A deal with LG – UDC’s elusive Holy Grail.

Fed by statements from Universal Display Corp. (“UDC”; NASDAQ: OLED) management, speculation has mounted for years that UDC will eventually be able to sign a “blockbuster” deal with LG, presumably on terms superior to the Samsung deal that already has allowed cuts in UDC’s red emitter sales of over 60%. Absurdly, UDC has been able to survive in investors’ minds as having a greater value in the distant future.

UDC’s redacted version of the Samsung agreement filed with the SEC does not give investors an understanding of the events that trigger protection clauses in Samsung’s favor including a “most favored nation” clause.

We believe that Samsung only entered into a long-term agreement to avoid further involvement with UDC and in anticipation of revocations before the 2017 patent expiration. Samsung’s early involvement with UDC, actually at the time of the DARPA experiments before UDC entered the picture, allows for the creation of complicated factual allegations. These would be considered in any Samsung “freedom to operate” legal opinion. LG is not in the same situation. LG has no such burden and has the benefit of new adverse rulings and pending full revocation of UDC’s cornerstone patent for the entire European market.

LG can easily avoid having to enter into any new deal with UDC and simply wait for UDC’s key patent claims to be challenged or invalidated in major jurisdictions, even before UDC’s key patents begin to expire in 2017.

Posted in Universal Display Corporation

Manuel Asensio doesn’t bet often. But when he does, it’s wise to pay attention.

Paul Kaihla
eCompany Now
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