thank you for your contributions....you make several very good points, and in general I agree that all negotiations begin with a baseline. If we look at HTC and RIM in per unit licenses....they have (or had) similar volumes and device selling prices, and probably both have taken advantage of prepayment discounts and caps....and from both we recognize a similar "effective rate" of around $0.70 on a $300+ selling price). LG's average selling price was much lower...maybe 1/2 of that.
However on a broader basis the individual licensee terms, and the multiple types of licenses offered .... blurs how we (the company) actually monetizes the IP
I'll get to your question about why I use and care about an effective rate in a moment...
How many variables in IDCC's licenses have we seen through the years? I'm sure I'll forget some so chime in
per unit rate- sometimes capped, sometimes not. Prepayment discounts can also be taken. Renegotiations over time when a licensee takes us to arb (like NEC)
May be based on a percentage of wholesale selling price (net x,y,z), or could be a set amount per unit shipped
We've also had country or region restrictions or use.
May also vary based on the type of product (module, modem, feature phone, smartphone, tablet, others)
Have had Infrastructure covered in some agreements (like LG....don't know how that was calculated)
Fixed fee - in general using a jointly created forecasted revenue number of combined products using the technology....and then applying the baseline to it....and then taking consideration of payment schedule
Type of technology applied- 2G (and different rates of the variants) , 2G/3G (and different rates for different 3G), 2G/3G/4G, toss in 802 and variants...
Past usage - negotiated and negotiated
Paid up provisions - for certain technologies...and the associated patents wherever those patents end up (i.e. 2G patents also declared for 3G...3G for 4G...etc)
Hidden terms and agreements - all I have to do is think about Ericsson.....
So why do I... and others....look at an effective rate per unit? Because even with the mish mush of different agreements and terms that the company has signed using the above....the company still tracks their licensing prowess....in licensee units that are sold....and in the revenues IDCC recognizes from those agreements (that's what I care about). 80% of 2G...50% of 3G
About LG....we have a number that they paid for coverage through 2010. 5 years of licensed, 5 years of unlicensed, and fully paid up on 2G forever. Infrastructure was also a part of the deal. Somebody somewhere....has assigned a value to those components, and has weighed them in creating a new proposal that is applicable to what they are and are planning on selling....
I'm pleased that the company didn't wait long in bringing LG to the ITC...but it also shows that there was or is a significant chasm. I'm scared that Samsung will do the same....because they had a very similar deal...
OK....so Apple.....has that license really screwed up everything? I've always been an advocate that Infineon and the actual manufacturer would add to the direct Apple fixed fee and create some parity....but the company's lack of being able to bring the other components to the revenue table is frustrating...and all we...and others in the industry see...is the fixed portion (until arb is resolved).
bottom line....how does the company move forward....sign 50 or 60 little guys...get the big guys on board...become "partners" instead of toll collectors....and reverse our declining revenue trend in a market that increasingly IP aware? Consistency...I don't think we're there yet where companies can look at the spectrum of our licensees, and feel comfortable that everyone is paying nondiscriminatory rates. Too many one offs...
rambling and typing fast....best of luck to us all
all jmo
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