Xperi Corporation (NASDAQ:XPER) Q2 2017 Earnings Conference Call - Final Transcript

Jul 27, 2017 • 05:00 pm ET

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Xperi Corporation (NASDAQ:XPER) Q2 2017 Earnings Conference Call - Final Transcript

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Executive
Jon Kirchner

the Samsung license or ultimately file litigation against them. While we work to provide investors the best information we can at a given point in time, for various reasons including strategic considerations geared toward driving the best long-term value for the business, the timeframes don't always match our expectations.

Regarding Samsung, the ITC decision has provided some relevant data around some key assets, and we continue to work to relicense our IP. Our strong preference remains to build our business through partner-based licensing engagements. However, even as our discussions continue, litigation remains a strong possibility. We are highly confident in our IP position and believe Samsung is continuing to use our patented technologies broadly across its products. As demonstrated over a number of years, we only choose litigation when we've pursued every other avenue for a fair market-based license for our IP. If we do litigate, we've a very strong track record and believe that any legal efforts would contribute meaningfully to a positive resolution.

Turning to the Broadcom matter, it continues to proceed very well and we remain confident in our overall position. In the ITC, we had several significant victories this past quarter. On June 30, the administrative law judge found that our 946 patent was valid, infringed, and had a domestic industry. We believe that this patent is broadly infringed across all of Broadcom's significant product lines and is used across the semiconductor industry. The patent's validity has been confirmed twice, first by the Patent Trial and Appeal Board also known as the PTAB when it denied Broadcom's petition for their inter partes review or IPR and then by the ITC's administrative law judge and now infringement has also been found. Last week, the parties filed petitions for review of the decision before the full ITC.

The ITC has discretion to decide which issues if any it wishes to review. Our Counsel believes the ALJ's initial determination was very detailed and well-reasoned and strongly supports our positions in the case. Notably, the public version of Judge Lord's opinion is expected to be released within the next week or two. We anticipate that the ITC will make a decision about what issues, if any, it will review by August 31st and will render its final determination by October 30. Any issues the commission declines to review will result in the confirmation of the original order.

In addition to our ITC victory, we had another favorable IPR decision this week. On Tuesday, the PTAB denied Broadcom's IPR against the 231 patent, which is in the same family as the 946 patent. The PTAB found that Broadcom did not have a reasonable likelihood of prevailing on any of its challenges to the patent and denied the IPR petition in its entirety.

This is a significant milestone as the 231 patent has now been battle tested and expands the potential revenue opportunity not only with Broadcom, but across the semiconductor industry. We believe the new revenue opportunities associated with this patent