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InterDigital (IDCC) Secures Favorable Verdict Against Lenovo

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InterDigital, Inc. (IDCC - Free Report) recently secured a favorable verdict from UK’s High Court for its longstanding licensing dispute against Lenovo. The litigation is based on the fair, reasonable and non-discriminatory (FRAND) terms of a license for InterDigital's patents and has featured five separate trials since the lawsuit was first filed against Lenovo in 2019.

Per the court ruling, the China-based technology firm is liable to pay about $138.7 million as a “lumpsum” compensation for all the past and future sales of mobile devices from 2007 until the end of 2023. The court further observed that previous offers of $337 million for a six-year license to InterDigital’s portfolio of 3G, 4G and 5G patents were not made on FRAND terms and it will determine in due course of time whether any additional interest payments were required.

The verdict reinforces InterDigital’s patent licensing rights and is likely to thwart any potential breaches in the future. Although the company has welcomed the favorable verdict, it intends to appeal against certain aspects of the decision that it feels do not truly reflect its licensing program.

InterDigital’s commitment to licensing its broad portfolio of technologies to wireless terminal equipment makers, which allows it to expand its core market capability, is laudable. It has leading companies, such as Huawei, Samsung, LG and Apple, under its licensing agreements. Consequently, the company expects to generate solid recurring revenues from the patent licensing business in the forthcoming quarters as well.

InterDigital’s global footprint, diversified product portfolio and ability to penetrate different markets are impressive. Apart from the company’s strong portfolio of wireless technology solutions, the addition of technologies related to sensors, user interface and video to its offerings is likely to drive significant value, considering the massive size of the market it licenses. Furthermore, the company remains committed to pursuing acquisitions to drive its product portfolio and boost organic growth.

The company is focused on pursuing agreements with unlicensed customers in the handset and consumer electronics markets. InterDigital aims to become a leading designer and developer of technology solutions and innovation for the mobile industry, IoT and allied technology areas by leveraging its research and development capabilities, technological know-how and rich industry experience. At the same time, it intends to enhance its licensing revenue base by adding licensees and expanding into adjacent technology areas that align with its intellectual property position.

Additionally, more and more companies are increasingly offering the work-from-home option to employees to ensure their safety and well-being. Several firms are also providing a secure and connected workplace setup through quick onboarding and enablement services to support the seamless continuity of businesses and enable employees to fulfill their professional obligations. This, in turn, is likely to create new revenue-generating opportunities for InterDigital, as humans become solely dependent on the digital platform to stay connected not only for their professional lives but also for online education, shopping, dining and entertainment.

The stock has gained 15.1% over the past year against the industry’s decline of 17.3%.

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InterDigital currently carries a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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