IPR Emphasis Continues to Grow in the Mobile Ecosystem

This morning there is news out that the U.S. International Trade Commission examine whether or not  Apple's (Nasdaq: AAPL) iPhone infringes intellectual property belonging to Kodak (NYSE: EK). This underscores my view that intellectual property, patents and related assets will be a hot topic in the coming weeks given a number of new product announcements for both smartphones and non-handset mobile devices at several industry events in as many weeks. These events include the Mobile World Congress, CeBIT and the CTIA, all of which span from this week until mid-March. Longer term, we suspect the deployment of LTE will evoke a new round of IPR conversations among technology holders and users. 

Ongoing emphasis on IPR. While it is rather accepted that wireless technology companies cross license technology and patents from one another, patent infringement cases are likely to escalate as a defensive move to protect IPR assets and IPR as business model, particularly as mobile devices increasingly embed a greater array of capabilities and technologies (connectivity, imaging, sound, and the like). As we discussed in that January 10th report, several disputes are underway including:

·      Kodak vs. Apple and Research in Motion (Nasdaq: RIMM)

·      Apple vs. Nokia (NYSE: NOK)

In our view, both Qualcomm (Nsasdaq: QCOM) and InterDigital (Nasdaq: IDCC) are well positioned to capitalize on the growing number of non-handset applications that are incorporating cellular and other connectivity.

Motorola loses one to RIM but more to come. With that as a backdrop, Motorola (NYSE: MOT) recently lost a patent infringement claim against Research in Motion after a UK Judge rejected the claims made. Motorola has been going toe and toe with RIM over alleged patent infringement both here in the US and in the UK. Motorola’s UK case focused on BIS and BES technologies, claiming that the two messaging systems infringe upon patents that Motorola holds for an RF-based message communication system. In ruling against Motorola, the judge noted that messages from BES servers were not suitable for RF transmission and that RIM’s BIS servers are physically located in Canada and is out of the court’s jurisdiction.

Even still, in January Motorola filed five more patent infringement claims with the U.S. International Trade Commission (ITC) against RIM that involve WiFi technologies, application management, user interfaces, and power management controls. Those claims have not yet been investigated or settle.

Black Sand acquires CMOS PA patent portfolio. Earlier this month, Fabless semiconductor firm Black Sand Technologies acquired a patent portfolio related to CMOS power amplifiers (PAs) from Silicon Laboratories (Nasdaq: SLAB). For those who remember SLAB’s run earlier this decade, it was long thought the company would bring a CMOS PA to market.  Last September, Black Sand unveiled what it claimed was the first 3G CMOS RF power amplifier and the company targets mobile phones and other 3G wireless devices such as data cards and netbooks for its products. We have heard several arguments in the past about the pending replacement of gallium arsenide (GaAs) based PAs and the pending doom for companies like RF Micro (Nasdaq: RFMD), Skyworks (Nasdaq: SWKS) and others, but so far this has yet to happen. In our view, the combination of increasing functionality, greater frequency bands and greater RF technologies in these devices make for a challenging environment and one that demands reliability, particularly when it comes to the consumer experience and battery life. At some point, CMOS PAs may have a place in the market and we will continue to have a wait and see view; should this technology take root, we would expect existing GaAs players to respond tactically.

Samsung Settles Patent Dispute with Rambus. Samsung Electronics and Rambus (Nasdaq: RMBS) have reached agreement settling all claims between them and licensing Rambus' patent portfolio covering all Samsung semiconductor products including a perpetual fully paid-up license to certain current DRAM products. As part of the overall agreement, Samsung will invest $200 million in Rambus shares; make an initial payment of $200 million to Rambus and quarterly payments of about $25 million for the next five years. In addition, Samsung and Rambus have signed a memorandum of understanding (MOU) relating to a new generation of memory technologies. This is but the latest settlement in an IPR dispute for Samsung and follows similar settlements with InterDigital and Kodak.