forecasted to increase threefold from today, topping 60 million units
Haptics hardware is improving at a fast pace, with haptic gloves being a noteworthy point of focus. The main use case for this hardware is gaming, which accounts for 75% of the total XR unit shipments
Historically, the absence of standards has stymied progress towards interoperability between platforms and vendors across the haptics ecosystem. This has meant protracted development cycles, proprietary methods, incompatible solutions and low adoption – all factors which the industry seeks to avoid during nascent stages in deployment of new technology. Fortunately, several leading standards organisations, including MPEG, IEEE and Khronos Group, are engaging with industry and collaborating to determine the mechanisms and modalities for coding haptic content and experiences. In fact, the collaborative work within standards is proving to be instrumental in enabling seamless integration across devices and platforms globally.
“This white paper comes at moment when haptic technology is greatly benefitting from advancements in electronics, material science, and consumer demand for immersive experiences,” said Lionel Oisel, VP and Head of Wireless Labs at InterDigital. “We see haptics as the next seismic shift in the way societies interact with technology, providing the opportunity for deeper levels of engagement with content and services through immersive visuals and sensory experiences. Looking ahead, the commercial viability of new services will rely on the standards that are now starting to be defined, and we hope to continue playing a key role in giving shape to this nascent and exciting industry.”
To read the white paper Haptics: The Next Modality in Immersive Entertainment, please click here.
About InterDigital ®
InterDigital is a global research and development company focused primarily on wireless, video, artificial intelligence (“AI”), and related technologies. We design and develop foundational technologies that enable connected, immersive experiences in a broad range of communications and entertainment products and services. We license our innovations worldwide to companies providing such products and services, including makers of wireless communications devices, consumer electronics, IoT devices, cars and other motor vehicles, and providers of cloud-based services such as video streaming. As a leader in wireless technology, our engineers have designed and developed a wide range of innovations that are used in wireless products and networks, from the earliest digital cellular systems to 5G and today’s most advanced Wi-Fi technologies. We are also a leader in video processing and video encoding/decoding technology, with a significant AI research effort that intersects with both wireless and video technologies. Founded in 1972, InterDigital is listed on Nasdaq.
For more information, visit: www.interdigital.com.
InterDigital Contact:
Roya Stephens
Email: roya.stephens@interdigital.com
+1 (202) 349-1714
Paullee
6 days ago
Meet InterDigital’s top licensing lawyer
Angela Morris
16 August 2024
Share
Meet InterDigital’s top licensing lawyer
InterDigital Chief Licensing Counsel Julia Mattis/courtesy photo
InterDigital Chief Licensing Counsel Julia Mattis was the chief negotiator and lead attorney for InterDigital when it struck its largest licensing deal of all time.
In September 2022, Apple agreed to a seven-year patent licence worth $938 million total (or $134 million per year). Apple first licensed InterDigital’s patent portfolio in 2007, and it renewed in 2016 (Mattis also handled this negotiation) and 2022.
“With Apple, we’ve had a relationship with them for many years. I think they see the value in our portfolio and what it brings to their business. In the end, I think that helped get the deal over the finish line – and helped get it done before it expired,” she states in an exclusive IAM interview.
We spoke with Mattis as part of our new series on Women in IP. We learned more about her critical role in the biggest licensing deals that InterDigital strikes with product manufacturing companies. Mattis has been instrumental in Apple’s renewal, the ongoing arbitration with Samsung and the global litigation against Lenovo.
We also caught up with Mattis about her career path toward the top attorney role on InterDigital’s licensing team, her techniques for negotiations and her philosophy on leadership in the IP department.
Mattis’ team serves as the in-house legal counsel for InterDigital’s licensing group. Someone from legal works alongside a licensing executive in every licence negotiation the company engages in. The licensing professional hammers out the commercial aspects of the deal such as price and what the licence includes and excludes. When the terms are set, Mattis and her team step in to draft and shape the contract and patent licensing agreement.
“We work hand-in-hand with our business colleagues both at the negotiation table and internally - working to formulate strategies and plans and develop and offer proposals. We consider ourselves partners. My team and I are just as strong in our business skills and the economics of licensing as we are in the legal aspects,” Mattis comments. “With some customers I take the lead on business discussions.”
Career path
Mattis finds joy in her work, expressing gratitude in being an attorney with the opportunity to generate revenue rather than being a cost centre. But if you asked her in law school whether she wanted to practice patent licensing law, Mattis would call you crazy.
She did always want to be an attorney, and in law school, she gravitated to property law. But tangible or intangible? She enjoyed real estate and intellectual property law (mainly trademark and copyright). Her career in IP was solidified in her first job in McGuire Woods’ intellectual property group doing trademark prosecution.
She earned her law degree from the University of Richmond School of Law in 2004. LinkedIn shows that she began her legal career as an associate at McGuire Woods, practicing trademark prosecution, advertising compliance and commercial transactions. Then from 2006 to 2008, Mattis was an associate with Pepper Hamilton, mostly working on intellectual property transactions.
From there, after having her first baby in 2008 and yearning for a better work-life balance, she left law firm life and went in-house. Mattis served a short stint as senior counsel at Advanta Bank Corp – one of her major clients – but the bank went out of business because of the 2008 financial crisis. Mattis joined InterDigital in 2010. For more than 11 years, she was the company’s vice president and deputy general licensing counsel. Since October 2021, Mattis has been chief licensing counsel there.
Initially, InterDigital hired Mattis to handle non-patent-licensing IP transactions, such as agreements for engineers to collaborate with university researchers or enter joint development projects with other companies. Nine months later, the patent licensing team recruited her.
Handling big deals
Apple is one of the few major licensees that InterDigital has never had to litigate against. The firms reached agreements through negotiations. Mattis is also proud that the Samsung mobile renewal is pending in arbitration now.
“Driving that towards arbitration was a good result. It is a little bit of a delayed result, but I think it is a good way of driving a deal to conclusion when parties cannot agree on terms. It is a much more efficient and more reasonable way to resolve a dispute rather than going to global litigation,” Mattis notes.
She mentions that Samsung has been a licensee for a long time and there was no question it would renew at some point. While it became clear that both sides were not seeing eye-to-eye on deal terms, they did agree that arbitration was the best way to work it out. Mattis’ view is that other potential licensees refuse to arbitrate because ultimately, they do not want to take a licence or try to delay for as long as possible.
“Remember, to go to arbitration, there is definite risk for each side, because it is final and binding and there are no appeals,” Mattis reminds.
Though not its preference, InterDigital does engage in litigation when it must. An example is the global dispute with Lenovo over cellular and video codec standard essential patents. Mattis has been a key internal figure advising InterDigital during the matter. She even testified in the trial in the UK case.
In July, the Court of Appeal for England and Wales increased the amount Lenovo must pay for InterDigital’s 5G portfolio. The royalty increased from $138.7 million to $178.3 million, and factored in an additional 4% compound interest, bringing Lenovo’s total to $240 million for using the patents from 2007 to 2023. This is $55 million more than the previous award.
UK Court of Appeal hikes InterDigital’s Lenovo royalties in landmark glo...
Second instance judges recalculate per unit rate, resulting in a more-than $50 million increase to licence fee
The appeal court upheld the trial court’s decision to charge royalties on all past sales to disincentivise implementer hold-out. The ruling stated: “An implementer such as Lenovo requires a licence from the first day it implements the relevant standards. FRAND terms are the terms that would be agreed between a willing licensor not intent upon hold up and a willing licensee not intent upon hold out.”
Mattis’ view is the ruling is important in addressing hold-out by companies that do not want to take a licence. Hold-out has created an industry practice of rights holders discounting past sales. This, in turn, encourages licensees to delay licensing portfolios, because in doing so the reward is paying less, she says.
“The UK decision says, ‘no. You have to pay on every sale, back to your first sale. That is a monumental step to address this pervasive issue,” Mattis says. “In the decision Justice Arnold made it very clear that this behaviour should not be rewarded.”
While she spends the most time on InterDigital’s agreements that are signed without litigation, she is involved in litigation as and when cases arise. She enjoys the work because it is a new challenge that pushes her to think differently, formulating lessons for future licensing deals.
“It is super instructive in terms of going forward for our licensing and thinking about: ‘Oh, we did it this way, but given what we have learned in a particular litigation, we may want to approach it differently.’ It is a way to continuously improve by being involved in litigation and seeing how things play out; seeing how little things you never would have thought of could be impactful and make a huge difference. It is a great learning experience for everyone on our licensing team to be involved in litigation."
Negotiation and leadership skills
Despite the benefits of learning from the litigation process, patent holders generally seek to avoid court disputes and handle negotiations privately.
At the negotiating table, Mattis is tough but fair. She is motivated to close deals and never wants to be the reason that a deal falters.
“I do try to listen to the other side and try to figure out what their issues are: why we can’t come to some kind of agreement and whether we can manage their issues in some way. I try to be creative and practical as well,” explains Mattis. “I also am pretty calm and it really takes a lot to get me worked up. I see this as an asset as negotiations can be very challenging in our business and can be so adversarial. … But I strive to keep a cool head and for the most part, I have always walked away from negotiations being friendly with the person on the other side. Our tone during the negotiation may be argumentative or combative, but then we will walk away and have a friendly conversation about our families. It is about building those relationships and building that trust with your counterparts that really helps you succeed in the long run.”
At this stage of her career, Mattis focuses on big deals and her team handles medium-to-smaller deals. She manages five employees on the licensing legal team.
She has gleaned her management style from picking up on lessons from her career and her past managers. Their influences show what to do – and what not to do. She is an inclusive leader and says several “North Stars” guide her management priorities.
“One is to share as much information as possible. You can't do your job and do it well if you don't have all the information you need at your disposal,” Mattis explains. “I try to clearly communicate all the information that my team would need.”
Respect is another priority. She is direct and sets clear expectations so that her team always knows where she stands – but always respectfully.
“It's important for my team to discuss and tell me things and for me to hear their feedback and their ideas. I may be missing something that they know. I really try to be inclusive, I encourage them to really try and do their best and I'm open, I'm communicative. I try to be respectful and treat them how I would want to be treated,” says Mattis. “At the end of the day, it's the golden rule.”
Gamco
2 weeks ago
Lenovo Gets Partial Victory In Patent Suit Information Fight
By Travis Bland · Listen to article
Law360 (August 13, 2024, 5:30 PM EDT) -- A federal court has ordered technology company InterDigital to hand over certain records to Lenovo as part of a patent infringement suit, reasoning that the latter company met the pleading standards under North Carolina law.
InterDigital must produce documents showing any communication accusing others of infringing specific video coding technology involved in the lawsuit, according to the court's Monday order.
"InterDigital says that it never sent a demand to Lenovo," the court said. "But given the broad definition of the term 'demand' and the substantial litigation that has occurred between the parties, the court finds it impossible to believe that InterDigital never sent correspondence to Lenovo accusing it of patent infringement or suggesting that it needed to obtain a license to the asserted patents."
In the same ruling, the court concluded that the North Carolina Patent Assertions Act wasn't broad enough to force InterDigital to give up all the records Lenovo requested.
InterDigital had argued that it shouldn't have to send any documentation of demands because other information the company was providing would suffice, but the court rejected that contention, saying the other information wouldn't satisfy Lenovo's request.
InterDigital's argument that handing over any demand letters or similar documents was disproportionate to Lenovo's needs was "unpersuasive," the court said.
However, Lenovo didn't succeed in convincing the court to require InterDigital to produce documents on offers to license patents to third parties.
The court found that the North Carolina Patent Assertions Act provision on showing bad faith in asserting a patent didn't address whether patent licensing deals between parties outside of lawsuits could be used as evidence of bad faith.
But other parts of the act did address third parties, the court said. If North Carolina lawmakers wanted the bad faith provision to include interactions with parties outside a lawsuit, it could have written that into the law as it did in other sections.
"But it did not," the court said. The bad faith provision "focuses only on offers to license a patent that are made between the parties to this litigation and not offers made to others."
InterDigital told the court it was producing contracts showing that it operated in good faith in asserting the patents and getting in touch with the parties in those contracts to get sharing permission, according to the order, and the court required the technology company to create a log of any contracts prohibited from sharing.
Lenovo and InterDigital came to agreements on documents concerning the latter's evaluations of alleged infringing products, according to the order.
In September 2023, several InterDigital entities sued Lenovo, claiming it infringed five patents that "enable wireless file-sharing between devices" and are important to "delivery and consumption of an enormous amount of video content on a daily basis."
A Lenovo counterclaim accused InterDigital of abusing its patents under the North Carolina patent law.
In July, the North Carolina federal court cut claims in InterDigital's infringement suit, finding some of the patents to be invalid.
The court gave judgment on the pleading to Lenovo concerning two of InterDigital's wireless transfer technologies, ruling that the patents were for common ideas of transferring information without any concrete improvements and thus ineligible for being patented. But the court refused to throw out infringement claims based on InterDigital's wireless video transfer technology.
Along with the remaining claims for infringement on the video transfer patent, claims remain on an allegation that Lenovo is misusing two other patents.
InterDigital filed a parallel action before the U.S. International Trade Commission seeking a ban on imports of purportedly infringing products, including the Lenovo ThinkPad laptop and Motorola Edge+ smartphone, according to ITC records.
Chinese technology giant Lenovo, in the summer of 2023, walked away the "overall winner" in a London court judgment on costs in its long-running dispute with InterDigital over fair, reasonable and nondiscriminatory licensing rates for wireless patents.
Counsel for the parties did not immediately respond to requests for comment Tuesday.
The patents-in-suit are U.S. Patent Nos. 10,250,877; 8,674,859; 9,674,556; 9,173,054; and 8,737,933.
InterDigital is represented by Richard Kamprath of McKool Smith and M. Scott Stevens, Philip C. Ducker, Katherine G. Rubschlager, Ryan W. Koppelman, Neal A. Larson, Jenny J. Wang and Adam D. Swain of Alston & Bird LLP.
Lenovo is represented by Adam R. Shartzer and Jack Wilson of Fish & Richardson PC, Jacob Steven Wharton and Raymond M. Bennett of Womble Bond Dickinson LLP and Matthew J. Dowd and Robert J. Scheffel of Dowd Scheffel PLLC.
The case is InterDigital Inc. et al. v. Lenovo Group Ltd. et al., case number 5:23-cv-00493, in the U.S. District Court for the Eastern District of North Carolina.
Gamco
2 weeks ago
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:23-CV-00493-FL
InterDigital, Inc., et al.,
Plaintiffs,
v. Order
Lenovo (United States) Inc., et al.,
Defendants.
Plaintiff InterDigital, Inc., a research and design company for wireless communications
and digital video technology, claims Defendant Lenovo (United States) Inc. is infringing on
several of its patents. In response, Lenovo brought a counterclaim against InterDigital under the
North Carolina Patent Assertions Act (NCAPAA). Lenovo has filed this Motion to Compel (D.E.
106) seeking discovery for its counterclaim. Having considered the parties’ arguments, the court
will grant Lenovo’s motion in part.
I. Background
InterDigital is a research and design company for wireless communication and digital
video technology. Mem. in Opp. at 2, D.E. 116. InterDigital licenses its patents to several
technology companies, including Lenovo. Id. In September 2023, InterDigital brought a patent
infringement suit against Lenovo in this court claiming that Lenovo was infringing on several of
its patents. Compl., D.E. 1. Before suing here, InterDigital asked a U.K. court to set a global
royalty rate for a Lenovo license of certain InterDigital patents. Mem. in Supp. at 2. InterDigital
also asserted different patents against Lenovo in the International Trade Commission. Id.
Case 5:23-cv-00493-FL-RN Document 145 Filed 08/13/24 Page 1 of 7
2
In response, Lenovo brought a counterclaim against InterDigital under the North Carolina
Abusive Patent Assertions Act (NCAPAA). Answer to Second Am. Compl. ¶¶ 179–87, D.E. 71.
Lenovo claims that InterDigital’s assertions of patent infringement are abusive and made in bad
faith. Id. It maintains InterDigital failed to conduct an analysis sufficient to identify the specific
infringement by the products. Id. ¶ 187. And it believes that InterDigital is attempting to license
these patents for an amount that is not based on a reasonable estimate of the value of the license.
Id. ¶ 188.
To support its claim, Lenovo sought discovery on topics it feels are relevant to its
NCAPAA-related allegations. When InterDigital balked at providing that discovery, Lenovo
filed this motion to compel. Mem. in Supp. at 2.
II. Discussion
The Federal Rules allow parties to “obtain discovery regarding any nonprivileged matter
that is relevant to any party’s claim or defense and proportional to the needs of the case[.]” Fed.
R. Civ. P. 26(b)(1). The Rules provide several tools, including interrogatories and requests for
production, to obtain discovery from other parties. Id. 33, 34.
The Federal Rules also allow a requesting party to move to compel if the responding
party’s discovery responses are incomplete or inadequate. Fed. R. Civ. P. 37(a). The party
resisting or objecting to discovery “bears the burden of showing why [the motion to compel]
should not be granted.” Mainstreet Collection, Inc. v. Kirkland’s, Inc., 270 F.R.D. 238, 241
(E.D.N.C. 2010). To meet this burden, the non-moving party “must make a particularized
showing of why discovery should be denied, and conclusory or generalized statements fail to
satisfy this burden as a matter of law.” Id.
Case 5:23-cv-00493-FL-RN Document 145 Filed 08/13/24 Page 2 of 7
3
A. Discovery Related to Bad Faith Factor No. 5
The NCAPAA lists several factors that a court may consider as evidence of whether a
party made an assertion of patent infringement in good faith or in bad faith. Lenovo claims that
several of its discovery requests relate to Bad Faith Factor 5:
(5) The person offers to license the patent for an amount that is not based on a
reasonable estimate of the value of the license, or the person offers to
license the patent for an amount that is based on the cost of defending a
potential or actual lawsuit.
N.C. Gen. Stat. § 75–143(a)(5). The parties disagree, however, about whether this factor focuses
on offers to license the patent made only to the allegedly infringing party or whether it
encompasses offers to license the patent that the patentee has made to anyone.
Resolving this question requires a federal court to interpret North Carolina state law. In
doing so, this court must “‘predict’ how the Supreme Court of North Carolina would rule on that
issue.” Knibbs v. Momphard, 30 F.4th 200, 213 (4th Cir. 2022) (quoting Rhodes v. E.I. du Pont
de Nemours & Co., 636 F.3d 88, 96 (4th Cir. 2011)). Discerning how the state’s highest court
would resolve that question requires looking, first, at any opinions from that court on the issue.
Stahle v. CTS Corp., 817 F.3d 96, 100 (4th Cir. 2016). If no opinions exist from that court, then
this court may consider opinions from the state’s intermediate appellate court, treatises, “and ‘the
practices of other states.’” Twin City Fire Ins. v. Ben Arnold-Sunbelt Beverage Co. of S.C., 433
F.3d 365, 369 (4th Cir. 2005) (quoting Wade v. Danek Med., Inc., 182 F.3d 281, 286 (4th Cir.
1999)). When engaging in this analysis, a federal court “should respond conservatively when
asked to discern governing principles of state law.” Rhodes, 636 F.3d at 979–80. And it “should
not create or expand [a] State’s public policy.” St. Paul Fire & Marine Ins. v. Jacobson, 48 F.3d
778, 783 (4th Cir. 1995).
Case 5:23-cv-00493-FL-RN Document 145 Filed 08/13/24 Page 3 of 7
4
North Carolina’s appellate courts have not wrangled with the scope of Bad Faith Factor
5. But the Supreme Court of North Carolina has explained its approach to statutory
interpretation. When interpreting a statute that court is attempting to determine the intent of the
legislature that enacted the law. Wynn v. Frederick, 385 N.C. 576, 581, 895 S.E.2d 371, 377
(2023). To do so, the court first looks to “the plain words of the statute[.]” Id. If court concludes
the statute is unambiguous, it will “apply the statue[] as written. Id. (alteration in original). But if
the statute is ambiguous, a North Carolina court must “look to other methods of statutory
construction such as the broader statutory context, ‘the structure of the statute[,] and certain
canons of statutory construction’ to ascertain the legislature’s intent.” Id. (quoting Elec. Supply
Co. of Durham v. Swain Elec. Co., 328 N.C. 651, 656, 403 S.E.2d 291, 294 (1991)).
The plain language of Bad Faith Factor 5 provides no guidance on the scope the North
Carolina legislature intended to give it. The structure of the NCAPAA, however, does. The
remainder of the Act shows that when the North Carolina General Assembly wished for a court
to consider conduct that goes beyond the parties before the court, it knew how to do so.
For example, another Bad Faith Factor focuses on whether “[t]he person making the
claim or assertion sent the same demand or substantially the same demand to multiple recipients
and made assertions against a wide variety of products and systems[.]” N.C. Gen. Stat. § 75–
143(a)(9). And among the Good-Faith Factors listed in the statute is whether “[t]he person has
demonstrated good-faith business practices in previous efforts to enforce the patent, or a
substantially similar patent, or has successfully enforced the patent, or a substantially similar
patent, through litigation.” Id. § 75–143(b)(6).
Had it wished to do so, the North Carolina General Assembly could have drafted Bad
Faith Factor 5 to include offers to license a patent that were made to others or offers made in
Case 5:23-cv-00493-FL-RN Document 145 Filed 08/13/24 Page 4 of 7
5
other cases. But it did not. So the court concludes that, given the structure of § 75–143, the
Supreme Court of North Carolina would find that Bad Faith Factor 5 focuses only on offers to
license a patent that are made between the parties to this litigation and not offers made to others.
See Evans v. Diaz, 333 N.C. 774, 779–80, 430 S.E.2d 244, 247 (1993) (“Under the doctrine of
expressio unius est exclusio alterius, when a statute lists the situations to which it applies, it
implies the exclusion of situations not contained in the list.”). Thus offers that InterDigital has
made to others to license its patents are not relevant to the claims and defenses here. The motion
to compel on this point is denied.
B. Request for Production No. 58
In Request for Production 58, Lenovo seeks documents showing InterDigital’s evaluation
of whether any accused product infringes any claim of the Asserted Patents and the resulting
determination to bring this action based on that evaluation.
The parties agreed that they have resolved their dispute over this discovery request. Hr’g
Tr. at 31:1–5, D.E. 123. Thus the court denies this portion of Lenovo’s motion as moot.
C. Request for Production No. 62
In Request for Production 62, Lenovo asks InterDigital to produce documents showing
any communication in which it accused another person of infringing the asserted patents. It
claims this request is relevant to Bad-Faith Factor 9:
(9) The person making the claim or assertion sent the same demand or
substantially the same demand to multiple recipients and made assertions
against a wide variety of products and systems without reflecting those
differences in a reasonable manner in the demands.
N.C. Gen. Stat. § 75–143(a)(9). The statute defines “demand” as:
Case 5:23-cv-00493-FL-RN Document 145 Filed 08/13/24 Page 5 of 7
6
(2) Demand.--A letter, e-mail, or other communication asserting or claiming
that a target has engaged in patent infringement or should obtain a license
to a patent.
N.C. Gen. Stat. § 75–142.
InterDigital says that it never sent a demand to Lenovo. Resp. in Opp. at 9, D.E. 116. But
given the broad definition of the term “demand” and the substantial litigation that has occurred
between the parties, the court finds it impossible to believe that InterDigital never sent
correspondence to Lenovo accusing it of patent infringement or suggesting that it needed to
obtain a license to the asserted patents. So the court rejects this argument.
Additionally, InterDigital says it should not have to supplement its response because it
“has provided (or shortly will produce) all executed licenses and claim charts created during the
process that led to the licenses, which disclose InterDigital’s contentions.” Id. InterDigital has
not persuaded the court that providing executed licenses and claim charts satisfies its obligation
to respond to Request 62.
And while it asserts that requiring it to produce any other documents would violate Rule
26’s proportionality requirement, id., it provides no evidence to support that position. So this
argument is also unpersuasive. See Mondragon v. Scott Farms, Inc., 329 F.R.D. 533, 549 n.4
(E.D.N.C. 2019).
As a result, the court will grant the motion to compel with respect to Request 62.
InterDigital must fully respond to Request 62 within 14 days from the entry of this order.
D. Request for Production No. 96
Finally, Lenovo seeks documents showing InterDigital’s contracts and agreements with
third parties to produce products using the invention claimed in any claim of the asserted patents.
Case 5:23-cv-00493-FL-RN Document 145 Filed 08/13/24 Page 6 of 7
7
Lenovo claims this information is relevant to Good-Faith Factor 4, N.C. Gen. Stat. § 75–
143(b)(4), which focuses on whether a party makes a substantial investment in the use of these
patents. InterDigital says that it either has or will produce these agreements and is obtaining
third-party approval to produce them.
InterDigital must produce documents responsive to Request 96 no later than 14 days after
entry of this order. To the extent InterDigital believes that it is contractually prohibited from
disclosing a responsive document, it must produce a log describing, generally, the withheld
document and the basis for withholding it. This log must be produced no later than 14 days after
entry of this order. The parties must meet and confer about documents contained in the log no
later than 14 days after its production. If the parties are unable to reach an agreement on the
timing or manner of production of those documents, they should contact Judge Numbers’s case
manager and the court will set a hearing to resolve the matter.
III. Conclusion
For all these reasons, the court grants in part and denies in part Lenovo’s motion to
compel. D.E. 106. Because this motion was granted in part and denied in part, each party will
bear their own costs.
Dated:
ROBERT T. NUMBERS, II
UNITED STATES MAGISTRATE JUDGE
Dated:
______________________________________
Robert T. Numbers, II
United States Magistrate Judge
August 12, 2024
Case 5:23-cv-00493-FL-RN Document 145 Filed 08/13/24 Page 7 of 7
Paullee
2 weeks ago
new S A article
InterDigital: Growing Fast By Monetizing AI For Video
Aug. 09, 2024 11:52 AM ETInterDigital, Inc. (IDCC) StockQCOM, RMBS
Chetan Woodun
Summary
InterDigital's recent stock upside was not impacted by tech volatility, showing the strength of its IP or intellectual property portfolio.
The company's AI technology optimizes video streaming quality without compromising, leading to revenue growth and strong financial performance.
Despite facing competition and downside risks, InterDigital's innovation in AI and video technologies positions it as a growth stock with the potential for sustained momentum.
Also, after such a rise, expect volatility in case the Federal Reserve does not cut the rate as expected.
Still, this highly profitable company can deliver more sales than expected for this financial year and potentially deliver double-digit growth for next year as well, making it a growth stock to contend with.
Robotics and AI for the future. 3D rendering.
Ake Puttisarn/iStock via Getty Images
InterDigital Inc. (NASDAQ:IDCC) is a midcap stock whose most recent upside coincided with the weakness suffered by the Invesco QQQ Trust ETF (QQQ) as shown in the chart below. While it is true that the company’s upbeat financial results for the second quarter of 2024 (FQ2) released on August 1 did help, the fact that it was not impacted by the general volatility engulfing tech names suggests strength.
s
Comparing recent performance with the tech-heavy QQQ (seekingalpha.com)
One of the reasons is its double-digit growth achieved by applying AI to improve video quality, while others, including the Magnificent 7 are still investing billions of dollars to build intelligent infrastructures.
From this perspective, this thesis aims to show that InterDigital is a growth stock, as the above price action may signal that investors are starting to pay attention to companies already monetizing innovation rather than be influenced by AI hype. Therefore, it is a buy since its trailing price-to-earnings remains underpriced relative to the the IT sector by more than 50%, and there are chances of generating more sales than expected.
First, I show what value this innovator brings to video streaming through its IP or intellectual property.
Using AI to Optimize the Quality of Video Streamed
About 82.5% of the internet's traffic consisted of video applications in 2023 as these have become increasingly popular on social media platforms as a way to communicate. However, there are challenges involved in transmitting video files over the internet, especially the high-quality ones when sent frequently throughout the day and night. The problem is these can strain even the most powerful networks resulting in buffering (delay), or even a disruption of the streaming experience when many users simultaneously use a platform. Now, there are techniques to address these issues, like compression to reduce file size, but this can impact quality.
This is where InterDigital's technology, which makes use of AI, comes into play, both to optimize video compression and transmission. It differentiates itself by being uncompromising on quality while making sure the video is delivered in such a way the streaming experience is smooth, or without introducing delay. Such performances where minimal transmission errors can be tolerated are essential in mobile phones to handle video-related tasks, such as Alphabet's (GOOGL) (GOOG) Pixel smartphones and Fitbit wearables.
Thus, a new licensing agreement with the search giant helped InterDigital to drive revenues to $223.5 million in FQ2 as shown below, or more than two times the amount initially guided, representing a 120% YoY surge.
s
Second quarter earnings call presentation (seekingalpha.com)
Other significant revenue contributors were a licensing deal with Panasonic (OTCPK:PCRFF) and Lenovo's (OTCPK:LNVGY). Following InterDigital's winning litigation cases against this Chinese company, the latter was ordered to pay licenses covering sales in the period 2007-2023, as I will detail later.
Also, as shown above, non-GAAP EPS surged from the $0.7-$0.8 initially expected to more than $4.57, or more than six times.
Highly Profitable, Deserving Better Based On Valuations and Sales Strength
Diving deeper into profitability, its trailing gross margins are 78% which outshines the sector median and is explained by InterDigital not manufacturing nor selling physical products but mainly licensing its portfolio of patents. This means that to stay ahead of the competition, it has to invest in research which accounts for its trailing EBITDA margin of 53.6%, but still exceeding the median for the IT sector by more than 400%.
Looking ahead, FY-2024's EBITDA margin guidance is expected to be 55%, up from 50% forecasted at the end of FQ1 which should translate into a non-GAAP EPS of more than $10.30 (midpoint), or more than $2.20 (27%) above the prior guidance.
Therefore, with its ability to convert sales dollars to profits, the company deserves better, and for this purpose, its trailing P/E is undervalued relative to the IT sector by 51% as shown below. Now, doing a comparison with IP pureplay Rambus Technology (RMBS) which has benefited from its market positioning in AI memory chips and whose P/E is 19.74x, InterDigital could potentially appreciate by 41% (19.74 - 13.79)/13.79. This translates into a target of $195.5 (138.65 x 1.41) based on the share price of $138.65 at the time of writing.
s
seekingalpha.com
To further support my bullish position, firstly, the revenue outlook for FY-2024 which has already been upgraded by $70 million could benefit from additional agreements signed during FQ3. Secondly, the management highlighted the litigation case it won against Lenovo will set a precedent during future negotiations covering HEVC (High Efficiency Video Coding) patents implying incremental revenues during negotiations with customers. Based on these two points, there are more chances of beating FY-2024's topline expectations or raising guidance at the end of FQ3 for a company that has suffered from a miss only once during the last ten years.
Faces Competition and Downside Risks In The Medium Term, But Innovation Can Help
Now, in addition to HVEC, its overall portfolio also consists of wireless (like 5G) patents and applications, which means that it does face competition from established semiconductor players with enormous R&D budgets like Qualcomm (QCOM) and Broadcom (AVGO) just to name two. As for HVEC, it competes with video and entertainment play Sony (SONY) without forgetting MPEG LA which manages a patent pool for HEVC.
Thus, there are risks that customers shift to competitors, thereby impacting revenue growth, especially after growing at 20% YoY FY-2023, and the 30% YoY expected for FY-2024 as shown below. By the way, this year's overall sales should benefit from an additional payment of $55 million from Lenovo (in July) and reimbursement of legal expenses incurred for the court case. To this end, analysts' estimate only $484 million of revenues for FY-2025 which would translate into a YoY decline of 32% as shown below, with growth expected to resume only in FY-2026.
s
seekingalpha.com
Therefore, after growing at a rapid pace, a double-digit decline may well not be digested by investors and is likely to result in volatility.
Still, as evidenced by its ability to improve performance during FQ2 in a way that far exceeded the outlook, and continued execution of its strategy to strengthen its innovation pipeline, I believe FY-2025 could deliver a revenue growth. The driver for this is VVC, or Versatile Video Coding, the latest video compression standard that paves the way for new opportunities in streaming applications and network efficiency, namely through the application of AI.
How AI Can Help to Sustain Growth Momentum in FY-2025
Digging deeper, while the VVC standard itself does not include AI, it is InterDigital's propensity to apply Machine Learning to optimize video networks for a better user experience across a large variety of use cases (including augmented and virtual reality) which should help it to drive its IP or intellectual property portfolio to new heights. To this end, a recent LexisNexis report stated that InterDigital is among the top seven patent holders for both HEVC and VVC, based on the quality and quantity of their patents. This strength saw it sign a patent license agreement with LG Electronics, the South Korean-based manufacturer of various consumer electronics products, last year also included VVC in addition to HVEC.
To further solidify the competitive position of its video portfolio across diverse devices and services, the company is using deep learning techniques to disrupt the open-source library of CompressAI as shown below.
s
AI Lab (www.interdigital.com/ai-lab)
Thus, in a video streaming market that is expected to grow at a 19.3% CAGR from 2023 to 2030, it could continue to grow by double-digits next year. Estimating a 19.3% increase in sales for FY-2025 instead of a 32% decline as currently expected, the topline could increase to $855 million (484.6 x 1.193) based on the $484.6 million estimated by analysts. This would in turn increase the forward revenue growth from 1.9% to 16.9% as tabled below, putting it firmly above the sector median's 6.65%, thereby improving the company's growth grade.
s
Table built using data from (seekingalpha.com)
Monetizing AI In A Capital-Light Way, While Others Are Spending Billions
Moreover, as I mentioned earlier, there are ingredients to potentially deliver a topline beat for this year, all thanks to leveraging its expertise in video compression and codecs to enhance user experience in video streaming. In this regard, the Deep learning technology (which it is using) is not as new as the much-hyped Generative AI, but, as evidenced by its financial results, can move the needle when it comes to driving long-term shareholder value. In so doing, it is not spending billions of dollars to acquire the latest accelerated computing GPUs produced by Nvidia (NVDA) as big tech is doing, but instead is spending relatively less capex on innovation, resulting in superior FCF margins of 30%.
Finally, InterDigital's business model, which consists of generating revenues by enabling other companies to embed its innovations in their products, has been highly profitable. In this connection, with a cash balance of $760 million versus debt of $489 million at the end of FQ2, it can continue its policy of share buybacks and dividend payments while continuing to invest money to stay ahead of competitors.
Therefore, it is increasingly likely for investors to reward companies like InterDigital whose IP is the basis for advancements in video and wireless and as the market's focus turns to the monetization aspect of artificial intelligence.
Ending on a note of caution, given so many expectations about a rate cut in September already priced in asset valuations, there could be a lot of volatility if there is any delay by the Fed in loosening monetary policy.
Editor's Note: This article was submitted as part of Seeking Alpha's Best Growth Idea investment competition, which runs through August 9. With cash prizes, this competition -- open to all analysts -- is one you don't want to miss. If you are interested in becoming an analyst and taking part in the competition, click here to find out more and submit your article today!
News
Market Data
Register to chat with like-minded investors on our interactive forums.
jealmc79
2 weeks ago
