InterDigital, Inc. (IDCC)

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InterDigital, Inc. (IDCC)

ITC Decision Briefing Conference

December 20, 2013 10:00 AM ET


Patrick Van de Wille - VP, Communications and IR

Bill Merritt - President and CEO

Rich Brezski - CFO


Charlie Anderson - Dougherty & Company

Anil Doradla - William Blair & Company

Michael Cohen - MDC Financial Research

Nicholas Rodelli - CFRA Research

Eugene Fox - Cardinal Capital Management

Tim Quillin - Stephens Investments

John Broderick - Permit Capital



Good day and welcome to the InterDigital ITC Decision Briefing Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Patrick Van de Wille. Please go ahead.

Patrick Van de Wille

Hi, thanks Melanie. Good morning, everyone and welcome to InterDigital’s conference call to discuss yesterday’s ITC decision. With me this morning are Bill Merritt, our President and CEO and Rich Brezski, our CFO. The goal of today’s call is to discuss yesterday’s decision of the ITC and also to go over other aspects of the business.

Before we begin our remarks, I need to remind you that in this call we will make forward-looking statements regarding our current beliefs, plans and expectations which are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results and events to differ materially from results and events contemplated by such forward-looking statements.

These risks and uncertainties include those set forth in our earnings release published yesterday evening, our annual report on Form 10-K for the year ended December 31, 2012, our quarterly report on Form 10-Q for the quarter ended June 30, 2013 and those details from time-to-time and our other filings with the Securities and Exchange Commission.

These forward-looking statements are made only as of the date hereof, and except as required by law, we undertake no obligation to update or revise any of them, whether as a result of new information, future events or otherwise.

Now clearly yesterday was an important moment, but certainly a defining one for our Company and we’ll be discussing that decision today. That being said, the date on the calendar has been known to us for some time and the Company’s leadership and Board have been discussing the business which remains in great shape outside the scope of whatever decision the ITC might render.

So today rather than prepare a script for you we thought it might be best for me to just ask Bill to provide us with his views of the decision and a more general update on the business, and then open it for questions.

So with that Bill let’s start off with a quick review of the ITC decision, what the way forward is on that case and a quick overview of its potential impact on other cases and then move on to a broader review of the business.

Bill Merritt

Thanks Patrick, and good morning, everyone. As let me reiterate what Patrick has said. That while the decision is important, it is by no means a defining moment for the Company. So as Patrick said let me go through the decision itself. Just be aware that we have what you have. We have the notice. We do not have the underlying decision. So we don’t have any further information on the case beyond that that commission has put forth in the notice. We should be getting the decision in the near future.

So in terms of the decision, basically what the commission did was make some minor adjustments that appear to the claim constructions, but not sufficient adjustments such that the ultimate decision would change. So the commission basically upheld the ultimate decision by the ALJs in that to do with no violation of Section 337. We are obviously very, very disappointed in the decision. We think it is flat wrong, and obviously we will appeal.

Without the underlying decision, it’s hard to know exactly what the commission’s rationale was, but looking at the decision of -- one example on the 970 patent. They did not appear to make any change to the ALJ’s findings and on that patent the ALJ had used one claim construction for its infringement analysis and a different claim construction for its validity analysis, so -- and you can't do that. You can't use different claim constructions for validity and infringement. So we think the decision by the commission is fundamentally wrong.

And therefore, that we have a very, very strong opportunity at the Federal Circuit to review the case. And unfortunately, it’s been a pattern with the commission (inaudible) with us on a number of occasions, have gotten things that we thought were very, very straightforward, they got them fundamentally wrong. We’ll come back to that because I think that while we don’t know for sure why that is, I think certainly people read about the regulatory environment every day, and the effect that that could have on a number of things in the intellectual property world, so we will come back to that but obviously again very disappointed in the decision. That said, we think we have a very good opportunity on appeal.

So let me talk a little bit about the appeal just to give you that process and timeframe and then also talk about the 868 case, which is the next case up at the ITC.

So the Federal Circuit review, as you folks know, we’ve been through this a couple of times before. We can move that process along pretty quickly, so we can immediately file for a notice of appeal. We can quickly, once the commission gets its documentation over to the Circuit, get our brief in , and that will accelerate the timing such that we think we can be briefed by the second quarter of 2014, and then you need oral argument and then the decision, the latter two not being under our control, so the front half of the process we can control, the back half of the process we can’t control as much.

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