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Patent Law

: IP ADR Blog

Settling "Bet the Company Cases" -- Qualcomm's Stock Price Soars

By Les Weinstein, Michael Young, John Leo Wagner, Eric van Ginkel, and Victoria Pynchon


(photo:  from Mediation from Darkness to Light)

In the Qualcomm-Nokia battle of the giants, settlement took a dedicated negotiation team, trial counsel who believed the case would not settle, and a string of pre-trial motion victories.  Trial counsel is so immersed in pursuing victory -- as well he should be -- that he calls the settlement a "multi-billion dollar award." 

Before giving you an excerpt from the AmLaw story on the settlement -- Nokia-Qualcomm Agree to Play Nice -- I must make at least a few glancing references to the settlement issues.

  • First, how about that 18% rise in Qualcomm's share value in the immediate wake of the settlement -- how much of the "multi-billion dollar award" will be off-set by external market benefits.
  • Second, it's no surprise for Qualcomm to have a string of pre-trial motion victories on the eve of trial -- it was being represented by Cravath for goodness sakes!  The KING of the pure legal issue.  Quinn, as recent trial victories demonstrate, dominates the courtroom when the jury is seated.  Still, if my spotty Civil War history doesn't mislead me, it was the number of victories in a row, not the number of total victories for each side, that resulted in a "win" for the Union.
  • Third, if the "negotiation team" is keeping the trial team in the dark -- as I'm now told by Fortune 500 GC -- "to keep the trial team focused" -- for goodness sakes, don't send the trial team to the mandatory settlement conference or high level (think Tony Piazza) mediation.  Send the negotiation team.  It won't be a surprise to either player that the trial attorneys are the equivalent of foot soldiers, deployed to serve purposes of which they are often blissfully unaware.  
  • And finally, was the end result worth the direct and ancillary costs of the litigation -- not simply those appearing on the legal bill -- but the market cost.  I'm assuming both sides have high-level financial teams analyzing the cost and benefit of this series of litigations, regulatory battles and at least one arbitration proceeding, to determine when settlement could have resulted in the maximum benefit to both sides. 

That's why god created consultants, right?  

Settlement talks began in earnest on Monday between Steven Altman, Qualcomm's president, and Tero Ojanper, executive vice president of Nokia, after a pretrial hearing July 18 in which Qualcomm won all its motions, according to Cooley's Steven Strauss. "That seemed to change the settlement dynamic," he says.

Strauss says he was in the Delaware courtroom Wednesday morning, ready to start the trial, when the negotiators called to ask for a short delay. On learning that the case had been settled, Strauss said he was disappointed--because he had prepared to try the case for so long--but ultimately satisfied that his client's best interests had been served. He declined to discuss the financial details of the settlement, except to say that it is a "multibillion-dollar award that includes a large cash payment and an ongoing royalty."

Under the terms of the settlement, Qualcomm will give Nokia access to its chip technology as Nokia develops the next generation of its cell phones. Nokia in return has agreed not to use any of its patents directly against Qualcomm.

Nokia also will make an up-front payment to Qualcomm and will continue to pay royalties as part of the deal. Financial terms of the settlement were not disclosed.

Qualcomm's stock soared 18 percent as investors expressed relief that Qualcomm's licensing money won't run out anytime soon. The company still faces similar litigation brought by Broadcom Corp.

If you have a subscription (it's free) to the IP Law and Business website, here's an article on the best IP mediators in the business.

No, it doesn't mention any of the great mediators or arbitrators here at the IP ADR Blog.  But we'll be recognized soon.  Count on it!

Full post as published by IP ADR Blog on July 25, 2008 (boomark / email).

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