You’d be forgiven for not recognizing the name InterDigital,
despite the fact that it has been around since 1972 and developed many
of the technologies that are critical to our increasingly mobile,
wireless world. As a result, per employee, InterDigital is the most
profitable company in the US, with a net income of $937,255 per worker, according to Bloomberg’s just-released visual compendium of data. And the only thing InterDigital produces is designs for new technology—and the occasional lawsuit.
But whatever you do, don’t call InterDigital a patent troll—CEO William Merritt hates that term. And it’s admittedly not a fair label for InterDigital, in contrast to firms
that merely buy up patents in order to then sue other people over them.
Like ARM, the Cambridge, UK-based company that designs the chips that
are in practically every mobile device on the planet, InterDigital does
not manufacture anything itself. Yet the company employs more than 200
engineers who have collectively helped InterDigital amass a trove of
patents that could be worth billions. InterDigital also creates working
prototypes of all of its technologies, in order to demonstrate them to
industry partners like Alcatel-Lucent, who later incorporate them into their products.
InterDigital isn’t shy about both licensing the technology it develops and selling it outright. In 2012, InterDigital sold 1,700 patents to Intel for $375 million,
which led InterDigital’s stock to surge 27% in a single day as the
markets speculated that the rest of the company’s patent portfolio might be equally valuable. In 2011, the company’s stock shot up 70% when its leaders announced the company would be for sale, and rumors circulated that Apple and Google would bid on it, in an attempt to lock up InterDigital’s intellectual property. (InterDigital’s attempt to sell itself ended in January 2012, when the company opted to license its IP instead.)
Using that patent portfolio in court cases appears to be as important to InterDigital as licensing its technology
to mobile companies—you might call it the carrot (develop new wireless
standards and technology) and stick (sue anyone who violates your
intellectual property) approach to innovation. Presently, InterDigital
is suing Nokia, Huawei and ZTE for violation of its patents, seeking a ban on import of their products. However, the company’s case may have weakened, and its stock has declined, after another
patent case—this one by Samsung against Apple—came to naught when
president Barack Obama vetoed an import ban on older Apple products.